The Role of Diversity in Innovation

(This piece was originally posted to the HeroX blog)

Can labor laws affect innovation? To many people, this question may sound nonsensical. Why would such a boring thing like labor law have anything to do with an exciting act of creating something new?

Don’t rush to the conclusion. Have you heard about so-called employment nondiscrimination acts (ENDAs)? These areU.S. state-level laws that prohibit discrimination based on sexual and gender identity. A 2016 study showed that ENDAs spurred innovation. The authors of the study found a significant increase in the number and quality of patents at firms headquartered in U.S. states that have passed ENDAs relative to firms headquartered in states that have not. This result was more pronounced for firms in states with a large homosexual population and for firms in human capital-intensive industries, such as technology and finance.

As far as I know, there are no studies suggesting that sexual minorities are intrinsically more innovative. What the above study implies is that innovation requires a certain level of individual freedoms, including freedom from being discriminated against for whatever reason. It also points to an important positive factor affecting innovation: diversity and inclusion in the workplace.

Is Diversity Important?

A growing body of evidence indicates that heterogeneous firms perform better than their homogenous counterparts. Research by Deloitte shows that organizations with inclusive cultures are six times more innovative and agile, eight times as likely to achieve better business results, and twice as likely to meet or exceed financial targets than organizations with less diversity in the workplace. Another study reported that more diverse companies were 45% more likely to report annual market-share growth and 70% more likely to enter a new market.

Analysis performed by McKinsey shows that the benefits of diversity in the workplace originate at the very top of the corporate world. McKinsey analyzed the composition of executive teams in more than 1,000 firms across 12 countries and found that those in the top quartile for ethnic and cultural diversity were 33% more likely to outperform those in the bottom quartile. The analysis also showed that firms in the top quartile for gender diversity were 21% more profitable than firms in the bottom one.

Diversity among members of the boards of public companies matters, too: Credit Suisse Research Institute found that firms with one or more woman board members had higher average ROI and better average growth than firms with male-only boards. And yet, 77% of S&P 500 company boards are more than two-thirds male, and only 2%(!) have more than 50 percent women members.

Diversity and Innovation

Why is diversity important? The answer to this question appears quite straightforward: diverse and inclusive companies innovate better. The connection between diversity and innovation was proven by a substantial body of research.

For example, Boston Consulting Group (BCG) surveyed the innovative potential of 1,700 American firms of different sizes and locations. As the indicator of innovation, BCG looked at the portion of a firm’s revenue from products and services launched within the last three years. BCG found that firms with above-average diversity produced a greater proportion of revenue from innovation (45% in total) than firms with below-average diversity (26%). Not surprisingly, this 19% innovation-related advantage had translated into better overall financial performance.

One specific factor identified by researchers of the role of diversity in innovation was the composition of innovation teams. According to a 2013 report by the Center of Talent Innovation, if a member of the innovation team shares an ethnicity with a client, the team is 150% more likely to understand the client’s needs, a scenario that can make the difference between winning and losing new business. That means that with increased diversity within a firm, its opportunity to acquire new clients and expand into new markets increases, too.

The above study may point to a useful approach for organizations seeking to enter a new market or a new segment of an existing market: to create a market research/innovation team with a demographic composition closely resembling the one of the target client population.

Why Diverse Teams Are More Innovative?

Diversity in the workplace can take multiple forms. Some of them are called inherent (inborn) traits: age, gender, race and ethnicity, and sexual orientation. Others fall in a category of acquired traits: education, professional and personal experiences, veteran and disability status. Recently, a lot of attention has been drawn to cognitive diversity: bringing together people with different styles of thinking and different viewpoints. Adding the component of cognitive diversity to a more traditional “mix” of inherent and acquired diversity can bring organizations to a new level of innovation power.

An important question to answer is, what are specific mechanisms by which diversity may affect innovation? A 2014 article in Scientific American, “How Diversity Makes Us Smarter,” by Katherine W. Phillips began unraveling this fundamental issue.

It’s reasonably easy to understand how the diversity of expertise and experience would spur innovation. After all, in today’s business environment, meaningful innovations happen at cross-borders of different disciplines. Having teams composed of experts in several relevant fields becomes a key prerequisite for any successful innovation project, be it a new car or a new way to save money.

But why is the diversity of race, ethnicity, gender, and sexual orientation equally important? Because people who are different from one another in the race and gender dimensions bring to the table unique information and experiences. This diversity of information creates a positive tension within the group and that tension increases creativity. Besides, simply interacting with individuals who are different forces group members to reassess their own assumptions, question others, and prepare better.

Of course, working in diverse groups isn’t easy. It requires individuals to adjust their own behavior and working styles, something that many of us may find uncomfortable. But a better innovation product will eventually emerge from this hard work. And, by the way, who said that innovation was easy?

Crowdsourcing as a “proxy” for diversity and inclusion in the workplace?

Building diverse and inclusive organizations takes time. However, there is a technique to approach large and diverse groups of people right away: crowdsourcing. Crowds assembled by established open innovation platforms, such as HeroX, represent people of different ages, educational and professional backgrounds, locations, and cultures. Crowds are as diverse a workforce as one could only dream of having in any organization – and they show the value of diversity and inclusion day in and day out by providing superior solutions to the world’s most pressing problems.

I’m grateful to Ralph-Christian Ohr for pointing to his 2013 post “Innovation and Diversity.”

Check out my eBook, “We the People of the Crowd…,” a collection of stories about crowdsourcing reflecting my personal experience in working with corporate and nonprofit clients.

Image credit: by Ali Yahya on Unsplash

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Sharing Knowledge in Times of Crisis – and Beyond

(This piece was originally posted to the HeroX blog)

In March 2020, the White House Office of Science and Technology Policy1 released an open dataset of scientific information on the novel coronavirus responsible for the ongoing worldwide pandemic. Titled COVID-19 Open Research Dataset, the dataset included nearly 30,000 scientific articles about SARS-CoV-2 (the official scientific name of the virus) and other viruses in the broader coronavirus group.

The dataset included not only published articles, but also unpublished data provided by open sources specializing in health sciences and biology research. Equally importantly, the new dataset is machine-readable, making it easy to use for machine learning purposes. The hopes are that with the help of the shared data, the global AI community will be able to rapidly identify approaches leading to virus prevention, patient treatment, and vaccine development.

We live through challenging times. The coronavirus pandemic takes lives and destroys economies, reveals the weaknesses of national health care systems, and sheds light on both the greatness and incompetence of political leaders. But it also reminds us that we are all together living on this small planet of ours. We’re interconnected and interdependent – and we need each other. Let’s not forget that when the pandemic is over.

The crisis is also showing how openness and unrestricted sharing of vital scientific information facilitate faster development of the tools to fight the pandemic.

The COVID-19 outbreak was first documented in Wuhan, Hubei Province, China at the end of December 2019. By mid-January 2020, Chinese researchers have determined the genomic sequence of the virus and shared it with the World Health Organization. The publicly available sequencing data has immediately opened the door to developing diagnostic kits in China and other countries. Singapore-based Veredus Laboratories, a provider of molecular diagnostic solutions, was, perhaps, the first company to develop a commercially available diagnostic test by the end of January.

Drugs and vaccines are next. First COVID-19 vaccines are already in clinical trials. Academic scientists, pharmaceutical companies, and government agencies are teaming up to test more than active compounds as possible anti-virus drugs and vaccines.

Fortunately, the willingness to open up and cooperate turned out to be as contagious as the virus itself. Nvidia has offered its powerful genome analysis toolkit for free to any researcher working on a COVID-19-related project. Canadian biotech company Bio Basic prioritized all purchase orders of reagents needed for coronavirus research and ships these orders free of charge.

Make no mistake: confidentiality and intellectual property still matter for biopharmaceutical and other companies. However, what the coronavirus crisis has already demonstrated is that even the most competitive enterprises can put aside their protective tools and work with others to solve one of the most urgent challenges of recent times. Openness and caring for each other in times of crisis seem to matter to them as well. Perhaps, even more than secrets and profits.

Let’s not forget that, too, when the pandemic is over.

1A department of the United States government with a broad mandate to advise the President on the effects of science and technology on domestic and international affairs.

Check out my eBook, “We the People of the Crowd…,” a collection of stories about crowdsourcing reflecting my personal experience in working with corporate and nonprofit clients.

Image credit: Patrick Tomasso on Unsplash

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What Can Dancing Teach Us About Innovation?

Many organizations treat corporate innovation as a child: unpredictable, capricious, and difficult to control. And as it often happens to us adults, we feel an irresistible urge to pontificate, to teach the child a lesson.

I’m amazed at the popularity of the idea to teach innovation a lesson. The sources of the lessons could be quite unorthodox. History? Of course. Art museums? Sure. Animals like elephants and monkeys? You bet. Soviet-era production? Without question. Hollywood movies like “The Karate Kid” and “Back to the Future”? How can one forget? And then comes my absolute favorite: a parking lot full of meat lovers.

Inspired by these examples, I decided to contribute my fair share to the list. As a competing amateur ballroom dancer, I would like to argue that dancing, too, can teach us about innovation. To prove my point, I want to share with you some wisdom that I have learned from my dancing teachers.

Make every move your own move

In a sense, there is no right way to dance. True, textbooks and competition guidelines describe recommended sequences of steps that every basic dancing move should comprise. Yet, every dancer knows that it is her or his body—its structure, flexibility, and responsiveness to music—that ultimately defines the choice of dancing moves and the way they are performed. You succeed in dancing only when every move fits your physical and spiritual abilities; you become a dancer only if every move becomes your move.

When launching innovation initiatives, organizations—especially those with a shorter innovation history—often look for “best practices,” a set of supposedly proven approaches that can guarantee a successful outcome of any given innovation project.

The truth is that there are no “best practices” in innovation management practice (remember Steve Shapiro’s “Best Practices Are Stupid”?). Instead of chasing chimeras, the organizations should try many different approaches to identify those that best fit their corporate strategy, organizational structure, the level of innovation maturity, and corporate culture.  Only after finding the moves that are its own moves, can the organization successfully perform an innovation dance.

You move with your feet, but you dance with your body

When I was taking my first dancing lessons, I was sure that once I memorized the sequence of the required steps – quick-quick-slow; quick-quick-slow – the art of dancing would be mastered. But then, I was told that my arms mattered, too. Later, I understood that without moving hips (not something taken for granted for a man of my age), my dance would look bland. Finally, I realized that it was my brain (or guts?) that ultimately drove my dance – bringing together my feet, arms, hips, shoulders, and, yes, my face expression. Curiously, the more experienced I became, the less I thought about steps as such.

Usually, organizations begin experimenting with innovation by creating a dedicated innovation unit—be it within R&D, business development, or IT—whose responsibility is to learn the first “steps” of innovation dance. It is crucially important for this group to not stay indefinitely focused on the pure technicalities of the innovation management process. Instead, the innovation group should rapidly reach out to Marketing to make sure that all planned innovation initiatives do incorporate customer feedback. In parallel, it should talk to human resources to ensure that employees who made significant contributions to innovation projects are properly recognized and rewarded.

And do not forget corporate communication whose help with celebrating early successes may play a crucial role in changing the way the organization views innovation. Finally, little will come out even of a brilliantly conceived innovation initiative, if the senior management team, the organization’s brain, would fail to support the innovation team. It is definitely for a reason that innovation is called a team sport.

Motion creates an emotion

I would lie telling you that I’m always in a dancing mood. No, quite often, I do not feel like dancing. But sometimes, I simply must practice, for example, to get prepared for my next lesson. So, like it or not, I get up, turn on the music, and take my first step. Then another. Then one more. And magic happens: my body sheds the rust and gets filled with life. The rhythm of the music begins pulsing in my blood vessels. My dancing motion has created a dancing emotion, and, fueled with this new emotion, my next step is getting better than the prior.

There are so many excuses for organizations to place innovation at the bottom of their to-do lists. “We don’t have time,” “We don’t have resources,” “Our CEO doesn’t care”—have we all not heard this before?

The only way to shake off the innovation lethargy is to leave the proverbial couch and take the first step. Then another. Then one more. Trust me, sooner or later, the motion of repeated innovation “steps” will change the spirit of the innovation group and then gradually take hold of the emotional state of the whole organization. Repeated acts of innovation will become a habit of it.

So, as they say in TV commercials: what are you waiting for? Turn on the music and go to the dancing floor. Better yet, invite a colleague of yours to dance with you. Quick-quick-slow. Quick-quick-slow.

Check out my eBook, “We the People of the Crowd…,” a collection of stories about crowdsourcing reflecting my personal experience in working with corporate and nonprofit clients.

 Image credit: from the author’s family album

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Innovating With Competitors

(This piece was originally posted to the HeroX blog)

With the waves of disruption rocking every corner of the global economy – dethroning powerful incumbents while skyrocketing to fame brazen startups – innovation isn’t a luxury anymore. It’s a means of survival. The slogan “Innovate or die” may sound like a cliche, yet it correctly reflects the contemporary business environment in which companies must relentlessly create new products and business models to stay competitive.

The prevailing innovation “doctrine” postulates that in order to innovate effectively, companies can’t restrict themselves to exclusively internal sources of knowledge and expertise. They should engage external sources as well: customers, suppliers, startups, academic, and business partners.

The competitive nature of the innovation process seems to exclude from the above list one important constituency: the company’s competitors. Why would you work together with your competitors and potentially help them take a bite of your market share? 

And yet, strange as it may look, one repeatedly witnesses examples of fierce competitors working together to solve a complex problem. A classic case of such cooperation has been Ford and General Motors teaming up to engineer a new type of transmission to be used in their vehicles. Another example was cooperation between Sony and Samsung to develop an innovative type of an LCD flat TV panel. (A term “coopetition,” a combination of “cooperation” and “competition” has been coined to describe this type of interaction.)

An interesting approach to engaging existing and potential competitors has been used by Tesla Motors. In June 2014 Tesla announced that it was opening up to anyone its portfolio of patents related to electric car technology. Explaining the move, Tesla Motors’ Elon Musk wrote that Tesla’s competitive advantage didn’t need to be defensive; instead, Tesla would compete and win on the merits of its talented engineers. In a similar move, Microsoft open-sourced more than 60,000 Linux-related patents in 2018.

One of the driving forces behind the idea of coopetition is the concept of “innovation ecosystems,” a business paradigm postulating that a sustainable innovation process needs the engagement of a wide range of interconnected actors: governments, civil society, the private sector, universities, startups, and individual entrepreneurs. Each member of the ecosystem is important for its ultimate success, and such an ecosystem is impossible without bringing together participants with competing interests.

As Michael Docherty wrote in his book “Collective Disruption,” in the very near future, competitive advantage will mean not who has the best technologies but who has the best relationships. 

One can consider crowdsourcing a form of coopetition. When you crowdsource, you become agnostic to the identity of the potential solvers of your problem. They can be anyone: folks working in a different country, or in a different industry – or, yes, for your competitors. The only thing that matters to you is whether your problem will be solved. 

Sun Microsystems’ co-founder Bill Joy reportedly said: “No matter who you are, most of the smartest people work for someone else.” Using crowdsourcing can help you mobilize the smartest people in the world, including those working for your competitors, to solve your most difficult problem. 

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Innovation’s “Uncharted Waters”

(This piece was originally posted to the HeroX blog)

A few years ago, Wazoku, a UK idea management software company, sponsored an innovation survey. The results of the survey are a cause of concern for anyone interested in corporate innovation. 

Full 85 percent of respondents to the survey –  board members, senior and middle managers, and line workers within large UK enterprises – considered innovation important to their companies. Yet 53 percent of surveyed managers were unaware of their organization’s definition of innovation and how it fits into wider corporate goals; 38 percent of them said innovation wasn’t their responsibility because it wasn’t in their job descriptions.

A lack of understanding of what innovation means – in general, and for any organization, in particular – remains one of the most serious problems facing corporate innovation. Even many CEOs aren’t immune to this “disease,” but at the lower organizational levels, almost everyone is affected.

No single fix exists to solve the problem. However, the organizations that are new to the structured innovation process – or the ones that experience troubles in running effective innovation programs – may consider a solution that looks deceptively simple and yet may prove surprisingly effective. 

This solution is to create a corporate Innovation Charter. There are at least three reasons why the Innovation Charter could help organizations innovate better.

The Innovation Charter outlines major aspects of the company’s innovation strategy.

The major objective of the Innovation Charter is to outline what innovation means for this specific organization. It should explain where the company stands today; where the company wants to be in a few years; how the gap is to be bridged, and what role innovation should play in this process. The clarity about the place innovation occupies within the framework of the general corporate strategy will help select and support appropriate innovation programs. 

Equally important, the Innovation Charter would help create a common innovation language, the lack of which often results in a communication wall between the innovation team and the rest of the organization.

The Innovation Charter creates the innovation “law of the land.”

CEOs are routinely blamed for the lack of attention to innovation. But let’s face it: they are very busy people in charge of everything, and it’s plain unrealistic to expect them to pay undivided attention to innovation, a continuous process with no evident need for day-to-day executive control.

So, instead of asking the CEO for constant intervention, the innovation team should create the Innovation Charter and ask the CEO to explicitly endorse it. With this endorsement, the innovation team can claim executive support even when the attention of the executive leaders will inevitably shift to other priorities.

In other words, the Innovation Charter establishes the innovation “law of the land.” Sure, like any other law, it needs periodic re-enforcement, but it still helps maintain order even when “the cops are away.”

The Innovation Charter makes innovation “everyone’s business.”

Corporate innovation can only succeed if it’ll expand from the traditional R&D or product development units to departments that are not directly involved in innovation programs (manufacturing, finance, HR, etc.). Unfortunately, very often, the corporate structure is too rigid, too “anti-matrix,” to allow innovation to become “everyone’s business.”

Realistically, not everyone in the company will be willing to assume an extra-load that participation in innovation activities demands. But even those who are, often can’t get involved because of the pressure of their everyday tasks. Here, the Innovation Charter can help too as it provides an explicit mandate to get involved in innovation activities, something that even all-powerful mid-level managers can’t easily ignore.

In other words, the Innovation Charter sends a message to the whole organization: “Yes, you can and you should!”

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Democratizing Innovation with Crowdsourcing

(This piece was originally posted to the HeroX blog)

In 2006, Prize4Life, a Cambridge, MA-based nonprofit organization dedicated to finding the cure for amyotrophic lateral sclerosis (ALS, a.k.a. Lou Gehrig’s Disease) launched a multi-stage crowdsourcing campaign, the ALS Biomarker Grand Challenge. The purpose of the Challenge was to find a cost-effective biomarker that could measure the progression of the disease in ALS patients. 

Three years later, Prize4Life awarded two “progress prizes,” $50,000 each, for solutions that had made the most significant progress towards reaching the ultimate goal of the Challenge. The first prize was awarded to Dr. Seward Rutkove, a neurologist at Beth Israel Deaconess Medical Center in Boston and a prominent researcher in the field of neuromuscular disorders, such as ALS. Dr. Rutkove went on to win the $1 million Grand Prize in 2011.

The recipient of the other “progress prize” was Dr. Harvey Arbesman, a private practitioner in a suburb of Buffalo, NY. Although his biomarker did not fully meet the Challenge criteria, Prize4Life chose to recognize Dr. Arbesman’s valuable insight into the fundamental mechanisms of the disease.

Interestingly, before receiving the “progress prize,” Dr. Arbesman was virtually unknown in the ALS community. Why? Because he was a dermatologist by training, with no formal connections to the field of neuromuscular diseases and no prior publications on ALS.

Was there any chance that Dr. Arbesman would have been selected, as an expert, by any organization that wanted to work on ALS? No. But Prize4Life didn’t start its quest for the ALS biomarker with looking for ALS experts. Instead, it began by formulating a problem it wanted to solve (“We need a biomarker for ALS”); it then proceeded to ask anyone capable of providing a solution – regardless of their education, professional background, or place of employment – to submit their proposals. Prize4Life didn’t look for people who had the solution; instead, it arranged for a person with the right solution to come to them.

This is a fundamental difference between crowdsourcing and other problem-solving tools. By posting your problem online, you become agnostic to the sources of potential solutions. They may come from anywhere and anyone, and you don’t have to do much to “target” your search to a potential solver – given, of course, that the crowd you’re approaching is sufficiently large and diversified. In other words, when running a well-designed crowdsourcing campaign, you don’t have to spend time and resources on finding solvers to your problem; you only need to analyze the solutions that these self-selected solvers are sending your way.

By creating the conditions when ideas no longer belong exclusively to subject-matter experts, crowdsourcing is democratizing innovation. It is leveling the innovation field by opening up new channels to the folks who have been barred before from innovation activities by institutional or educational barriers. 

Of course, the ascent of crowdsourcing as a new innovation tool results in changing the rules of how new knowledge is generated, collected, implemented, and protected by organizations. I’ll touch upon these important topics in the upcoming posts.

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Crowdsourcing: A Decade In Review

(This piece was originally posted to the HeroX blog)

In 2004, James Surowiecki published a highly influential book, “The Wisdom of Crowds.” The central idea of the book is that the decisions made by a large and diverse group of people are intellectually superior to the ones made by a few isolated individuals, no matter how smart and well-informed. 

Crowdsourcing is one of the most popular applications of this idea. Numerous organizations around the world, including corporations, governmental agencies, and not-for-profit foundations, now use crowdsourcing as a tool to address complex technical and business problems.

A Short History of Crowdsourcing

Although crowdsourcing got its official name only in 2006, thanks to journalist Jeff Howe, it has been around for quite some time. Some peculiar examples of “crowdsourcing” could be found as far back as in ancient Babylonia. Yet most pundits would agree that crowdsourcing was born in 1714, when the British Parliament launched the Longitude Prize, soliciting a reliable method of determining a ship’s longitude at sea.

The beginning of the modern history of crowdsourcing can be traced to the early 2000s, coinciding with the birth of “open innovation,” a business concept postulating that organizations should combine both internal and external sources of knowledge and expertise to advance the development of new products and technologies. Along with co-creation and web scouting, crowdsourcing represents a practical open innovation tool that organizations can use to meet their strategic innovation objectives. 

The appreciation of the value that crowdsourcing can bring to the marketplace was helped by the appearance of first commercial crowdsourcing platforms. It took a few more years, however, to fully realize that crowdsourcing can only be effective if careful consideration is given to identifying and formulating problems to be crowdsourced as well as to precise matching of these problems with the most suited crowds. 

The Past Decade

The past ten years have been the time crowdsourcing has finally begun coming of age. Although it’s virtually impossible to even list all successful, high-profile crowdsourcing campaigns carried out over the decade, some examples are worthy of mentioning. One of the most exemplary, both in purpose and design, was the 2014 Grand Challenge launched by the U.S. Agency for International Development to crowdsource the safe and comfortable protective equipment for healthcare workers battling Ebola.

Brands have been increasingly using crowdsourcing to advance the development of new products and also create lasting relationships with their customers. Many folks remember the 2013 Super Bowl Halftime Show featuring Beyoncé. The introduction to the show used more than 500 high-quality images that Pepsi, the sponsor of the event, crowdsourced from its fans. 

Crowdsourcing has entered the realm of public policymaking, too. For example, in 2016, Mexico City asked its nearly nine million residents to help draft the city’s new constitution through social media. 

Of course, crowdsourcing has had its share of critics and detractors. They routinely point to the 2010 Deepwater Horizon Oil Spill Challenge. Following the oil spill accident off the coast of Louisiana, BP invited members of the public to submit their ideas for sealing off the ruptured well and cleaning up the millions of barrels of spilled oil. Some 123,000 people from 100+ countries have taken part in the challenge and submitted more than 43,000 suggestions. Unfortunately, none of them, according to BP officials, has proven to be useful for plugging the leak, although some of the ideas related to the subsequent clean up were later considered.

There are a number of factors slowing down the speedy adoption of crowdsourcing. One of them is the lack of trust in the intellectual power of the crowds and their ability to tackle complex problems. Almost everyone would agree that crowdsourcing can be successfully applied to accomplishing a “simple” task, such as crowdsourcing a corporate logo or choosing the name for a city landmark. However, when it comes to answering a question that requires specialized knowledge, organizations often prefer turning to experts. And the reluctance to replace experts with crowds is widely shared by the experts themselves who’re understandably scornful of the idea that someone with no immediate experience in the field can solve a problem that they could not. 

Another factor is an expansive use of the very term “crowdsourcing” and blurring the line between crowdsourcing and other problem-solving tools, such as brainstorming. As a result, crowdsourcing is often used in a suboptimal way, and when the outcome proves disappointing, it is crowdsourcing itself that gets the blame for being ineffective. Periodic calls to “rethink” crowdsourcing regularly appear on the pages of the most respected business publications.

The importance of Crowdsourcing Platforms 

The burden of promoting the effective use of crowdsourcing – and facilitating its further adoption in the marketplace – falls on crowdsourcing platforms. This was one of the objectives behind the creation of HeroX, a 2013 spin-off from the XPRIZE Foundation. HeroX’s mission is to enable anyone in the world to launch a challenge that addresses an important problem, build a community around that challenge, and then create the conditions that would lead to breakthrough innovation.

HeroX has an impressive track record. Since its creation, the platform has amassed a crowd of more than 125,000 dedicated Solvers, has launched over 140 successful challenges, and has hosted challenges with prize awards as large as $1M! 

Arguably, one of the most successful challenges posted on the HeroX platform was the Space Poop Challenge. The objective of this challenge, sponsored by NASA, was to design a system for spacesuits that routes human waste away from the body, hands-free. More than 200,000 innovators and 152 teams took part in the competition. Two individual contributors and a team have shared a $30,000 prize.

In December 2019, HeroX signed a strategic partnership agreement with Ideanco. The purpose of the agreement is to augment HeroX’s platform expertise and robust community of innovators with an AI-integrated crowdsourcing model developed by Ideanco. Two challenges focusing on climate change and food security are now being developed to test the combined tool.

The Future

Crowdsourcing is here to stay. Its future as an effective innovation tool is ensured by its proven ability to deliver value to many organizations that use it. Moreover, crowdsourcing is being organically incorporated in the “gig” economy, providing independent workers with the ability to be paid by a task or a project as opposed to a salary or hourly wage.

And yet, to be widely adopted in the business environment of the future, crowdsourcing needs to overcome certain barriers. Crowdsourcing platforms, including HeroX, will need to do a better job of explaining what crowdsourcing is and, equally important, what it’s not. A crucial aspect of this job is helping organizations understand how to correctly identify and formulate problems suited to crowdsourcing and how to run an effective crowdsourcing campaign.

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Innovation: The Role of Money and Government

Over the past couple of months, I have attempted to assess the role of a few major socio-economic factors on the national innovation potential. To do that, I ran a series of simple regression tests to estimate the correlation between these factors (as measured by appropriate indexes) and the 2019 Global Innovation Index, a database that analyzes global innovation performance of approximately 130 economies.

First, I analyzed to which extent the ability of a country to innovate correlates with the level of political freedoms. Second, I looked at a possible role of the country’s prosperity and education spending.

The above findings can be summarized as follows:

  1. There is a strong correlation (R2=0.46) between a country’s innovation potential and the level of democratic development (as assessed by the Democracy Index 2019).
  2. This correlation is only valid for democratic countries (R2=0.45) but is absent in the case of non-democracies (both groups defined per Democracy Index 2019).
  3. Although all five individual components of the Democracy Index positively correlate with innovation, the strongest correlation occurs for Functioning of Government (R2=0.53).
  4. Poor correlation (R2=0.14) was observed between a country’s innovation rankings and its nominal GDP.
  5. This correlation was strong, however, when GDP per capita was analyzed instead (R2=0.54).
  6. A very solid correlation (R2=0.68) exists between innovation and what a country spends on Research and Development (R&D) expressed as the percentage of the nation’s GDP.
  7. Somewhat surprisingly, a poor correlation (R2=0.17) was observed between the Innovation Index and a country’s expenses on education expressed as the percentage of the national GDP. However, I have some concerns about the quality of the education expenses data that I used.

One might argue that political freedoms and democracy affect innovation only indirectly, via the country’s prosperity and R&D spending. The argument would go like this: the freer the country, the more prosperous it is (as measured by the country’s GDP per capita); the more prosperous the country, the more it spends on R&D; and the more it spends on R&D, the more innovative it is.

A more sophisticated statistical analysis is needed to see whether this argument is valid or not.

Check out my eBook, “We the People of the Crowd…,” a collection of stories about crowdsourcing reflecting my personal experience in working with corporate and nonprofit clients.

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Innovation and Money

In my previous post, I further explored the notion that the ability of a country to innovate correlates with the level of political freedoms in this country.

In particular, I showed that no such correlation exists for non-democratic countries (as defined by the Democracy Index 2019 composed by the Economist Intelligence Unit). It appears that a “threshold” exists below which no improvements in democratic development would lead to more innovative economies.

In contrast, a reasonably strong correlation was observed for democratic countries (with a plateau seen for the most democratic). Further analysis suggested an important role of government in promoting national innovation programs.

Before exploring this “government” connection in more detail, I wanted to check other, seemingly more trivial, factors that could affect a country’s ability to innovate.

One of such factors is money. Innovation costs money, so more prosperous countries should theoretically be more innovative. To test this simple idea, I plotted the countries’ innovation rankings from the 12th (2019) edition of the Global Innovation Index against their nominal GDP (as per World Bank, 2018). Poor correlation was observed (R2=0.14).

This correlation was evident, however, when instead of nominal GDP, GDP per capita, which is considered a bona fide measure of a country’s prosperity, was used. The results are presented below:

One can see that the correlation between a country’s Innovation Index and GDP per capita is especially strong up to approximately $60,000; a plateau seems to be formed after that. There are also two outliers with the GDP per capita exceeding $120,000: Luxemburg ($123,892) and Qatar ($126,898). With these two countries excluded, the correlation becomes even stronger (R2=0.68).

Perhaps, the best way to see how money affects innovation at the country level is to look at how much this country spends on Research and Development (R&D). To do that, I plotted the Innovation index against the national R&D spending expressed as the percentage of the nation’s GDP (as per World Bank). The results of this comparison are presented below:

A solid correlation is indeed seen. This correlation seems to be especially strong until R&D spending does not exceed 2% of the country’s GDP; a plateau seems to be forming after that – which intuitively makes sense.

Finally, I decided to see how the country’s expenses on education may affect its innovation abilities. To do that, I plotted the Innovation Index against the country’s educational expenses expressed as the percentage of the nation’s GDP (as per World Bank). Somewhat surprisingly, a poor correlation between the two parameters was observed:

There is a problem with the education expenses data that I used: many data points are not current, so data for different years were often used to compare countries (although I didn’t use the data points collected prior to 2014). I do not know to which extent this may or may not affect the quality of the comparison.

Regardless, the lack of a strong correlation between the country’s Innovation Index and its spending on education looks surprising. Whether it reflects the fact the relationship between education spending and its quality is complex – or that some additional, more subtle factors play a role in innovation – needs further investigation.

 Check out my eBook, “We the People of the Crowd…,” a collection of stories about crowdsourcing reflecting my personal experience in working with corporate and nonprofit clients.

 Image credit: Micheile Henderson (Unsplash)

 

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Innovation: Governments Matter

In a recent post, I presented evidence that the ability of a country to innovate correlates with the level of political freedoms in this country.

To make this argument, I used innovation rankings from the 12th (2019) edition of the Global Innovation Index that analyzes global innovation performance of approximately 130 economies (Y-axis) and plotted it against the political freedom rankings taken from the Democracy Index 2019 composed by the Economist Intelligence Unit (X-axis). The results are presented below:

As one can see, a reasonably strong correlation exists between the countries’ innovation prowess and the level of democratic development.

A careful examination of the graph reveals, however, a certain degree of “non-linearity,” implying that the relationship between innovation and freedom might be different at the lower and higher ends of the freedom scale (X-axis). I decided to explore this opportunity.

The Democracy Index 2019 assesses the countries’ level of democratic development on the scale 0 to 10.0, marking them as authoritarian regimes (0–4.0), hybrid regimes (4.0–6.0), flawed democracies (6.0–8.0), and full democracies (8.0–10.0). I pooled the data for authoritarian and hybrid regimes to mark them “Non-Democracies” (0-6.0) and the data for flawed and full democracies to mark them “Democracies” (6.0-10.0) and plotted them separately. The results can be seen below:

 

 

 

 

 

Amazingly enough, for the group of non-democratic countries, there is virtually no correlation between the level of democratic development and innovation. But a solid correlation can be seen for the group of democratic countries.

Outliers occur on both graphs. For the non-democratic countries, the most visible is China (democratic index 2.26, innovation index 54.82). Among democracies, these are Hong Kong (6.02; 55.54) and Singapore (6.02; 58.37); excluding Hong Kong and Singapore from the “democracies” graph makes the correlation even stronger (R2=0.59). The presence of outliers suggests that even countries with a less than stellar level of political freedoms can be innovative – apparently by inventing some “compensation” mechanisms. I will study such “compensation” mechanisms in the future.

I must admit that the above results came to me as a surprise. First, I didn’t expect that there appears to be a “threshold” in democratic development below which no improvements would lead to more innovation; I expected at least some level of positive correlation at the lower end of the political freedom spectrum to exist.

Nor did I expect that there will be no “plateau” in democratic development. I thought that when a country reaches a certain level of political freedom, any further improvement will not affect innovation, the level of which will be defined by other factors: investments, education, etc. Instead, what the data suggests is that at all levels of democratic development, there are factors included in The Economist’s Democratic Index that still positively affect innovation.

What these factors could be? To probe this question, I plotted the innovation index against each of the five individual components included in the Democracy Index: Electoral Process and Pluralism, Functioning of Government, Political Participation, Democratic Political Culture, and Civil Liberties. The results of this analysis are presented in the table below:

 

Although all five individual components positively correlate with innovation, the strongest correlation occurs for Functioning of Government (R2=0.53).

I will return to factors affecting Innovation Index in my future posts, but for now, we can leave the topic with the following statement: when it comes to innovation, functioning governments matter.

Check out my eBook, “We the People of the Crowd…,” a collection of stories about crowdsourcing reflecting my personal experience in working with corporate and nonprofit clients.

 Image credit: https://www.historynet.com/book-review-the-first-congress-by-fergus-m-bordewich.htm

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