July 17, 2015 | Written by: Tim Callington
Categorized: Digital Strategy
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Before I joined IBM I worked on a project with a healthcare company to launch a new approach to drug development. The client had spent quite some time working on the new approach and had already devised their launch plan.
My team’s role was to do the market research that would prove it could work. A little bit ‘cart before horse’ you might say, but the launch plan was at least thorough and well-considered.
The trouble was, our research found some serious risks in how the industry and the public might react that the client simply hadn’t spotted. And, whichever way we looked at the results, we couldn’t find a way to mitigate the risks in the existing plan.
The plan needed to change, but the client wasn’t budging. They had their plan and they were sticking to it. There was no room for compromise.
As you can probably imagine, the meeting in which we presented back our results was a pretty uncomfortable affair and it was clear that even if we’d wanted to, we wouldn’t be asked to support the next stage of the programme.
This turned out to be no bad thing.
We found out later that the launch plan had been put into action without any changes and that the ‘risks’ we’d foreseen had indeed come to pass. The whole programme was put on hold within five days of the launch, ‘pending review’. That was a couple of years ago and nothing’s been heard of it since.
Listening to customers seems like the most obvious thing in the world.
According to IBM’s Global C-suite study, for CEOs, customer influence is second only to the C-suite in terms of strategic influence. So why do we still hear about companies tumbling into the same predicament as my healthcare client?
They want to innovate their products and services, but whether it’s due to time restraints, resource pressure, or just an overwhelming belief in their own convictions, they continue alone. I’m certainly not arguing against the value of gut instinct, but when it comes to the practice of innovation I do believe – and experience has shown – gaining multiple perspectives on a problem or an idea is vital to finding the best answer.
That’s why I also believe in value of open innovation and the tremendous potential of social media.
Social platforms and behaviours have a major role in enabling innovation. IBM’s study into how successful organisations innovate identifies three areas where leaders outperform the competition: organisation, culture and process.
Source: More than magic: How the most successful organizations innovate, IBM Institute for Business Value, 2015.
Culture and Process are both important to my earlier point about time and resource constraints: by developing a culture that appreciates innovation and the conditions it requires, and has the processes in place to support innovation-generating activities, then you will be better-placed to act swiftly and confidently when the need arises.
Organisation and structure is the ‘glue’ that unites Culture and Process, ensuring the activities within both ‘spheres’ deliver value back to the business. It’s here where I want to focus for a moment.
By building robust structures to support ‘open’ forms of innovation it becomes possible to tap into the wealth of market intelligence and insight shared by your customers in social media. More significantly, it also becomes possible to connect with those customers directly, to formulate new ideas and concepts, and develop and prototype products in an inclusive way.
Lego Ideas is probably one of the most well-known and successful examples of open, social innovation. The platform not only helps customers build affinity with the brand, but for Lego promotes higher success rates for new initiatives, thanks to the early input from customers.
Many other organisations have experienced similar benefits:
GE has adopted an ecosystem approach to accelerate its innovation programme, ‘crowdsourcing’ ideas through Quirky, it is able to reduce risk and costs while sharing revenue with Quirky and the inventor community.
Xiaomi, the Chinese smartphone producer, uses open innovation to improve product and as a vehicle for marketing and sales. Xiaomi releases a new version of its MIUI software every week in response to user feedback. The releases and feedback system are, in effect, the marketing content and channel, while the software itself provides a platform to generate sales.
Across all industries, firms face a common challenge in the growing complexity of the business environment. Unlike my healthcare client which tried to shield itself from the uncertainty this creates by focussing inward, I believe the best way to deal with complexity is to become more complex yourself – opening up the innovation process and providing employees with the tools and environments (physical or virtual) in which to engage in collaboration.
Of course, systems of governance must be in place to protect the firm and the collaborators, but in an environment where customers have the means and the will to share their views and ideas, surely it would be foolish not to listen?