outside innovation

Before starting, the team members were invited to read a number of books and articles:

Last on the list was Patty Seybold’s Outside Innovation. I can’t do better than quote the introduction to her blog:

What is Outside Innovation? It’s when customers lead the design of your business processes, products, services, and business models. It’s when customers roll up their sleeves to co-design their products and your business. It’s when customers attract other customers to build a vital customer-centric ecosystem around your products and services.

So she is addressing one part of the solution to the innovator’s dilemma. And she makes an interesting point in the book, but more clearly in a recent blog, about predicting the future using crowdsourcing. Her blog points us to the Sloan Center for Internet Retailing’s eLabeXchange prediction market. Red Stripe was not trying to predict the future using crowdsourcing but trying to get ideas about what it should do. One of the ideas it received related to setting up a prediction market (which it had already considered at length in the early days). So, by extension, something that Red Stripe could have done would have been to set up a prediction market for itself – getting people to bet on what would be the ‘innovative and web-based product, service or business model’ that it would come up with. Though it sounds improbable, the wisdom of crowds would perhaps have prevailed.

Dilemmas:

Can you use a prediction market to avoid making any decisions at all yourself?

creativity and innovation

Joanna: 'There's this idea that you can only create great ideas in a free-form, unstructured environment. I don't believe that.'

In Creativity is Not Enough, Professor Ted Levitt (who later became editor of the Harvard Business Review and popularised the term 'globalisation') said interesting things about creativity and innovation:

It is alleged that everything in American business would be just dandy if
industry were simply more creative and if it would hire more creative people and
give them the chance to show their fructifying stuff.

It seems to me that the world would be a better place if more Harvard Professors used terms like 'fructifying stuff' and my fantasy is that, of the two terms, he'd rather be famous for that than globalisation.

Levitt goes on to explain his view that:

...there is really very little shortage of creativity and of creative people
in American business. The major problem is that so-called creative people often
(though certainly not always) pass off on others the responsibility for getting
down to brass tacks. They have plenty of ideas but little businesslike
follow-through. They do not make the right kind of effort to help their ideas
get a hearing and a try.

His point, clearly enough, is that ideation in businesses is relatively abundant. It is its implementation that is more scarce. Which brings us back to one of the conventional distinctions made by people who attempt to define innovation and creativity: namely that creativity is about having the idea, while innovation is about making it happen.

In this sense, Red Stripe had the perfect brief. It had not only to have the big idea or ideas, it had to 'pick one or more of these ideas to develop, and then bring the idea(s) to market'.

Another point made by Levitt in the same article, is that 'in most business organisations, the most continually creative men... are also generally known as corporate malcontents.' For whatever reason (Mike Seery says the team members were chosen 'for their flexibility, enthusiasm and to get a range of experience within the team'), the Red Stripe team members were far from corporate malcontents. Of course, they were not all unreserved admirers of their employer but, by and large, they liked and respected The Economist, were proud to work for it and determined to do well by it during the six months of the project. Perhaps, if the team really had been capable, as Slashdot suggested, of frittering away the six months on drink and debauchery, then they might also have been even more receptive to even more revolutionary thinking:

In the first week, the staffers bought beer, wine, whisky, condoms, flat
screen televisions and gaming consoles.

In the second week, the staffers hired a young graphic artist through the internet for $35 per hour to set up a rudimentary web page asking for innovative ideas.

The next 5 months is a blur.

The final two weeks were a flurry of activities. So many good ideas to review! So little time!

By contrast, it was their respect for The Economist Group and concern not to do anything that might damage its reputation (or concern for their jobs, or conservatism, or pragmatism... call it what you like) that led them to back off from their brief at times. When they could have gone public with the Lughenjo idea and effectively forced the hand of The Economist Group (who would not have wanted to be seen ditching an admirably philanthropic scheme), they deliberately chose to stay silent and seek approval from the GMC first.

Staying with Ted Levitt, he further noted:

There is some evidence that the relatively rigid organisation can build into
its own structure certain flexibilities which would provide an organisational
home for the creative but irresponsible individual. What may be required,
especially in the large organisation, is not so much a suggestion box scheme as
a specialised group whose function is to receive ideas, work them out, and
follow them through in the necessary manner.

One of the bravest decisions that Project Red Stripe took in its early days was to abandon the great ideas that most of its members had brought with them and, in some cases, which they had worked up into virtual business plans in order to get accepted onto the team. (Joanna didn't have an idea at the outset and, as a result, felt somewhat split off from those who were 'awash with them'.) After presenting their ideas to each other on a cold day in Regent's Park, the team set about finding ways to harvest ideas from Economist readers and other interested parties. In using this crowdsourcing approach, they defied James Surowiecki, the granddaddy of crowd stuff, who claims - in the words of Dave Pollard - that 'despite compelling evidence that executives and experts are poor at making decisions, and that the collective wisdom of large numbers of people is very much better at it, few businesses rigorously canvass their employees and customers for anything more than inconsequential assessments after the decisions have already been made.'

For the first few weeks they simply worked on developing a workable scheme for collecting, collating, sorting, classifying and evaluating these ideas.

As a result they put themselves at a stroke in exactly the position of the 'responsible' evaluation group rather than that of the 'irresponsible' creative individual.

One reason this was such a bold decision was that it effectively undermined one of the most significant 'glues' that the team started out with - the notion that they could come up with an idea that would change the face of business, or the world, or - at the very least - The Economist.

In doing so, they freed themselves temporarily from the clutch of the becoming-whale-of-an-idea.

Dilemmas:

If good ideas are relatively abundant but the ability to commercialise them is relatively scarce, it may be useful to focus on the latter. But, if you do that, you might end up missing out on the really good idea, which no-one has had yet.

The crowd will come up with good ideas but it may also be tainted by lowest-common-denominator thinking.

A less responsible (or more malcontent) bunch than the Project Red Stripe team might have pursued the idea of a philanthropy website and launched it in a blaze of publicity without approval from the GMC. The Economist Group would have got 'businesslike follow-through' but would also have got an innovation it didn't want.

-----------------------------------------------------------------------------

Credits:

Innovation depot: Chris Denbow

-----------------------------------------------------------------------------

inspiration

Stewart (after talking on Skype to Steven's friend I Shuen, a web designer, in China): 'She's really nice.'
Steven: 'She's married.'
Mike: 'Are we actually sourcing this in China? That's fantastic. I only picked Steven for that.'

On a bright afternoon in early March I sat in the Red Stripe office. There were only three members of the team there. (Often two of them would go downstairs to the canteen to talk without disturbing the others and sometimes Ludwig would have a long, but working, weekend in Berlin with his family.)

There was a general sense of absorption but not urgency. It struck me as remarkable just how much can be done without leaving a computer. So much, in fact, that I think we sometimes forget that there is still work that can't be done in front of a computer. It was more noticeable to me as I was always without a computer, writing with a pen on a piece of paper.

Stewart's main excitement that afternoon was a conversation on Skype with a designer in China. It sounded, apparently, as if she were in the same room. He was momentarily incensed, whilst reflecting on the conversation, that we accept such poor quality telephony as natural. But he's young and doesn't remember when STD meant Subscriber Trunk Dialling or the postmistress in Kinlochspelvie who used to listen in to every call to that end of the Isle of Mull.

That lunchtime and that afternoon a serious question was crystallising about the process. These fine minds had, between them, come up with a process that allowed little room for their intuition or their imagination or their creativity. They recognised this. Joanna noddingly reported a conversation with Tom, in which he had identified that they were just 'funnelling and analysing' without any real creative input.

They were using vox pop - more properly, crowdsourcing - to look for ideas. The team had been divided down the middle about whether this was a good idea and had, in the end, decided to try crowdsourcing not out of laziness or fear of not being creative enough themselves, but because, in Business 2.0, that's what you ought to do. It was also an opportunity to work together and get to know each other as a team on a demanding and time-sensitive exercise - a kind of dummy run for the whole project. As Mike said in his final report:

Some people had thought that our public call for ideas would yield the killer idea. Others thought that they had it already. And the rest thought that a decent dose of inspirational brainstorming would be needed.

What, I wondered, were the odds of the interested world at large coming up with a better idea than the six of them locked in a room brainstorming, discussing and sharing ideas? In any case, I was now watching the team designing a form and a process for collecting and evaluating other people's ideas. I still wondered if they didn't fully trust themselves. Could a babushka have persuaded them to trust themselves? Of course, it's more of a personal gamble if they rely on their own ideas rather than on the collective wisdom of Economist readers. If the latter don't come up with the goods, then how could the team have been expected to do any better themselves? But, then again, the average Economist reader probably gave the question five minutes' thought before writing a reply. (Actually, the average Economist reader didn't reply at all.)

The implications were surely significant - remembering that one of Mike's stated intentions was to come up with a process that the Economist Group could replicate. There's now no way of knowing whether the team could have done as well or better on their own. I also wonder what would have happened if one of the team had come up with an idea so shockingly inventive and so devilishly ingenious that the rest of the team had all gasped, with one voice, 'Let's do it.'

Much the same questions were raised when the team started looking at how to evaluate the ideas that they would receive. Tom was responsible for working out a process for doing this and, one day, wearing a yellow tee-shirt, he went round the room discussing his thoughts so far with each member of the team individually. (He tended to do this more than the others, who were more inclined to call a brief meeting of the whole team.)

Coming to Joanna, I heard her ask him, 'Do we go for ideas that excite everybody, or do we group them to see that 50% are to do with timeliness or world peace?' Tom answered saying he felt they would group them, do more research, do a presentation on each main idea group and ask a list of standard questions, like 'how disruptive is this technology?' and 'how do people do it now?'. He felt that each presentation should be made to the group as a whole, which would then split into sub-groups of two to discuss the presentation, before reassembling for further discussion.

At the end of their discussion Joanna asked, 'Is that some help? Is that the kind of feedback you need?' (I only once heard anyone else say such a thing.) Was her question the product of a dominant feeling function [Myers-Briggs]? Of her being the only woman? Of her lack of assurance about her technical knowledge? Of her sophisticated teamworking skills?

In the end, unsurprisingly, they were less scientific than Tom had imagined at the outset and the issue became one of finding an idea that all the team members could get behind wholeheartedly. For that they needed Javier's help.

Dilemmas:

What are the odds of the interested world at large coming up with a better idea than a small group of fine minds brainstorming, discussing and sharing ideas and purposefully dedicated to finding the best one?

-----------------------------------------------------------------------------

Credits:
Loch Buie photo: Seaview Bed & Breakfast, Isle of Mull

-----------------------------------------------------------------------------

open innovation

Dr Henry Chesbrough had a good idea about innovation and wrote a book about it. In fact, the idea was so good that he wrote three books, several articles and launched a website about it. Along the way he interviewed hundreds of people who confirmed his hypothesis that there are two sorts of innovation: open innovation and closed innovation. These can be given capital letters thus: Open Innovation and Closed Innovation. Both can also be followed with the word paradigm, for good measure.

To save time, I'll use his own summary of the Open Innovation paradigm:

Open Innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.

Dr Chesbrough's idea is described as 'pathbreaking' on the jacket of his book, where several wise people are quoted fulsomely endorsing his idea. Scott Cook, Chairman of the Intuit Executive Committee, goes so far as to say that the book is both seminal and practical and 'provides the how-to for revving up your innovation engine for leaps of profitable growth'. I'm hopeful, confident even, that no-one will describe the present book/blog/Brain in that way.

On the strength of all this, I bought the book and read it on the train back from a birthday party in Oxford. At the party, important people like Metropolitan Police Commissioner Sir Ian Blair, Professor Robin Grove-White (former head of Greenpeace UK and Director of the CPRE) and Professor Richard Macrory, who was appointed by the UK Cabinet Office to lead a review on regulatory sanctions, talked about important things. I thought 'this is the sort of place where change begins really'. Surely it has to be as much about people as paradigms?

Anyway, in the Closed Innovation paradigm, a company uses insiders to have ideas, some of which it develops and commercialises in-house, using the profits partly to fund further research and idea-generation in-house. In the Open Innovation paradigm, in case your attention drifted during the bit about purposive inflows, the same company gets ideas from wherever it can and takes them to market through a combination of internal and external channels.

Red Stripe used a combination of both paradigms: insiders drew ideas in from outside, but then had their own idea, which they discussed widely with outsiders, before setting about commercialising it internally. It could, of course, have done any of those things differently. I don't have a view on whether it should have (though Dr Chesbrough does). I just think that innovation teams may find it useful to think carefully about this question at the outset.


Mike Seery's own conclusion was similar:

Some people had thought that our public call for ideas would yield the
killer idea. Others thought that they had it already. And the rest thought that
a decent dose of inspirational brainstorming would be needed.

Learning by doing ~ learning while waiting

But another thought in Dr Chesbrough's book caught my attention. In the foreword, John Seely Brown talks about two sources of learning: learning by doing and learning while waiting. John Seely Brown clearly likes this idea too, because he's put the whole of his foreword on his website, which is indicative of the closed loops in which this kind of discussion takes place. But it's another revealing thought for an innovation team. Certainly the Red Stripe team found and had ideas while they were waiting to decide which idea to take to market and while they were soliciting ideas from outside. But their Bavaria/Lughenjo idea evolved considerably in the course of 'doing' the business plan, talking to partners and getting ready to make their formal presentation to the GMC. It's from this 'doing' process that the final HiSpace idea emerged.

I think it's fair to say that some of the ideas that emerged from doing were more practical and practicable than many of those that emerged from the earlier waiting process. So, there's perhaps a case to be made for 'doing something', even at the outset, because it may reveal ideas of a different order.

Once again we can view the Red Stripe approach as a combination of the two. But the outcry (scroll down when you get there) that greeted their decision not to publish the ideas that were submitted by outsiders (and which was generally speaking based on an objection to a private company soliciting money-making ideas and then keeping them to itself) may have concealed a more important issue - namely that if they had allowed the 'world' to kick around and discuss the ideas that were submitted, they might have found that much of the process of evaluation, sifting, analysis and development of those ideas could have been done for them by people who, collectively, knew more about their viability than the Red Stripe team ever could.

But then, of course, the problem remains that Red Stripe would never have actually owned any of the ideas.

The Delphi Technique

While we're on the subject of learning while doing and the team's conversations with NGOs and other experts who were likely to be involved in the Lughenjo idea, I should mention the Delphi technique. I was alerted to it by a Harvard Business Review article called The Wisdom of (Expert) Crowds by Robert Duboff. The technique, which is not unrelated to scenario planning, is rather like an amplified focus group. You recruit two dozen or so experts on a particular topic and ask them to evaluate possible developments/trends/outcomes in a chosen business or technology area. (There's a lot more to it than that - an independent facilitator then summarises their thoughts and they have another round. And so on. There are lots of rules, which necessitate the hiring of expensive consultants to oversee the process.) I suppose it's also related to the Prediction Markets idea, which the Red Stripe team had discussed at the outset and were encouraged to pursue during their idea harvesting process.

As I've said elsewhere, involving the experts eventually led Red Stripe to reject Lughenjo and it's possible that the earlier, formal involvement of such a group might have helped them home in on a workable idea. But, of course, that would require that they had first decided which mountain they were going to climb. For sure, Red Stripe were in the lucky position, as an Economist team, of being able to get the attention of experts whom others might have found it more difficult to talk to.

Cathedral and bazaar

Before we leave the Open Innovation paradigm, I'd like to mention another way of thinking about all this that's been around a lot longer. In 1997, Eric Raymond, talking about the open source software movement, came up with the term 'the cathedral and the bazaar', which is constantly evolving into a book. The former represented the conventional method of using a group of experts to design and develop a piece of software (though it could apply to almost any large-scale creative or innovative work). The bazaar represented the open source approach. This idea has been amplified by a lot of people, notably Don Tapscott and Anthony Williams in their book Wikinomics and on their website and blog of the same name. Wikinomics, being the commercialised arm of The Wisdom of Crowds, of course has its opponents and detractors. It's not a panacea and plenty has been written about the foolishness of crowds. Bruce Schneier's essay on the psychology of security is one elegant example of this. But Eric Raymond himself is also quoted in a compelling article by Nicholas Carr as saying that 'one cannot code from the ground up in bazaar style. One can test, debug, and improve in bazaar style, but it would be very hard to originate a project in bazaar mode.' In the same vein, Raymond is also quoted as saying, 'The individual wizard is where successful bazaar projects generally start'.

Project Red Stripe had six fine individual wizards, unsure of how far to trust their own wizardry and how far to turn to the wisdom of the crowd.

Dilemmas

Open vs. Closed. You can use insiders or outsiders; your own ideas or other people's; your own money or other people's. With the latter, there's always going to be less ownership and less control. But more room.

Thinking vs. Doing. Trying to implement one idea may inspire other ideas, but settling on an idea too soon may close down other options. Time-tabling is important.

-----------------------------------------------------------------------------

Credits:

Paradigm bottle: Michael Calore

Innovation Camp: Theis Kofoed Hjorth

Innovation mosaic: Roland Tanglao

Delphi: Jay Galvin

-----------------------------------------------------------------------------