Wednesday, October 5, 2016

How Crowdsourcing Evolves: The 4 Stages to Transformation

By: Tim Woods, VP of Marketing, HYPE Innovation 

The innovation management industry is highly fragmented today, which makes it confusing to understand which methods apply to which scenarios, and what the difference is between those doing crowdsourcing, and those doing enterprise programs designed to facilitate business transformation.

Front-end, back-end?

Terminology is part of the problem, which stems from the overuse of the word innovation (how about we stop using it?). Generating ideas is not innovation, for example, but are commonly bundled together. More specifically though, we notice that there is confusion between the front-end and back-end of innovation. Many people consider the evaluation phase of ideas to be the back-end of innovation, but in fact this is still part of the discovery process, because we are in the domain of figuring out what to implement, not in the actual implementation phase. The back-end is where the value creation process begins, and where the outcome of that process is captured.
The back-end - the domain of implementation where innovation truly happens - is drastically undervalued and ill-considered in crowdsourcing. Ideation is not innovation at all, and it’s also not where business transformation happens - for this, you must execute. You will never transform the way you work simply by generating a lot of ideas, and making people feel engaged. Michael Schrage’s observation from The Innovator’s Hypothesis is worth putting up on a poster in our offices to remind us:
“Good ideas have nothing to do with good implementations … Implementation - not the idea - is the superior unit of analysis for assessing value creation. How organizations enact ideas - not the ideas themselves - is the soul and substance of innovation. More often than not, implementation ends up redefining both the boundaries and the essence of the original idea.

What is Crowdsourcing?

Crowdsourcing can also mean anything from the outsourcing of effort to tackle a task, like Amazon’s Mechanical Turk; a call for solutions to a specific problem; or an employee idea suggestion scheme. Jeff Howe, who coined the term, defines it as the first of these:
“...the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”
In a research paper by Estellés-Arolas and González-Ladrón-de-Guevara, the authors found 40 different definitions of the term. Yikes!
Specifically, when we look at the major platforms available to organizations, we see more confusion. In a recent analyst report, Forrester listed 15 vendors in their Wave assessment, 11 of whom were ranked as Market Leaders, the other 4 were Strong Performers, and there are no Contenders and Challengers. How can it be that there are 11 market leading solutions on offer? It must both be true that the criteria used by Forrester is somewhat flawed, requiring more nuance, and the market itself is not clearly defined.
There is a big difference between something like MyStarbucksIdeas, and an enterprise platform which has real-time trend scouting integrated, multiple channels for ideation to happen, different and specialized workflows, individual governance models for different areas of the business, and a back-end that supports concept iteration and tracking.
There is of course nothing wrong with MyStarbucksIdeas, but it’s designed for branding and engagement purposes. A program that is there to support a transformation in the way a company is working looks entirely different.

The Perils of Crowdsourcing

The BP oil spill crowdsourcing challenge garnered a lot of press attention when launched, but a retrospective view saw that 43,000 ideas were submitted, from 120,000 people, taking an enormous amount of time to triage and evaluate, but ultimately resulting in: “a lot of effort, for little result”. See the Guardian’s summary for more background.
More recently, the Natural Environment Research Council (NERC) in Britain asked: “What shall we call our fancy new boat?” In a moment of brilliance, somebody submitted the idea of Boaty McBoatface, and it quickly gathered 30,000 votes before the website crashed. See the Independent’s article on the ‘perils of crowdsourcing’ for more info.
It’s tempting therefore to conclude that crowdsourcing is really a bit of a joke, and not a serious initiative to facilitate transformation. But far less publicized cases of enterprise crowdsourcing exist, which demonstrate an altogether more serious effort of large companies trying to do things differently. A recent example comes from Liberty Global - the largest international TV and broadband company - with their program which further extends its reach and capabilities every year, and includes a well thought-out plan to train and educate employees on innovation methods and tools, and develop a network of innovation managers who magnify the program's reach. Many of the initiatives of the program are actually offline, but the online platform is the single source of truth for everything, the visible window into the transformation. You can read more about it in a deep dive write-up here.

The Four Stages


At a macro level, all enterprise crowdsourcing programs move along the same trajectory, although many get stuck half way - let’s look at the stages briefly. 
Engagement
All programs begin with the challenge of achieving a certain level of engagement; getting people on board and collaborating together. For some companies, this is already a major challenge, because of a skeptical or disengaged audience - and/or a lack of empowerment from management. For others, the culture is such that engagement, even across divisions, comes easily.
However, it is important to note that engagement and collaboration by themselves have no inherent value. Unless it is converted into the second stage, it is essentially worthless - sometimes even damaging. This is a delicate trap, because engagement can feel like momentum, and give the program a positive outlook, but ultimately reveal itself as a fool's gold.
Insights
Engagement must deliver insights. Otherwise the program will surely die - it’s just a question of when. The goal of getting the critical mass of people to engage in innovation is ultimately to discover new perspectives, new ways of thinking about a problem, or surfacing new opportunities. If you didn’t need these new perspectives, then you could just have the same folks sit down in a room and come up with the same ideas.
Ideas are cheap, and you can get plentiful ideas just through engagement, but what you really need is a new viewpoint, new insights; this is how innovation starts. There are many subtle difficulties to generating insights, as opposed to just generating ideas. For example, the quality of the question being posed is critical, and so is the way collaboration is guided (think of De Bono’s Six Thinking Hats  methodology to explore different perspectives on an idea). It’s not as simple as just asking for ideas, and getting the valuable new insights. Quite the contrary.
Solutions
Ideas, insights, and perspectives, are only just fragments. Another step is required to develop the fragments into something the business can work with - i.e., a solution. For some companies, this means creating a business case that makes the idea fit with the existing performance engine, rather than antagonize it (see Trimble and Govindarajan). For others, it means quickly iterating through build, measure, learn cycles to find a product/market fit (see also: The Most Important KPI for Building Innovation Muscle for more on this piece).
Solutions are synonymous with concepts, or lightweight innovation projects. The challenge here is finding a suitable way to realize the value from the concept. A company is ideally looking to have a portfolio of these solutions, or concepts, rather than just a portfolio of ideas.
It is extremely challenging for those companies who struggle with transformation, because unlike generating engagement and ideas, this stage requires that all parts of the business confirm the value of the solution, and a process must be established to handle the creation of innovation (the implementation, back-end phase!).
Transformation
It’s tempting to think that the previous stage is the end of the process. But transformation happens only once the company has successfully implemented these solutions, and has made the entire process a part of the way work is now done. Employees must be able to clearly recognize and understand the process, and the process has overcome any significant organizational resistance.
The investment axis is important to note, since it is often cheap and easy to get engagement, and with careful consideration you can also get the valuable insights too. But it becomes significantly more expensive to convert this into tangible outcomes - it requires resources, education, budget, and constant negotiation with different parts of the business. But of course the impact is far greater, exponentially so, because of the return on investment with new products, services, disruptive innovations, and the impact on company culture.
Because of the issues around terminology, and the disparity between idea crowdsourcing and enterprise innovation management, it can be hard to pick apart the differences. But from my perspective at least, the four stages above are a window into the process, and a way to start the dialogue about where companies get stuck, and how they get to where they really need to go.

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