Point: Getting maximum benefit from innovation requires new organizational practices

Story: In their book Wired for Innovation, Erik Brynjolfsson and Adam Saunders show how innovation and IT drive productivity growth. Productivity growth explains how cars, for  example, went from costing an average of three years of salary a century ago to costing only seven months of salary today. Nor is this gain unique to high-tech products. Even eggs plummeted in their effective price in the last century, dropping from 149 minutes of salary to a mere 5 minutes of salary per dozen eggs. What brought about the productivity improvement? Technology has helped, but it’s not the only factor.

Analyzing both company IT investments and company practices,  Brynjolfsson and Saunders found that high IT spending, by itself, didn’t explain high productivity.  Some companies spent large sums on IT but seemed to have little to show for it.  Highly productive firms, it turns out, also made a set of complementary investments in people and processes.  Brynjolfsson and Saunders identified seven key practices:

1. Move from analog to digital processes: Don’t just automate paper-based practices.  Invest in new ways of doing business enabled by IT (e.g., daily tracking of key performance indicators, enhanced alerts on exceptional events, global collaboration on innovation, etc.)
2. Open information access: Give employees all the information they need to accomplish and accelerate their jobs; in contrast, restrictive access impedes information flow and slows down work.
3. Empowerment: Give employees the authority to make decisions. Information has no economic value if it doesn’t change a decision. The sooner the information can affect a decision and the sooner the decision gets implemented (i.e., by the frontline employee), the better.
4. Performance-based incentives: Reward individuals for their now-measurable contribution to the firm, not just for their years of service, as with traditional seniority-based pay.
5. Cohesive corporate culture: Create cultural cohesion and strategic focus so that employees work toward shared goals that matter.
6. Recruit the right people: The productivity boost provided by technology depends on the quality of the people who use it, particularly when giving employees more information and authority to make decisions.
7. Training: Invest in people by training them to use digital processes, find the right information, make good decisions, and reach their incentive goals.

Action

• Don’t just invest in technology; invest in new processes
• Broaden information access and decision rights
• Invest in training, merit pay, and recruiting

Point: Tools and processes — PepsiCo’s 72-hour IdeaJams, Kraft’s R&D Suite with online lab notebooks, and MWH Global’s Idea Hub — speed innovation by enabling quick access to new ideas, prior art, and company-wide participation.

Story: Innovation accelerates business growth by providing the new products, services, processes, and business models that help an organization reach new markets and new levels of organizational performance.  But how can organizations accelerate innovation?  Several speakers at the World Research Group‘s annual Open Innovation Summit in Orlando described ways to accelerate innovation.

Dr. John Johnson of PepsiCo described how the company uses fast-cycle IdeaJams to quickly focus the efforts of a crowd of innovators on a specific challenge and quickly generate usable ideas.  Too often, innovation processes expand to fill the time available — if you only review innovation once a year, then innovation projects will take 12 months.  Instead, PepsiCo’s IdeaJams are 72-hour events, well publicized in advance to gain comapny-wide participation and excitement.  Employees can even participate using mobile phones to text their answers.

Many organizations, such as MWH Global (a wet infrastructure engineering services company), have knowledge workers who generate innovative ideas every day in the course of their daily tasks. But even if innovation comes fast and furious at the individual worker level, MWH found that the company-wide rate of innovation depends on the rate of spread of ideas from individual knowledge workers to broader deployment. To increase the velocity of innovation, MWH created an Idea Hub where people can post, see, vote and discuss ideas, said MWH’s Senior Innovation Specialist Kelli Shuter Cessna.  To encourage participation, MWH focused on finding highly-visible “knowledge brokers” in the organization and displaying a “hot list” of the top participants.

Steve Goers, Vice President of Open Innovation, Investment Strategy, R&D and Quality at Kraft Foods talked about the flipside of generating innovation, namely using pre-existing solutions more effectively.   Kraft noticed that too many innovators jump directly from idea to development without looking around inside and outside the organization to leverage pre-existing solutions.  To remedy this, Kraft implemented knowledge management and open innovation processes to help find and reuse internal and external knowledge.  Kraft found that reuse is faster than reinvention. When Kraft started work on its recently launched Deli Fresh line of presliced meat, it discovered a solution proposed 12 years ago that was viable now. The pre-existing solution trimmed 4 months off the product development effort.  Although developers don’t want to take the time to search existing information sources, Goers said that people sometimes need to “go slow to go fast.”

Action:

• Design fast-paced innovation efforts to accelerate innovation schedules.
• Encourage the spread information across the organization to increase the velocity of adoption of new ideas.
• Encourage seeking information from across the organization (and from outside) to avoid delays in reinvention.

Point: Dividing work into microtasks and using software to manage quality enables outsourcing of work directly to billions of workers worldwide

Story: One month after launching in Kenya, startup Txteagle Inc became one of the country’s largest employers with a workforce of 10,000 Kenyans. Let’s look at what Txteagle does and the implications for managers and employees worldwide.
In 2008, former MIT Research Scientist Nathan Eagle founded Txteagle (now Jana Mobile), with the idea of marrying crowdsourcing to cellphones.  Txteagle deconstructs work into microtasks that can be performed on any simple mobile phone through texting. Txteagle distributes the microtasks to thousands of workers (currently primarily in Africa) who complete them and get paid via the mobile phone either in airtime minutes or in cash through the M-Pesa service.
“Txteagle is a commercial corporation that enables people to earn small amounts of money on their mobile phones by completing simple tasks for our corporate clients,” says Eagle.
The types of tasks Txteagle’s African workers have done are:
* enter details of local road signs for creating satellite navigation systems
* translate mobile-phone menu functions into the 62 African dialects (for Nokia)
* collect address data for business directories
* fill out surveys for international agencies
Txteagle seems similar to Amazon’s Mechanical Turk, except that workers only need a simple mobile phone – no computer or Internet access is needed. TxtEagle now has partnerships with 220 mobile operators in more than 80 countries.  This expands Txteagle’s reach to 2.1 billion cellphone users in sub-Saharan Africa, Brazil and India, who can all participate as workers. Currently, the firm earns revenues 49 countries.
At first glance, managing 10,000+ workers — not to mention controlling quality — seems daunting. Txteagle solves the problem through algorithms.  “Instead of using managerial staff to oversee accuracy and quality, we use math,” Eagle says. Txteagle’s algorithms infer the correct answer by asking more than one person, Eagle said.  Txteagle also tracks each worker’s accuracy and rewards the best workers. “If they get a lot of right answers in a row, we pay them more for each answer,” Eagle says.

Win/win/win/win for everyone:
For companies in the developed world:
* lowers labor costs through access to a worldwide workforce
* access real-time local expertise in language, business, markets, and conditions
For developed-world workers
* make extra money during downtime
* flextime work
For developing-world workers
* access to work despite local economic conditions
* lets women work remotely
Entrepreneurs everywhere have to opportunity to design work in a new way and not need employees on the payroll in order to get work done.

Action

• Think about the information that ordinary people in foreign markets could collect for your business, such as market  conditions, surveys, local business prospects
• Consider overcoming language hurdles that keep your products from succeeding in diverse economies
• Think about tasks anyone in the world might do during a few minutes to spare
• Imagine how 2.1 billion people could work for you one text at a time

Sources:

Txteagle (now Jana Mobile)

Jessica Vaughn, “Q&A: Nathan Eagle, founder of txteagle,” JWT Intelligence  March 3, 2010 http://www.jwtintelligence.com/2010/03/qa-nathan-eagle-founder-of-txteagle/

Robert Bain, “The power of text in the developing world,”  20 January 2011 http://www.research-live.com/features/the-power-of-text-in-the-developing-world/4004395.article

Kate Greene, “Crowd-Sourcing the World,” MIT Tech Review, Jan 21, 2009 http://www.technologyreview.com/business/21983/

Nathan Eagle presentation at TedxBoulder, August 7, 2010