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APPROPRIABILITY, PROXIMITY, ROUTINES AND INNOVATION Copenhagen, CBS, Denmark, June 18 - 20, 2007

KILLING THE MYTH OF WEB BASED CREATIVITY Sigvald Harryson Lund University Institute of Economic Research sigvald.harryson@hik.se Sandra Kliknaite Baltic Business School/Lund University Business Administrati sandra.kliknaite@hik.se

Abstract: Our paper explores the web based approaches used by BMW and Nokia to source outside ideas and compares this approach with an approach used by a mobile operator based entirely on human interaction to drive innovation. Although our first two companies have made significant investments in web based approaches to receive thousands of ideas per year, none of the companies has created a single good innovation through the web based approach yet. By contrast, the human interaction approach used by our third case company created a unique degree of entrepreneurship

JEL - codes: M, L, L


Killing the Myth of Web Based Creativity

Our paper explores the web based approaches used by BMW and Nokia to source outside ideas and compares this approach with an approach used by a mobile operator – based entirely on human interaction to drive innovation. Although our first two companies have made significant investments in web based approaches to receive thousands of ideas per year, none of the companies has created a single good innovation through the web based approach yet. By contrast, the human interaction approach used by our third case company created a unique degree of entrepreneurship. Mobile turned the whole company into an organic idea-creation network by introducing a networked growth through innovation (GTI) process cutting across the core rigidities that had blocked innovation for several years. The process includes the definition of a strategic framework, structured brainstorming sessions along selected strategic themes, selection of ideas, a competition between the employees to choose a selected idea and write the best business plan for it, and finally the implementation of the winning idea. It is a comprehensive process that aims to bridge the gap between exploration and exploitation. Key words: Web based idea management, creativity, entrepreneurial culture, innovation management approaches Proposing a Theoretical Framework to Analyse Creativity and Innovation There is an increasingly accepted view that the competitive advantage of companies depends on their ability to create, extract and protect difficult to imitate knowledge assets. However much of the knowledge has a limited usefulness unless it is combined in some way (Teece, 2001). The ability of the company to bundle the in-house knowledge along with the externally sourced knowledge in new combinations enables competitive new products and services to be developed. Over the past two decades, the ‘ideal’ models of and processes for innovation have experienced a linear evolution from a traditional closed system towards more or less exclusively open and strategically networked systems (Nyström, 1990; Pisano, 1990; 1991;


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Salford, 1995; Berthon et al., 1999; Rigby and Zook, 2002; Sawhney, 2002; Chesbrough, 2003). The academic analysis of this evolution was initiated by Teece (1986), tackling the role of specialised complementary assets in successful innovation pursued by a company. He purports that innovators who do not have access to relevant specialised and co-specialised assets may ultimately loose profits to imitators, other competitors, or the owners of the specialized and co specialised assets. Shenkar and Li (1999) claim that the need to obtain complementary assets can be a principal driver in the decision to initiate and exploit alliances. Due to integration of complementary assets the synthesis and creation of knowledge base not available by any partner on its own becomes possible. Networked innovation (Hellström and Malmquist, 2000; Hardy et al., 2003; Radjou, 2005) is thus becoming increasingly important for organisations as they attempt to respond to rapidly changing environments and deal with interdependent and complex bundles of knowledge through forging of innovation alliances. We believe that a networked innovation perspective has the potential to add an important dimension for a better understanding of the dynamics of organisational knowledge transfer and innovation. Networks emerge because no organisation is self-sufficient in R&D, but rather dependent on extra-organisational resources for its sustained competitiveness. As each individual product development activity can be seen as part of a total knowledge creation process, which in turn may be an integral feature of a specific network, it follows that a network perspective will help us more fully to understand corporate technology and innovation management processes. With respect to the increasing intensity and extensity of knowledge, companies need to excel both at in-house research and at cooperative research with external partners, to move quickly in identifying new projects and funnelling them inside the organisation for accelerated innovation (Ahuja, 2000; Hedlund, 1995). In this context, it seems that new forms of organisational flexibility and learning alliances are required to adapt to substantial and uncertain changes in the environments (Lorange, 1996). Firms tap the potential of external sourcing strategies and learning partnerships to acquire new knowledge and reduce uncertainty in R&D. According to leading literature (Badaracco, 1991; Bleeke and Ernst, 1993; Contractor and Lorange, 1988; Hagedoorn and Schakenraad, 1994), the essential factors contributing to this trend include: • • •

The growth in cross-technology and field interdisciplinarity. The globalisation of technology and proliferation of sources. The necessity for rapid commercialisation at reduced risk and cost.

While these arguments are valid, they neglect one perhaps equally important aspect, which is related to the use of learning through external networking not only to retrieve new knowledge, but also to improve the mechanisms in which people learn from each other and transfer knowledge within the company. An interesting finding from the research on a selection of technology innovation leadership companies in Japan and Europe (Harryson 1998, Harryson 2006; Harryson and Lorange, 2005) is that external sourcing of technologies and skills does not have to result in a phasing out of internal R&D capabilities. Quite the contrary, it seems to stimulate and create a unique flexibility to network tacit knowledge and disruptive technologies into innovation through an increased focus on external know-who – as opposed to internal know-how. This flexibility does not seem to have been covered extensively so far in the current literature on the topic – nor how to leverage learning alliances across extra- and intra-corporate levels to support both exploration and exploitation of innovation. These two consecutive phases of the innovation


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process also seem to rely on fundamentally different types and structures of networks – as outlined below. Open and Closed Networks Along the connectivity dimension of the social network, a distinction is made between open and closed social networks. Based on the idea that organisations are embedded in social ties (Granovetter, 1985), the characteristics of these networks are also assumed to be valid at the organisational level of the network. In most research on innovation networks, this similarity is taken for granted and is not discussed (e.g., Ahuja, 2000; Gulati, 1999; Gulati and Garguilo, 1999). The open network is mainly about resource exchange of information, while the closed network focuses on social exchange, trust and shared norms (Walker et al, 1997. An example of an open network is one in which firms have direct social contacts with all their partners, but these partners do not have any direct contacts with each other. A high number of such non-connected parties, or structural holes, means that the network consists of few redundant contacts and is information rich, since people on either side of the hole have access to different flows of information (Burt, 1992). Burt (1993) claims that to enhance network efficiency an actor should focus on maintaining only primary contacts and delegate the task of maintaining all (complementary) contacts to these primary contacts. The major selection criterion for such partners then concerns how many contacts they have. This implies that the structure of an open network is suitable when the purpose of the network is knowledge creation by maximising the number of contacts gathering, processing and screening new sources of information. This kind of innovation network then stresses the indirect linkage, has mainly weak relationships and is loosely coupled. The opposite is the tightly coupled closed network, where all partners have direct and strong ties with each other. This network is centered on social capital, which is built through trust and shared norms and behaviour (Coleman, 1988). Embeddedness in dense networks supports effective knowledge transfer and interfirm cooperation (Granovetter, 1985; Walker et al, 1997). We believe that this type of network is required for exploitation, but not suited for exploration. The contradiction between open and closed networks is also stressed by Ahuja (2000), who proposes that the larger the number of structural holes spanned by a firm, the greater its innovation output. There seems to be a trade-off between a large network that maximises information benefits and a smaller network promoting trust building and more reliable information. This contraction is studied by Soda et al. (2004) regarding the organization of project teams. They found that the best performing teams (transformation networks) are those with strong ties among the project members based on past joint-experience, but with a multitude of current weak ties to complementary (non-redundant) resources. If we summarise the complementary networking theories in a model, it would seem that the network structure required for exploration is the absolute opposite of the one required to support exploitation. We can also conclude from the literature that a project team should have its nucleus in the North-Eastern corner of Figure 1, but also have a multitude of current weak ties into the open networks – as represented by the opposing South-Western corner. However, we have not found any advice in the literature on how to secure learning within, or how to transfer the knowledge from one network structure into another. -----------------------------------------------------------------


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Insert Figure 1 about here ----------------------------------------------------------------Our cases will illustrate and analyse how to combine the benefits of both opposing corners of Figure 1. In particular, we think it is important to leverage the strength of weak ties to secure creativity and multitude in the concept creation phase – as illustrated below.

The Strength of Weak Ties in the Creativity Phase Granovetter set the stage for examination of the importance of weak ties in linking unconnected networks (1973, 106). He distinguishes between weak ties (ties to partners characterised by infrequent and more distant contact) and strong ties (close, frequent and based on trust communication). His line of argument purports that individuals with few weak ties have difficulties to be up-to-date with information from distant parts of the social system, and that ‘social systems lacking in weak ties will be fragmented and incoherent’. His argument has implications for innovation, in that novel ideas more often emanate through weak ties from the margins of a specific network rather than through strong ties from its core. Accordingly, the relative strength of weak ties can transform marginal idea creating networks into a new nucleus of innovation. This notion presents challenges to the innovation management: if the idea creation process is centred around marginal networks and their relatively unstructured weak ties, it becomes cumbersome to manage the main source of innovation and hence also difficult to control the innovation process as a whole – at least if attempted to do it all within one and the same company. It may be that innovation implies the need to develop a capability to manage both weak and strong ties cutting across both peripheral and core networks with a strong focus on developing and managing relationships for transfer and transformation of information into innovation. Following Granovetter (1973), Hansen (1999) uses a network study to explore how weak inter-unit ties help a new product development team with purposeful knowledge-sharing. His findings are that while weak ties help the team find new knowledge located in other units, they are not useful in supporting the actual transfer of complex knowledge. The more complex the knowledge, the stronger the ties required to support its transfer. Research findings by Uzzi (1996), Rowley et al. (2000) and Van Wijk et al. (2004) confirm that strong ties are positively related to firm performance when the environment demands a relatively high degree of exploitation and weak ties are beneficial for exploration purposes and to prevent the network’s insulation from market imperatives. Based on the arguments outlined above, it seems reasonable to assume that strong and weak ties are complementary from the perspective of time, and that the structure of an ideal network should maximise the yield per primary contact. We also learn that weak ties are likely to accelerate development speed in early phases of exploration when the required knowledge is not complex. Conversely, weak ties may slow down speed in situations of high knowledge complexity where strong ties are required to support exploitation of innovation. It seems that radical innovation requires management of both weak and strong ties cutting across both peripheral and core networks with a strong focus on developing and managing relationships for transfer and transformation of information into innovation across multiple


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levels. Based on these arguments, we draw on Harryson (2002; 2006) to make a distinction between three interrelated network levels with different foci: •

Extracorporate creativity networks with weak ties as primary sources of specialised knowledge and technology focused on exploration through collaboration with external partners; Intracorporate process networks with strong ties focused on exploitation of innovation through strong linkages between R&D and marketing & sales (M&S) for market alignment, and from R&D to design & manufacturing (D&M) for commercialisation; Transformation networks focused on interlinking the complementary creativity networks and process networks. This is where and how the connection between exploration and exploitation seems to happen.

----------------------------------------------------------------Insert Figure 2 about here -----------------------------------------------------------------

Our model serves as a starting point of the theoretical framework and guides the empirical as well as the theoretical analysis. The perhaps less well-explored challenge seems to be how to manage external ‘creativity networks’ both for steering of direction during exploration, and for transformation and internalisation of the results so as to secure exploitation of innovation. In this context, we see a strong need to understand the role of web based tools to source external ideas and to what extent such ideas can lead to exploitation. Similarly, we will analyse how a human-interaction based approach to creation and implementation of ideas can bridge the gap outlined in Figure 2.

Methodology The methodological strategy behind this research is mainly abductive, being a mix of deduction and induction (Alvesson and Sköldberg, 1994; Jansson et al., 1995; Dubois and Gadde, 2002). The purpose is refinement and application of a theoretical framework to brief empirical cases, rather than theory generation based on grounded theory approaches. The empirical support of a theory is continuously assessed, or, inversely, a reality’s theoretical support investigated through the matching of theories with realities. This process has started from a more preliminary frame of reference, using the case-study approach (e.g., Merriam, 1998; Yin, 1991). The framework has been continuously refined through changing perspectives between deductive and inductive approaches. The final aim is to create a more solid theoretical and empirical base, while at the same time strengthening the practical validation of the research by making the results relevant for organizations and society. Through the in-depth case study method a large extent of information has been collected from a limited number of research units. The goal was to gain a deeper understanding and knowledge of ‘how’ a selected few companies in Europe – typically seen as innovation leaders in their respective businesses – manage their external collaborations to enhance impact and speed of cost efficient innovation. The primary instruments in the data collection have been interviews with audio recording and transcribing, including several types of documentation. There has been a continuous interchange between empirical data and theory, as empirical findings initiated the search for further theories.


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Internal validity concern has been addressed through the use of multiple sources for the case studies in terms of number of interviewees and their positions in the organizations. Complementary information has been gathered from corporate publications and from other literature. The issue of construct validity and reliability have been addressed by always having the cases reviewed by the companies in several iterations, and also by organising two seminars in which we have presented the empirical research to the benchmarking companies for an open dialogue on best practices regarding external idea acquisition. A total of 60 interviews were conducted between 2002 and early 2006 in this research context. The information obtained during the interviews was summarized as soon as possible after each interview and sent back for review. Effort was also put into identifying the proper (additional) person(s) to interview. In addition, we ran several master theses and one PhD project related to web based innovation and innovation networks. Since our empirical research is based on three different companies of different size and industry we believe that a good base for generalisation is offered – within reasonable limits. The process – as outlined above – of jointly reviewing the results with the research partners has partly also served the purpose of enhancing generalisability.

Killing the Myth of Web-Based Creativity by Bringing in the Human Dimension Many champions of innovation have started to use the web and sophisticated portals to attract and assemble external ideas and expertise as an attempt to strengthen their innovation impact. The question that remains unanswered so far is: to what extent can web based approaches drive creativity and entrepreneurship for breakthrough innovation? Companies such as BMW, Bose, Nestlé, Nokia, Procter & Gamble and Virgin, are using the internet to attract and acquire external ideas. Their approaches are showing a significant degree of diversity. Some companies require the ideas to be patent-protected before submission. Other companies state that the one who submits the idea will never get rewarded for it. Other companies hang out significant rewards for good ideas, but have not paid a single cent after four years of operation and several thousand ideas received. Other companies offer detailed explanations and illustrations of how the ideas can go further into different venturing avenues. It is yet too early to identify any significant degree of success in using the internet for creatively to plan, organize and assemble knowledge for efficient innovation output. The challenge is to build a “brainpower-pull effect” and attract relevant additional brainpower and ideas without drowning in useless ideas from irrelevant sources. The research presented in our paper is based on in-depth comparisons of the web based approaches of BMW and Nokia with a human interaction based approach of a Finnish operator called Mobile in our paper. The Virtual Innovation Agency of BMW BMW holds one of the most resourceful and cutting-edge internal R&D networks and resources in the industry. An additional source of external brainpower that BMW attempts to leverage is the pool of lone inventors, competent contractors and SMEs. To this end, BMW has established a gateway called the Virtual Innovation Agency (VIA) – a direct online communication platform for all external parties interested in submitting innovative ideas. It is aimed at collecting external ideas for product or process innovations and improvements from anywhere in the world through the internet. Currently, VIA does not restrict access to a particular target audience, and all ideas from anyone with access to the web can be submitted. However, the preferred audience it is trying to reach are SMEs which have not yet been


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awarded contracts with BMW and which might otherwise find it difficult to get in contact with the company. VIA can be accessed through BMW’s international group website bmwgroup.com/via. The platform has been running for several years, but is not yet delivering its full potential in terms of applicable innovation impulses that BMW is looking for. Since the launch of VIA in 1999, the number of received ideas per year has progressed from 350 per year to 1000 ideas received in 2004. Still, only one out of 800 ideas leads to improvement / added features to an ongoing project. The majority of submissions had been made by private entities, rather than smaller suppliers or technology providers which did not already work for BMW. Geographically, there also seemed to be a strong predominance of submissions from Asian or middle Eastern origin, with the most productive country being Afghanistan. In order to justify its existence, VIA needs to attract better ideas in a more cost efficient way so as to enhance the return on ideas.

Submission Process VIA’s interface states clearly that SMEs are addressed. At the same time, however, it is also clearly stated that rewards for successful ideas will be paid, with a maximum amount of €50,000. Due to this strong incentive, and without any restrictions which could complicate or hinder submission for anyone with access to the web, many submissions from individuals without relevant expertise are entered. Submission can be made by ordinary mail or email, by filling out a submission form. Ideas do not have to be patented or otherwise protected, although they can be. Screening Process Once an idea has been submitted, it will be sent to an “idea mailbox” including electronic and ordinary post which is screened by a member of the VIA team at BMW. The first initial screening represents the first filter by which ideas are evaluated. If it is clear at this stage that the submitted contribution does not yield any benefit to BMW, it is discarded and a refusal reply sent to the submitter in the same way as the idea was supplied, i.e. by email or post. Candidates with potential receive closer scrutiny. Frequently, specialist knowledge is required at this stage in order to be able to assess the idea appropriately. This is where the so-called Innovation Field Managers are contacted. Innovation Field Manager comprise experts which have been appointed from all possible specialist areas and are able to provide counsel on specialist areas of expertise. The expert in the corresponding area of expertise is forwarded the more promising ideas for assessment. Should the Innovation Field Manager recognize concrete value in an idea, the submitter of the idea will be contacted and a meeting arranged to discuss the submission in more detail. How VIA contributes to R&D and Innovation The output from VIA is not restricted to basic research, development new product development or product/process innovation only, but rather, is intended to remain open for impulses which can be applied at all levels of the innovation process. Thus, VIA is able to provide impetus for new research/development at the same time as feeding into existing projects or processes. This versatility is achieved by passing on promising ideas directly to the ‘Innovation Field Managers’ and thus achieving and filtering down impulses to experts directly and effectively. By using the internet as a platform, dispersed, talented individuals can be united and contribute to technological and scientific problems through one channel. The internet also represents a highly effective way of tapping external knowledge, since it is relatively cost


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efficient to maintain, and does not require costly push-marketing to be communicated. VIA’s global reach is also a strong point, especially when considering the alternative of having decentralised R&D units or listening posts in all key markets in the world. Thanks to the global reach of VIA, BMW can maintain fairly centralised R&D functions and still get impulses from markets beyond the lead regions. Furthermore, VIA enables the integration of specialised SMEs in relevant technological fields which are currently not part of the supplier network. Especially with critical pace of technology development, new players in emerging technologies could be spotted earlier, by being encouraged to submit their innovation through the online portal. This way, a network of specialised, smaller SMEs which are difficult to ‘get on the radar’ are intended to be connected to BMW, forming a flexible net of weak ties, which can be called upon and transferred into strong ties once a mutually resource consisting of expertise is signalled. Shortcomings of VIA While we can clearly see the benefits of a system such as VIA and its contribution to innovation at BMW, there are also areas where VIA does not fully comply with the Innovation concept. Let us briefly outline these here: • • •

VIA’s channel is not focused exclusively on a target group of SME’s with specialised, complementary knowledge; Internal problems are not exposed to VIA users to provide external expertise from private enthusiasts for case-specific problem-solving; Processing ideas and input exclusively through internal channel and restricting them to on-going processes limits the potential of these ideas – in addition to internal, external ways of utilising ideas are not in place.

It is explicitly stated on the VIA portal that the purpose of the idea submission portal is to attract ideas and suggestions from SMEs in relevant technology fields which have not been awarded contracts with BMW in the past, and which thereby would otherwise face difficulties getting access to the OEM. However, BMW has recognised the huge potential the burgeoning SME sector can offer, since, with a view on the faster-moving technology areas, this sector is very difficult to monitor. Schumpeterian creative destruction often threatening established players in theses areas create the need to be able to find another, more attuned monitoring mechanism to keep up with developments. Currently, however, idea input predominantly comes from sources with lower levels of expertise of little value for the OEM. Despite the fact that the specific intent of attracting the desired target group is clearly stated on the website, the monetary reward offered for successful submissions, people outside the target group are attracted to supply ideas. Another aspect of open innovation, exposing internal problems to external expertise is another area VIA does currently not comprise. It has often been claimed, that ideas submitted are rarely anything new and are met with ‘been there done that’ reactions of engineers. By posting concrete problems on the website which could then be solved by VIA users, the portal could provide further value, increasing quality of input and support internal staff. Naturally, by exposing internal development or research topics, these would also be subject to observation from competitors. However, the homogeneity of the car industry means that competitors are usually quite aware of the status of each other’s development already. Thirdly, there is currently no process in place which would enable submitted ideas to be exposed to external ways to market. Using an ‘inside-out-approach’ for ideas which do not pass all filter levels, but might prove valuable for other companies, could be taken forward and exposed to the market and could possibly create additional commercial value.


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How Nokia Moved from Technology to Business Nokia has experienced an evolution almost identical to that of BMW. Nokia has an Internet based platform for external idea submission. This platform was also established in 1999, and the aim was to receive ideas mainly for technological innovations to see the breakthroughs that Nokia can do in the area of mobile phones. Since then website has been changed, and the latest version is from two years ago when it was updated to better respond to current needs. Today, Nokia is not concentrating on technological innovations anymore, but focuses instead on getting more certain specific ideas, business models, and focus points. Submission and Screening Process The external idea management process in Nokia Ventures Organisation (NVO) begins when someone submits an idea. First of all the person submitting the idea has to agree that the idea is not submitted in any confidentiality. The idea will go to the idea mailbox, after which the team members assigned to external venturing will evaluate the idea. If the proposal looks interesting, more information, or a full business plan is asked for. After this, the idea is sent further to the internal decision making team for evaluation. If the idea is accepted, further discussions take place, and Non-Disclosure Agreements (NDA’s) are usually signed. If not, the idea is killed immediately. NVO aims at a maximum response time of two weeks. Big part of the ideas coming in are mobile phone related designs or accessories for phones. These ideas are not the main interest of NVO, because Nokia has a full internal design process taken care by professionals. In fact, design related ideas are not forwarded, but the entrepreneurs are asked to contact the local Nokia Organizations in their own geographies if they want to try another entry to sell their ideas. If there is something exceptionally innovative in the solution, NVO will respond straight to the submitter with an invitation to come and discuss the idea directly with NVO. How NVO platform contributes to R&D and Innovation Some 500 ideas are submitted through the website yearly, and it takes 300-400 ideas in to get one good out. So far, there have not been any breakthrough ideas coming purely through the Internet platform. For the few breakthrough ideas that have been found from the external environment, the website has only been one part of the inventor’s approach to Nokia. The Head of External Projects, Shashank Jain, points out that good ideas with breakthrough potential usually come from many different directions, website being only one way to submit the proposal. The guys who are good approach us through the website, but they also manage to find out somebody internally who they approach as well. So then you have a proposal coming in from two or three different directions. (Shashank Jain, interview, 8.2.06) Those persons who really believe in their idea will find someone internally to help them to get the idea in. Internal references are very important. Mr. Jain explains that persons who have really good idea, may at times contact their local Nokia organization, and when approaching NVO through Internet platform, they will use their local references. Problem with ideas coming purely through website is that they are typically not very far in the development. You have to be a bit more mature in describing what your business plan is, what your potential is and what are your competitive advantages, and those things are not very clear to a person who is just having an idea. (Shashank Jain, interview,


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19.3.06) Nokia’s main target group for the website is small or medium sized companies, with ideas that are close to commercialization. Individuals are not ignored, but if an individual has developed an application, he will usually not approach to Nokia but other intermediaries like Forum Nokia (a market place for applications) or non-Nokia entities. If it is a product idea, it is usually in a too early stage of development to be of any value to Nokia. Nokia does not market the Internet page any way, but makes an effort to reach the most interesting target groups more directly than through the portal. Strength and Shortcomings of the NVO Platform One strength of NVO’s platform is that is fairly simple and without any middlemen so that the idea comes directly to people who make decisions. In the future, NVO plans to define the focus more clearly, e.g. by giving practical examples in the web site. The challenge is to find the right balance in giving information, giving some guidelines what is wanted, but not narrowing down the range too much. Most importantly, the focus is expanded to cover new business ideas – as opposed to pure technology ideas. The Human Interaction Approach Applied by Mobile Our third case company, Mobile, experienced intensive growth with excessive divisionalisation and nearly lost its ability to innovate in the late 1990s. Similarly to the two previous case companies, Mobile realised an urgent need to enhance its innovation capability at the millennium shift so as to regain market leadership. Instead of implementing a webbased solution to source external ideas, Mobile implemented a highly networked growth through innovation (GTI) process to promote an entrepreneurial culture and build a sustainable innovation capability based on several key-elements: •

• •

Systematic scenario analyses to regularly define the most important drivers of innovation, coupled with need-based segmentation elements to distil the most important customers needs and enhance the degree of early adoption; Development of a solid strategic framework for innovation – based on the first point – with clear selection criteria to focus and filter the results of idea generation; Structured brainstorming sessions with a mixture of internal and external participants bringing scientists, technologists, designers, marketeers, finance managers and entrepreneurs together to accelerate creativity in desired areas of focus – as directed by the strategic framework; Networked process based on human interaction to move from creativity for bright sparks of ideas to implementation of solid business concepts focused on the value proposition itself – not on the underlying technology.

The six building-blocks of the GTI process are visualised in the illustration below: ----------------------------------------------------------------Insert Figure 3 about here ----------------------------------------------------------------The GTI process is based on manual idea creation through human interaction in carefully selected brainstorming groups. These groups are dominated by company external participants, but always also have internal participants to secure an early link to evaluation and implementation of the ideas. In this sense, the process builds new creativity networks (Figure


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2) encompassing internal brainpower from all critical BUs and external brainpower from other players in the value chain, such as other operators, suppliers, retailers, and specific segment groups such as students and the elderly. Idea generation always follows a focused and clearly communicated innovation strategy with specific brainstorming themes. The transition from early ideas to solid business concepts was secured through an internal innovation competition through which any employee was allowed to form a team and use any of the 1500 ideas from the brainstorming sessions and turn these into a winning business plan. The GTI process is organised as an organic network spanning across all the BUs through three different bodies: I. The GTI board, represented by five 10 per cent positions: 1. 2. 3. 4. 5.

CTO and chief innovation officer (combined function); Head of corporate planning/strategic business development; Head of R&D/Technology Centre; Head of operations/network operator; External consultant with experience in designing and applying strategic frameworks for innovation.

Total time investment: 0.5 FTE (Full Time Equivalent) to turn networked innovation into a natural behaviour for systematic growth through innovation. The roles of the GTI board are to: • Design, refine and communicate the strategic framework for innovation used to channel creativity and to assess ideas; • Apply the framework to assess and select the best concepts to be taken from screening to initial ranking and, further, to final ranking; • Secure resources from the organization to help refine the selected concepts; • Leverage their know-who to bring in additional experts on an ad hoc basis. II. The GTI driving team, represented by two positions: • • •

Internal project leader with significant project management and product planning experience, and a strong network within the company (80 per cent); External consultant with significant expertise in Growth Through Innovation Implementation, and a strong network into complementary external sources (20 per cent); Total time investment: 1.0 FTE.

The roles of the GTI driving team are to: • Plan the process and develop necessary templates; • Run internal and external interviews (barrier analysis; drivers of innovation; voting on favorite ideas) and analyse the results; • Drive the process including brainstorm organization and facilitation, meeting management, documentation and communication; • Prepare GTI board decision material; • Leverage their internal and external know-who to bring in additional experts on an ad hoc basis.


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III. The GTI Coaching Team, represented by 20 per cent positions from most BUs – represented by: • • • •

Either the head of product planning/development; or else The head of business development; or else Senior project managers; Total time investment: 1 - 1.5 FTE.

The roles of the GTI coaching are to: • Bring in BU specific needs/themes into brainstorms and transfer BU specific concepts back home; • Bring in their expertise into both screening of ideas, and ranking of concepts; • Working as formal coaches of concept teams selected to take specific concepts forward through feasibility studies; • Leverage their know-who to bring in experts on ad hoc basis; • Appoint the right receiver within their BU for concepts that will, eventually, be pursued partly or entirely within their BU. Reinventing the Entire Innovation Process with three FTEs To summarise the total manpower investment, between two and three FTEs are allocated to one GTI cycle – typically running between December and June each year. Through the strong focus of the know-who of all GTI contributors, an additional 100 (mainly external) people were involved on an ad hoc basis for participation in brainstorms or to bring their know-how into the feasibility studies. This may be one of the main reasons why the human based GTI process offered such a resource-efficient approach to creating, identifying and refining the best opportunities for growth through innovation. The automatic connection and collaboration between creators and implementers of ideas seems to offer advantages – analysed below. Analysis of emprical findings Referring back to figure 2, it seems that both BMW and Nokia are able to reach certain external creativity networks, but experience challenges both in terms of putting the right creativity networks together and in linking the resulting ideas to internal process networks for exploitation. In this sense, the web based approach seems to focus too exclusively on weak ties in open networks without ability to combine these with closed networks based on stronger ties. Might it be that this connection could be done only through human interaction? The overall idea of the GTI process was to create temporary creativity networks within the large hierarchical organization (process network) and provide the right strategic direction for idea creation towards clearly defined customer needs. As many members of the temporary creativity networks actually had their organizational home base in one of the process networks of Mobile, the link from exploration to exploitation was very effective and sometimes close to immediate. In addition, it was easy to bring in customers and strategic partners like students, handset manufacturers, or other operators into the brainstorming sessions, or the concept validation workshops, so as to involve the value network as a whole in a networked process of collective concept creation. The networked and collective nature of knowledge creation continued throughout the transition from early concepts with unclear market potential to candidates selected for feasibility studies and business planning towards clearly defined customer needs. This process


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was managed by small project networks, which reached out to selected sources of complementary know-how based on the know-who of the project network members. With respect to the typical challenge of continually diverging, or fractional, solutions generated through passive idea management systems versus the natural focus on integration in product development, the GTI process offered several countermeasures. First of all, the strategic framework with the clear selection criteria channelled idea generation towards the desired direction and dictated selection of the most relevant ideas/solutions/technologies. Secondly, by lifting out members from their process networks in strongly separated BUs and bringing them into one and the same boat with temporary creativity networks, a certain business relevance of the generated ideas was secured. Thirdly, by leveraging weak ties to external partners, such as lead users, suppliers, or retailers, who are also brought into the temporary creativity networks and their brainstorming sessions, both creativity-stimulating divergence and market relevance was secured in the idea generation. Fourthly, the early use of business plans to consolidate ideas and solutions triggered the point of convergence in the collective knowledge creation process – and hence contributed more strongly to implementation of the ideas. Finally, by having process network members part of the project networks that secure convergence and build the business plans, these members could act as human knowledge carriers supporting integration and implementation of the emerging concept in their respective function and business unit. Accordingly, the GTI process can bring both the left-hand and the right-hand side of Figure 2 together into one and the same company context and secure strong and immediate connections between creation and exploitation of new ideas. Conclusions The main conclusion from empirical study is that the Internet-based external idea sourcing platforms are not bringing in ideas with the quality that is required by the companies. This fact may relate to the limited resources available to the individuals, who are the main idea submitters to these platforms. Another finding from the research is that majority of the ‘innovations’ submitted through the web portals are not new to the companies’ internal R&D. The companies have high R&D investment and large R&D departments, and therefore an idea must be truly radical in order to attract their attention. Our research suggests that truly radical ideas will more commonly be generated through human interaction and the ‘meeting of different minds’ rather than through isolated idea submission by lone inventors. Some of the companies have realised that their system is not bringing the results they expected for. Thus, these companies do not specifically encourage ideas inflow, but they keep the platform open for marketing and image reasons. One aspect to keep the platform open is to get all the ideas in one place, which eases handling of them. Passive idea sourcing platforms do not bring expected results in any of the companies studied. In order to get high quality results from such platforms, a more active and human interaction based idea scouting process is needed. When discussing a passive platform, the quality can only be enhanced by creating awareness of the portal among its target group and by making the platform structured, so that an idea can only be submitted by answering a number of important questions, which would allow keeping the unwanted idea submitters out. Also by giving clear instructions of what type of ideas are searched for, better results can be achieved. The target group can only be reached by addressing them directly, for example, at the trade fairs, or creating awareness of the idea sourcing portals through marketing and PR.


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After analysing results of this research, it can be concluded that the following points require attention of company Internet based Idea Platform management: placement of the link, feedback time, creation of awareness within the target group, raising internal company knowledge about the platform, making the idea submission requirements stricter, frequently asked questions, expressing current technology needs of the company, user access to viewing all the submitted ideas, creating specialised external expert networks, and finally, licensing out of the ideas. The most relevant points are discussed in more detail below. Creating awareness about the portal within its target groups Currently, ideas are submitted to the Innovation Platforms mainly by individuals. In order to reach the desired target group, which are small- and medium-size firms as well as universities and research institutions, special marketing activities need to be carried out. One way to reach this target group is to carry out marketing and PR activities aimed at Innovation Platform’s popularization at relevant specialised industry trade fairs. Such activities would also raise company’s image as a highly innovative company. Further, placing PR articles in the relevant industry publications, directed at Innovation Platform’s target audience would also be useful. Another useful method of raising awareness about the Innovation Platform would be to organise a competition around a current technology problem that the is trying to solve. The competition should be marketed to the suppliers, R&D institutions, universities, and other relevant experts in the area, thus creating awareness among and within Internet Platform’s target audience. Making the idea submission requirements stricter Currently, there are only a couple of the steps that an idea submitter must complete for sending an idea in to the two portals. By making the idea submission process more extensive, a submitter’s credibility can be verified. Creating a drop-down menu where the submitter has to choose the category of the idea, and by asking the submitter to evaluate his/her idea and its potential value for the company, will make the submitter consider his/her idea more thoroughly before final submission is made. Expressing current company needs for ideas Currently, case companies receive ideas from various technology and science fields. Not all of these areas are of interest for the companies. By clearly stating their current needs on the Innovation Platform, the inflow of ideas could be narrowed down to the topics that are of interest to respective companies at the moment. One way to approach the issue is to simply state that for example ‘currently we are interested in the ideas related to electronics and materials’. Another, and a more effective method, would be to provide a drop-down menu, where a submitter has to choose the field that his/her idea belongs to, e.g., electronics, materials, etc. If he/ she cannot fit the idea into one of the categories provided, it would not be possible to submit it at all. Allowing users to see all the submitted ideas Another issue worth of consideration is allowing the portal visitors to view all the ideas submitted by the others. When the idea is seen and evaluated by a large number of people, the internal psychological barrier of posting it is higher and the potential for cross-fertilisation increases. However, in such approach, the intellectual ownership of an idea becomes more problematic. People might use ideas of others, possibly develop them further, and submit them as their own in the hope for a reward. One possibility to consider is to give these incoming ideas to specialised expert networks for evaluation and enhancement. These networks are discussed below.


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Creating specialised expert networks One way to get potentially valuable external ideas can be establishing specialised networks of suppliers, academics, senior company specialists, partners, research institutions, dealers and other interested parties. The first step would be to identify the parties, which could add value to company’s product development. To carry out communication with these organisations, a link with the registration and log-on requirements could be attached to the Innovation Platform, which would create an exclusive – as opposed to a fully open – extranet-like environment to these users. Leveraging the power of know-who One useful aspect of the portals is that it allows for BMW and Nokia, in particular, to identify people with innovation potential – to be tapped through personal interaction. As opposed to BMW and Nokia, Mobile mainly enhanced its innovation performance by combining acquisition of external expertise with an organic approach to internal resource deployment for enhanced performance in the network system as a whole. This emerging approach seems particularly beneficial for companies operating in a dynamic business environment that requires high impact innovation with short lead-times. We believe that a more active human interaction based process could be an alternative and/or addition to the internet based processes deployed by BMW and Nokia to promote creativity and entrepreneurship with efficient and effective R&D management resulting in high impact innovation. Recommendations for further research Our paper only cover three different cases. Although we have made similar research on other companies that are relatively advanced in using web based solutions for external idea sourcing (Bose, P&G, Nestlé, Virgin), we still see a need for richer in-depth cases and analyses. In this context, we also see a need for further theoretical research in the related areas of creation and implementation of ideas and how these two activities can be supported by optimal network structures.

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Figure 1: Conflicting Network Structures Required for Exploration vs. Exploitation of Innovation

Figure 2: Cross-Level Networks for Exploration and Exploitation of Innovation


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Killing the Myth of Web Based Creativity

Framing Framing the the Platform Platform for for Growth Growth

Strategic Strategic Framework Framework with with Clear Clear Selection Selection Criteria Criteria

Industry Drivers Selection Criteria Brainstorm Themes Brainstorming Brainstorming Opportunities Opportunities for for Growth Growth

3 Internal Brainstorms 1500 Ideas 1 Partner Operator BS with Clearly 1 Business Student BS Indicated Favorites Filtering Filtering out out the the Top Top Ten Ten Candidates Candidates

Hundreds of Ideas

Innovation Competition: 33 teams Preparing and Proposing 5-page Business Plans Developing Developing and and Ranking Ranking TopTopLevel Level BusiBusiness ness Cases Cases

33 Initial Concepts

Top 14 Concepts Continued towards Final Ranking Running Running Detailed Detailed Feasibility Feasibility Studies Studies

Final Selection of VIP Projects to Implement Final Final Ranking Ranking of of Top Top Candidates Candidates for for Growth Growth

December

January

February

March

April - May

June

Figure 3: The six steps of the human interaction based GTI process

88 Business Business Cases Cases

44 Selected Selected Renovation/ Renovation/ Revolution Revolution Projects Projects


BASEDCREATIVITYJEL-codes:M,L,LPapertobepresentedattheDRUIDSummerConference2007Copenhagen,CBS,Denmark