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The sources of innovation are changing. As communication channels evolve, companies must learn new ways to open up to customers and collaborate with employees and third parties in order to develop ideas. Harnessing those insights so that experimentation and business strategy are aligned is a major headache, but it’s one that must be dealt with if organisations are to stay competitive.

Social media presents an opportunity to rapidly create communities with employees and customers, but for genuine engagement and innovation to happen something more sophisticated is required from businesses. Tulsi Naidu, Operations Director for UK & Europe at Prudential, says: “I suspect all businesses now are doing a range of blogs and Twitter-type interactions, but I’m particularly excited about our ‘colleague ideas’ portal which we launched about a year ago.

“It’s an open portal which started guerrilla-style through a home-coded collaboration forum by a bunch of IT colleagues, and is now being rolled out to over a thousand people. It has a lot of energy around it because people tend to dive in every day, look at their favourite ideas and post comments.”

Ruth Cairnie, Executive Vice-President of Strategy and Planning for Shell International, explains that a programme was introduced to capture innovative suggestions from employees and external parties. “Entrepreneurs in all kinds of organisations can submit their ideas to us and we have a team of people who vet those ideas, decide which ones would have potential, then they can be supported with investment and expertise to turn an idea into reality,” she says, noting that one such suggestion, relating to a floating liquefied natural gas facility, is “now on its way to become part of a world-class project”.

Ideas have to be shaped so that they inform the business strategy. Annette Burgess, Commercial Director of books and stationery wholesaler Baker & Taylor UK, says: “All stakeholders need to play an active role in social innovation, but I think there needs to be a gatekeeper in terms of looking at what points and which conversations should go onto these social innovation platforms. The difficulty is that as well as having all these meaningful conversation, not all ideas will be taken forward in this collaborative process, so somebody needs to steer the initial conversations.”

Paul Baxter, Social Business Leader at IBM, explains that the company engages in real-time conversations internally for the purpose of innovating. “It could be around redefining corporate values, which we have done, or it might be about thinking how we redefine our product or service proposition in the marketplace,” he says. “Everybody in the organisation will come online and contribute but, importantly, it’s not just an opportunity to gripe about anything that comes to mind, it is structured around key themes which are carefully moderated.

“In terms of how you derive insight from that mass of data, we use our analytical tools to look at what the hotspots are around the conversation, what the key influences are and then, as an output, we’ll make sure we go back to check that everyone is up-to-date with what the main insights are that came out of that very large online conversation, and which ideas are going to be taken forward.”

Rock the boat

There has to be a leap of faith from executive teams in how ideas are encouraged and rewarded. After all, as much as introducing something ‘new’ is perceived to be good, the reality is that it can stir up friction within an organisation. “You need to welcome change and innovation, but many business leaders are absolutely terrified of it,” says Don Elgie, CEO of insight and communications company Creston.

In a number of industries, the pace of change is relentless. Simon Johnson, UK and International Group Managing Director for publisher HarperCollins, comments: “If you’re not creating fresh approaches, you’re in trouble. Our ability to do this is a key competitive advantage because, while we aren’t trying to become the biggest publisher in the world, we are trying to build the fastest, most creative, nimble and innovative business.”

Beyond driving ideas through social media and variations of crowdsourcing, the fundamental problem within a vast number of companies is how to create an innovative culture. It requires maintaining the traditional hierarchy, operations and efficiencies within the organisation while, at the same time, there is effectively a shadow business running alongside which is agile, flatter in structure and able to drive new strategy development and product innovation.

This leads to conflicts about culture, performance measurement (think of the traditional retailers fighting their 'space vs online' battles) and degrees of permissible experimentation. Where exactly is the line between hitting quarterly targets and securing the long-term future and success of the business? Just how far can innovation be pushed within an organisation so that it doesn’t just undermine day-to-day performance, but even produces ideas that render the existing business obsolete?

Each company has to decide on its boundaries and definitions of success. Simon comments: “It’s about avoiding the 'innovators dilemma'. For a business like ours, which has been around for a long period of time, it’s vital that we are the disruptor and not the disrupted. That may mean at some stage disrupting your own business model, not just focusing on the short-term financial targets. Generally, incumbents have a predisposition to not evolve because they are worried about destroying their legacy business.”

This can be kept at bay if the focus is on the customer and defined goals. Tulsi comments: “We’ve made a point of saying everything must have a conclusion and being able to go in and look at the graphs that tell you how many ideas you have on there, what stage of the process they are in and whether they are under consideration, in implementation or have been stopped from further progress.”

If the engagement and passion are right, then ideas should flow. Costas Markides, Criticaleye Thought Leader and Professor of Strategy and Entrepreneurship at London Business School, comments that “ideas can come from anybody, anywhere, anytime so any processes that help to put this philosophy into practice are welcome”. Although there is nothing particularly new about this per se, he does acknowledge that the speed at which technology can be used to galvanise the ideas of numerous people does give a different twist to innovation.

Paul says: “Over the next decade or so, companies will start to think about how they foster, measure and reward collaboration and knowledge-sharing internally. Rather than just being about how much business you have sold or how much revenue you have earned, the extent to which people are collaborating and seen to be leading thinkers within the business, and the ability to put some objective measures around this, will be built into some of the HR scorecards of the future.”

No one is saying this is easy, but executives must be brave and experiment rather than assume that the old ways of creative thinking are going to provide the competitive edge going forward.

I hope to see you soon.