Can Innovation Be Automated?
Can Innovation Be Automated?
A Q&A with Ludwig Melik, founder of Tenrox Professional Services Automation, on the ability to automate innovation and how organizations can use it.
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When I think of innovation, the process that comes to mind involves a group of smart people in a room with a whiteboard, tossing ideas around to solve a specific problem or to improve a process or business model. The classic demonstration of this type of interactive brainstorming is illustrated in this video from Ted Koppel’s Nightline episode, which examines the creative process employed at IDEO, the renowned design firm in Silicon Valley. In a large group setting, designers tackle the problem of creating a “new wave” shopping cart, defying all the common knowledge about what a cart is to completely revamp a familiar object.
So when my friend Ludwig Melik, (who with his brother Rudolf founded Tenrox Professional Services Automation software, and took it from zero to $15m in annual revenue before exiting), told me that he was investing in an innovation management software platform, Planbox, my immediate reaction was “how do you automate innovation?”. To answer that question, Ludwig and I chatted about what innovation management automation means, how firms use it, and how the innovation process differs from the traditional, IDEO idea of “smart folks in a room”.
First a little background. Management theorists, from Joseph Schumpeter and his “creative destruction” concept, to Michael Porter and his theories of strategic advantage, have stressed the importance of innovation. Porter suggests that firms have two main mechanisms of competition, innovative differentiation or high efficiency leading to lower costs. The wave of digital disruption that has swamped traditional industries, from booksellers to taxicabs, illustrates that innovation is a powerful strategic weapon. In our current business environment, many firms are looking for ways to systematize innovation, rather than hoping for the random brilliant insight or the anonymous ‘suggestion box’ of yore.
Innovation management software, as Ludwig educated me, is not a replacement for the “team swarm” approach of brainstorming employed by IDEO and many other firms:
“Our client enterprises still want to meet in small teams, to innovate in many different ways, but if you don’t have a process and community to develop these ideas they just walk out the door. It’s not about some individuals submitting random ideas, but it should instead be a sustainable source of great ideas that can transform the business. Innovation management is about creating a central repository where ideas are kept, and then developing a consistent process and community to test and execute the right ideas.”
When I asked Ludwig to explain why firms would find value in an automated innovation process, he explained:
“Getting ideas just for the sake of ideas is valuable, but it’s not easy to capitalize on those ideas when they’re unrelated to where you’re heading as an organization. The question is, what’s your organization’s priority in innovation, whether it’s driving value from a new idea, or innovating in customer experience, or changing your business model. We start every engagement with our customers ensuring they’ve had that internal conversation about what they want to achieve through innovation, before they embark on the journey.”
So, I asked, how does it actually work? What does the software add to the innovation process?
“It’s not only about capturing ideas. but also creating a system for folks, whether they’re great idea-generators or not, to participate, wherever they’re located, to collaborate and develop those ideas. This gives them a platform to communicate, add additional information, and experiment on those ideas. The last thing you want to do is pull the trigger on an undeveloped idea. It’s all about creating an opportunity for your employees to engage. The premise of innovation management tools is that they’re a cross-functional tool that everyone in the enterprise uses. Innovation management software creates an opportunity to break down the walls between departments.”
I was very interested in the participative, cross-departmental element of innovation management. As Ludwig explained:
“The participation element is very important. It’s not your old suggestion box where ideas are submitted and there’s no visibility into where they go or what happens next. It’s easy, in these sort of systems, for the individual with a great idea to submit it, and then see how it’s accepted and developed by the community. If people across the organization don’t have a voice, then you start to lose engagement and people start to wonder whether they’re valued, or whether they should move on to the next opportunity. Innovation management tools provide total transparency to a community that can continue to develop that idea and see it come to fruition.”
When I asked how innovation management products create sustainable innovation, and avoid becoming “shelfware”, Ludwig got a little deeper into the features of these products:
“The submission of the idea is the easy part. These systems will often build in some basic gamification so when people are submitting ideas, developing ideas, commenting, they’re getting some incentive points that result in rewards. Capturing ideas is great, but this really takes off when communities are recognized, rewarded, and see their ideas grow and flourish. These are the things that make innovation sustainable.”
I found it interesting that Ludwig had also invested in an agile development platform at the same time he got involved in innovation management. I asked him to explain the connection.
“There’s an obvious connection between innovation management and agility. Once ideas are generated and vetted, you have a connection point between the flow of ideas into an agile process that allows you to experiment before you fully fund the project. Many of our corporate clients want to apply an agile process, iteratively prove out the concept, and fail fast, to ultimately become more successful and innovative. The output of the agile experimentation loops directly back into the innovation management tool, so you track the results and plan subsequent iterations and funding for the right ideas. If you don’t have a feedback loop that cycles from ideas to experimentation to iterative development, you won’t be successful in the turbulent market environment we live in. “
I asked Ludwig for a concrete example of a current client using innovation management software. What were they trying to achieve, and how did it work in practice?
“Many teams want to use virtual sessions and vote in realtime on ideas, and make decisions collaboratively, right there and then, no matter where the distributed team is located. For example, a recent engagement involved a major financial institution in Asia that has 25,000 employees. They just wanted to run a jam session, communicate their company’s strategic objectives, get ideas and comments right then, and build a daily ‘tag cloud’. What are the words that keep coming up, the common themes that come up when global teams ‘jam’ on the best solutions to challenges? That allowed them to zero in on opportunities to innovate.”
Finally, we talked about the role of management in these systematized innovation solutions.
“At the executive level, the rank of executive that is given ownership of these initiatives sends a message. These innovation management solutions bring about more tangible ideas when you have a close alignment between your strategic objectives, the challenges you’re going to face as an organization, and generating ideas that are focused on the strategic challenges you’re trying to solve. Executives should be considering the questions, what is the focus and priority of innovation in the enterprise? Should the ideas submitted be freeform and wide open, or do you want to create strict criteria that define what constitutes an acceptable idea? How many ideas can the enterprise reasonably handle? What level of sophistication do they expect from ideas? We recommend a challenge-based approach so that people understand, we love ideas, but these are our priorities, these are the ones that fit in our portfolio and will get funded. Successful organizations use innovation to grow organically. Organizations that are not generating ideas and acting on them are not going to be around for too long.”
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