The Beauty of Crowdsourcing is Being Completely Agnostic to a Solution

Interview with Eugene Ivanov Eugene Ivanov is an Innovation Management Consultant who helps organizations of all sizes increase their efficiency through internal and external innovation programs, particularly with crowdsourcing campaigns.

He also writes extensively about innovation, open innovation and crowdsourcing on his popular Innovation Observer blog. In this interview with IdeaConnection, Eugene offers some insights into how companies are using crowdsourcing to innovate and how some are getting it wrong.

In your article ‘What Do Numbers Say About Different Models of Innovation?’ the idea generation mode of innovation comes in for some criticism. What do you have against it?

I call this way of looking for ideas the “bottom-up” way of innovation in that you create tons of ideas and there is a hope that they will be implemented.

It is certainly democratic in that companies harness the collective wisdom of their employees. However, I’m afraid that this model of crowdsourcing actually absolves the leadership of an organization from being hands on. There are multiple problems with this model.

Most of the ideas are not aligned with real corporate strategy. Now, if you articulate your corporate strategy to the whole organization, if you define the criteria very clearly – what you are looking for and what you are not looking for - then I’m totally fine with this “bottom-up” mode of innovation, but it doesn’t happen. There are maybe a few companies I’m aware of where it does take place, such as Google, but for 99% of the companies, it doesn’t happen. So instead, I advocate a “top-down” approach where the executive leadership articulates the problem that matters to the company and then employees submit solutions to this problem. Unfortunately, this comes as a surprise to many, many leaders.

Why is that?

We talk about open innovation as a set of tools, but open innovation also means a more general mind-set, an approach to collaborative innovation. So this type of open innovation starts usually, in my experience at the middle level of a company. For example, with a new ambitious Director of Innovation who has heard about open innovation intermediaries and says “let’s try it”, and so they try it. Sometimes, they do it wrong and other times they do it right. There are good results and so there is excitement at this level. But for open innovation to include the whole organization, two things should happen.

First, this movement should go up to the very top. Internal innovation or internal crowdsourcing could be run on the ground floor and there are some examples of that, but open innovation cannot be. That’s because it involves intellectual property rights, issues of confidentiality, contracts etc. It can’t even be done on the middle level. It must go to the top. Secondly, as it can also change the way people work, sometimes you have open resistance to open innovation approaches.

Unfortunately if you lose your battle at the top or the bottom, the whole open innovation project will fail sooner or later. I’ve seen so many examples of that when companies have started with very good open innovation approaches, got early wins, but then the projects simply died because there was no grassroots support nor support from the top.

Do these companies then abandon crowdsourcing approaches or do they carry on after finding out what went wrong for them?

Both things happen. In companies that I talk about that tried an open innovation project and it didn’t work, specifically the co-creation part of open innovation, they basically put it on hold to pursue different ways of innovating. They do so because these days, everyone has to do some innovation. You cannot not do that. But they do something more traditional. Now everyone says crowdsourcing is a great tool, yet when you look at articles, papers and studies they show that crowdsourcing is still the least used open innovation tool despite the fact that it is actually very good.

Why do you think that is?

When I talk to my clients I tell them that crowdsourcing is so damn simple, because it only has two components to it. It is a question and a crowd, and that’s it. The problem, mostly in my experience is with the question. Unfortunately, not every problem can be put to crowdsourcing and even if you have the right problem you have to formulate it in such a way that makes it solvable by crowdsourcing. And some organizations do a very bad job of that. Mostly, however, they try to solve a problem in one giant leap. What experience shows is that you have to split your problem into chunks and solve them separately or in parallel. Not only is this more efficient, but it’s actually faster, because when you fail you have to start again. In my experience that is three quarters of the problem.

You have to frame the question in such a way to get what you need to solve the problem and not a zillion ideas that are off track.

The irony is that there are innovation brokers like IdeaConnection, InnoCentive and NineSigma that know how to do that. There are ways to formulate a problem. We know how to formulate a problem and yet the process still meets with some kind of resistance. You see companies say we’ll save money by solving the problem in its totality. But that doesn’t work.

Another part of the problem is that there are too many open innovation service providers. Somewhere, I read that there are approximately 200 of them around the world. They are similar and different at the same time. And there hasn’t been any consolidation of this model. There are still many single players. It’s very difficult to navigate this ocean of companies.

When talking about IdeaConnection, InnoCentive and NineSigma there are problems that may be better solved by using one platform and not another. For example, something could be better solved by the InnoCentive platform, but companies use NineSigma, because they know someone who uses NineSigma or because they are larger. And a problem that is better solved by NineSigma would go to InnoCentive. And if the problem is not solved, people blame what? They blame crowdsourcing.

So there is a type of work that people like me need to be doing to bring this knowledge to corporate clients or other clients.

When you do see clients what are they asking you in terms of open innovation?

There are a few reasons why companies go for open innovation. Firstly, they realize they don’t have internal expertise or experience. That’s the most obvious consideration. The second consideration is that some companies, especially those with some exposure to open innovation through crowdsourcing realize that there is a diversity of solutions. They can go to their experts, but not only is it actually more expensive to pay experts, but there is a limited amount of experts you can talk to, and they are almost always aligned with you. So basically you are asking them what you already know.

The beauty of crowdsourcing is that you are completely agnostic to a solution that may come. It could be so unexpected. I know cases where companies hired consultants to analyze solutions they were getting from crowdsourcing, so they were smart enough to realize that they were onto something very valuable. The ideas were so novel to them that they couldn’t understand them, and this is good. There was no other way to get them unless through crowdsourcing. They would never have gone to this source, because they didn’t know this source existed.

Are there open innovation services that your clients wish existed?

No, I can’t say that they have ever mentioned that to me. Usually, companies are unaware even about the options that are available.

In your ‘Are We Faking Innovation?’ article you highlighted a surprising survey on innovation where 85% of respondents said that innovation is important to their companies, but 72% had no understanding of what innovation meant to them. Is this something you have come across?

Amazingly, it actually happens all the time. I had a client and spoke with two of their research directors who were working for the same department. When I asked them to give me a definition of what innovation meant for them, they gave vastly different responses. They were talking about share of markets and rate of retention and things like that. And those were people who had a budget to fund innovation projects under them.

I’m a great fan of diversity, but in some of these places the topic of diversity is not welcome. It’s a lack of a larger kind of corporate oversight. At one point I advocated that companies should write an innovation charter and some people said well it’s just a piece of paper and everyone is sick and tired of these mission statements, which it is not. And yes I understand that complaint, but there is no common language of innovation. So people don’t know what innovation means for their particular company.