Point: You don’t have to be the originator of an idea to succeed with it.

Story: Sam Walton didn’t invent discount retailing. Instead, he learned of the idea from an article about two Ben Franklin stores in Minnesota trying self-service. At the time, self-service retail was a brand new concept. Previously, customers came to a counter and the full-service clerks helped the customer by picking items from the shelves behind the counter. Upon reading the article about this new concept, Sam went to investigate. “I rode the bus all night long to two little towns up there — Pipestone and Worthingon,” Walton recounts in his autobiography. “They had shelves on the side and two island counters all the way back. No clerks with cash registers around the store. Just checkout registers up front. I liked that. So I did that, too,” In 1950, Walton’s Five and Dime was the third self-service variety store in the country.

But Sam didn’t simply imitate this one discount retailing idea. He continued to toy & tinker with it and improve it, even as it grew and became successful. He kept his stores well stocked with lots of items, stayed open late, bought goods in bulk to reduce costs, and pioneered communications and logistics technologies to maintain his everyday low price strategy. “As good as business was, I never could leave well enough alone, and, in fact, I think my constant fiddling and meddling with the status quo may have been one of my biggest contributions to the later success of Wal-Mart.”

Howard Gardner, Professor of Cognition and Education at the Harvard Graduate School of Education, sees this style of constant innovation as key characteristic of creative people. He says, it’s not a flash-in-the-pan, one-time-only thing. it’s a whole style of existence. People who are creative are always thinking about the domains in which they work. They’re always tinkering. They’re always saying, “what makes sense here, what doesn’t make sense? And if it doesn’t make sense, can I do something about it?”

Action:

• Be open to the new and different — seek out odd-ball business practices in out-of-the-way places
• Study how others do what they do, why they do it, and how it can work in your situation
• Adopt and adapt those discovered ideas and keep tweaking the ideas

For more information: Sam Walton: Made In America and Creative Spirit by Daniel Goleman, Paul Kaufman, and Michael Ray.

Point: Companies can encourage innovation through employee contests

Story: The previous post on Harrah’s Entertainment generated some great discussion, particularly around EMC’s “innovation-by-contest” as one approach to generating innovations. Some companies (e.g., Harrah’s, HP) use themes to guide their employee-submitted innovations, and some companies (e.g., EMC) do not. This prompted me to ask Wharton Professor Karl Ulrich, author of the forthcoming Innovation Tournaments (Harvard Business School Press, May 14, 2009) about his experiences with innovation contests. In his book, Ulrich uses the metaphor of a tournament to explore how ideas vie for attention and resources during the innovation process. Ulrich’s central metaphor is that companies use figurative or literal tournaments to progressively filter incoming ideas through a series of hurdles or gates during research, development, and new product introduction. At last week’s Silicon Flatirons‘ conference, I asked Karl about his view on the theme-based approach compared to the wide-open approach for an innovation contest. Ulrich recommended a wide-open approach for the first phase, saying that the wide-open approach might show clusters of idea suggestions on a new topic. He cited a cosmetics manufacturer with whom he’s worked. The cosmetics manufacturer’s contest got a numerous unexpected suggestions for foundations (make-up) for young people — an new area that the company decided to explore further. He added that many companies mistakenly try to fund too many projects — not narrowing the funnel fast enough.

Action:

• Leverage employees’ knowledge of markets or technologies to spawn unexpected revolutionary or evolutionary innovations (e.g., EMC’s contest)
• Cluster the wide-open ideas by similarity, to create or modify themes or spot unexpected opportunities
• Use employees’ distributed knowledge to help focus attention on the best ideas (e.g., Harrah’s voting portal)

Point: Define priority innovation areas to harness employee energy

Story: When it comes to innovation, Harrah’s Entertainment doesn’t play games. The operator of a global chain of 50 casinos is pursuing a theme-focused innovation strategy similar to technology giant Hewlett-Packard and venture capital firm The Foundry Group. The company identified six areas of interest (akin to HP’s 8 themes and Foundry’s 5 themes – see Innovation Investment Strategy). Harrah’s target areas are: enabling technologies (such as wireless and radio frequency identification); enabling platforms (cloud computing, service-oriented architecture, anything-as-a-service); “smart” service (self-service kiosks); interactive CRM; next-generation gaming; and expanded channels to reach customers.

An innovation team of about 10 people from IT, marketing, customer service and gaming evaluate idea submissions from employees. Harrah’s also taps the innovations of vendors and is considering enlisting the public in seeking new innovations in gaming and entertainment. To gather even more feedback, Harrah’s created an “Innovation Portal” where employees can vote for their favorite innovation. Top management (CEO Gary Loveman and VP of Innovation Chris Chang) then decides which ideas ultimately get funded.

Action:

• Identify the areas of top priority to your firm, to help steer energy & momentum in the areas that will provide most value to your firm.
• Use themes to look for the deeper, long-term enablers and platforms rather than shallow short-term gadgets and projects.
• Ask employees for suggestions, feedback or votes on ideas within these areas
• Consider involving vendors, customers and the public as well, to expand the pool of ideas. (This strategy will require thinking through the IP issues.)

For more information on Harrah’s: Network Computing article