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Is Crowdsourcing the Future of Innovation?

by Robert B Tucker

The process of inviting ideas from groups – usually online — to solve a common problem is called crowdsourcing. The tool is quickly gaining popularity, (Forester reports a 32 percent growth in innovation management solutions) just as other innovation methods, such as corporate venture funds, are proving ineffective. Powered by state-of-the-art software from purveyors like Bright Idea, Imaginatik, IdeaScale, Spigit and others, crowdsourcing is giving new momentum to efforts to broaden innovation and make it “everybody’s business.”

As an innovation speaker and consultant, I’m picking up on a new sense of urgency out there. The goal is to involve the troops as companies address existential issues: How do we avoid becoming the Kodak of the (fill in the blank) industry? And how do we move the growth needle, now that cost-cutting and headcount reductions have been pushed to the extreme?

I’ve long argued that the most effective way to speed up an organization’s metabolism is through what I call “all enterprise innovation.” In today’s environment, you never know where your next breakthrough idea will come from – supply chain, HR, IT, manufacturing — almost anywhere except the department of line extensions and incremental improvements. The growing realization is that you can’t just have a few pockets of innovative activity. It really needs to be systematic and coordinated. You need a process. Scattershot approaches will not be enough to meet the challenge of hyper-competition, and two guys working out of some internet café in Ireland (ask any banker). At the same time, various innovation tools that initially showed promise are fading fast (Open Innovation, for one) or corporate venture funds, (85 percent of these programs are failures, according to our sources in Silicon Valley), while organized, online initiatives continues to rise.

The big idea behind crowdsourcing is that none of us is as smart as all of us, especially when it comes to solving big problems

“Imagine the potential when you can leverage the brainpower of tens of thousands of people in your company,” is the mantra of the Crowdsourcing Movement. Fifteen years ago, as suggestion boxes first began to morph into intranet-based suggestion programs, companies thought they could automate the process, sit back, and the ideas would pour in. Didn’t happen. Many of these programs experienced huge drops in participation after the initial enthusiasm dissipated. And when some programs failed to implement submissions, the result was often employee cynicism. “I put in an idea and they never did anything with it,” was the frequent complaint. Some firms abandoned their programs entirely.

Meanwhile an adjacent social movement – crowdsourcing – was exploding with potential based on the book, The Wisdom of Crowds by James Surowiecki. The notion here is that none of us is as smart as all of us, especially when it comes to solving critical problems and conceptualizing exciting new opportunities.

Surprise Finding: Ninety-three percent of crowdsourcing programs are aimed at creating a culture of innovation and increasing engagement. Only half were aimed at finding breakthroughs.

In 2006, crowdsourcing got a huge boost when IBM hosted a series of widely publicized global “Innovation Jams.” Instead of a few people crowded around a whiteboard, they opened the process up to IBM’s 377,00 employees, their families and the company’s global supplier base to participate in global electronic online brainstorming sessions. Each Jam was built around a specific challenge – how could we reduce global energy use by 30 percent? Or: how can we make cities smarter? – And game-changing ideas poured in, and IBM quickly went to market with the best of the best. Crowdsourcing took off from there.

At Spigit’s annual Engage conference last month in San Francisco, 150 or so innovation leaders from a wide variety of industries shared their crowdsourcing experiences. A survey by Spigit found that the top objectives of most crowdsourcing programs is not breakthrough products but rather “creating a culture of innovation” (93%) and “increasing employee engagement” (86%) across the enterprise.

One insurance company told of using its crowdsourcing program to revive sagging morale, overcome the stigma of its role in the Global Financial Crisis, and energize the culture. Using Spigit’s platform, they began hosting reinvention challenges: “How do we drastically improve customer experience?” And: “How do we dramatically boost retention?” A thousand employees participated in the first challenge. They formed a 40-person “boot camp” team to oversee the effort. They assigned five person teams to do “proof of concept” of ideas which got vetted and implemented. Early experiments mushroomed into a whole new way of doing business within the division.

Now energized, the unit has begun setting its sights on even bigger opportunities. Why not capitalize on the knowledge we’ve gained in paying millions in workers comp claims over the years? Why not be the first to insure against things like terrorism, or cyber attacks? Why not be at the forefront of leveraging data they have collected on their customers to help them prevent accidents, reduce costs, and train differently? And why not gather data in new ways, for example, by having construction workers use wearable technology that will give better data analysis on how employees get injured, in the first place? How about using virtual reality to simulate hazardous conditions? Why not rely on our 65,000 employees to “recognize the change signals”?

“We see changes in the insurance industry happening at an exponential rate,” observed the commercial division president. “The question is, can we reinvent fast enough? We know that if we don’t disrupt ourselves, we simply won’t be relevant in the years ahead.”