Now, what about money?

Posted on July 16, 2016 by Eugene Ivanov

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In my previous post, I wondered why as efficient innovation tool as it is, crowdsourcing is still seldom used by organizations. I offered two answers to this question. First, formulating a question to crowdsource requires careful deconstruction of the underlying technological or business problem, a skill that many organizations simply don’t possess. Second, there are so many different commercially available crowdsourcing platforms that just navigating this marketplace makes your head spin. And make no mistake: choosing ‘wrong’ platform will almost certainly derail your crowdsourcing campaign.

A friend of mine, who read the post, made a shrewd comment. Before complaining that crowdsourcing is seldom used, he said, you should first prove that crowdsourcing is really efficient and, better yet, cost efficient enough for organizations to want using it.

My friend is right. I too strongly believe that crowdsourcing must prove its economic worth to become a mainstream innovation tool. In other words, we need a proof that crowdsourcing can solve problems in more cost-effective way than other innovation approaches. That turns out to be not as easy as it might seem: economic analyses of crowdsourcing campaigns, whether successful or not, are almost never publicly disclosed. That’s why it’s so important to review a couple of publicly available case studies.

A 2010 case study analyzed the return on investment (ROI) realized by a multinational agricultural company Syngenta when using a crowdsourcing platform provided by InnoCentive, an open innovation intermediary. The analysis identified a number of benefits gained by Syngenta from the cooperation with InnoCentive, including cost savings from finding solutions to R&D problems and reduction in intellectual property transfer time. The total value of these benefits was estimated at $11,861,688 over three years. Given that the total cost of using the InnoCentive services over the same period amounted to $4,200,567, a three-year, risk-adjusted ROI for Syngenta was 182%, with a payback period of fewer than two months. Not bad.

More recently, a showcase for the economic prowess of crowdsourcing came from Harvard Medical School. For one of their research projects, the HMS scientists used the MegaBLAST algorithm to process DNA sequencing information; the working capacity of the algorithm was 100,000 sequences processed in 4 hours and 20 minutes. In order to increase the speed of processing, HMS hired a full-time developer (with the annual salary of $120,000), who lowered the processing time to 47 minutes, a 5.5-fold improvement. Because this was still too slow, HMS launched a crowdsourcing campaign offering $6,000 in prize money for further improvements of the algorithm. The campaign that lasted only two weeks resulted in 122 submissions coming from 69 countries. The winning algorithm was capable of processing 100,000 sequences in 16 seconds, a 1,000-fold improvement over the original MegaBLAST algorithm and a 180-fold improvement over the algorithm developed in-house. Taken into account a 20-fold difference in labor expenses ($120,000 vs. $6,000), the HMS crowdsourcing campaign was overall 3,600-fold more cost-effective than the internal approach. Think about it: 3,600-fold more cost-effective than the internal approach.

There are at least two factors making crowdsourcing so cost-effective. First, every organization has limited resources to allocate to solving a particular problem. As a result, the problem is solved in a sequential manner, with only one or a few approaches being tried at the same time, which increase the total project time. In contrast, when crowdsourcing, you engage a large number of independent “teams,” all of them working in parallel. As a result, shorter time is needed to try a large number of solutions to identify the correct one.

Second, and much more importantly, organizations must pay for any attempt at solving a problem, whether successful or not, which drives the cost of the internal problem-solving. In contrast, when running a crowdsourcing campaigns, you pay only for the successful solution, ignoring the cost of unsuccessful attempts.

This combination of running in parallel a large number of problem-solving tries with paying only for the successful try makes crowdsourcing so cost-effective.

Image credit: “The Moneychanger and His Wife” by Marinus van Reymerswaele (https://themathematicaltourist.wordpress.com/tag/counting/page/3/)

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A Performance Paradox: Why Is Crowdsourcing So Seldom Used?

Posted on July 9, 2016 by Eugene Ivanov

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Call it a performance paradox: while being an effective innovation tool, crowdsourcing is seldom used by organizations. A fresh example of this paradox came in the recent Gartner 2016 CIO Agenda Report (highlighted in a June 27, 2016 Forbes article). The Report showed that although crowdsourcing was the most impactful among ten digital innovation platforms, it was actually the least used (by fewer than 10% of surveyed businesses).

The Gartner Report finding might be the latest, but hardly the only indication that crowdsourcing is slow to become a major innovation tool. A 2013 study by Henry Chesbrough and Sabine Brunswicker looked at specific open innovation tools used by large companies in Europe and the U.S. The study showed that the most popular approaches were customer co-creation and informal networking, while crowdsourcing (along with using open innovation intermediaries) was considered the least important.

The Chesbrough and Brunswicker study echoes yet another report by Robert Cooper and Scott Edgett published back in 2008. Cooper and Edgett reviewed techniques that 160 companies used for product innovation, more specifically, at the front (‘ideation’) end of the product innovation process. They found that the most popular methods were customer visits and focus groups. In contrast, crowdsourcing was unpopular and perceived ineffective.

It thus appears that crowdsourcing still doesn’t find its proper place in the corporate innovation toolbox, and the situation doesn’t seem to be getting better over time.

What’s going on? I think that the roots of the performance paradox lie in the superficial simplicity of crowdsourcing as an innovation tool. At first glance, in order to run a crowdsourcing campaign you need only two things: a question to ask the crowd and a crowd to answer this question. And here the problems begin. First, as any crowdsourcing practitioner would tell you, formulating a ‘question’ to crowdsource requires careful deconstruction of the underlying technological or business problem, something that many organizations are actually quite bad at.

And then, there is a ‘crowd’, an audience you assemble to broadcast your question to. You either build your own crowd, a process requiring time and patience, or you ‘rent’ a crowd by hiring an appropriate open innovation intermediary. And here one encounters another hurdle: there are so many different commercially available crowdsourcing platforms–some estimates put this number at around 200 worldwide–that just navigating this crowded marketplace is a daunting job. Besides, the stakes are high: choosing ‘wrong’ platform will likely doom your crowdsourcing campaign to failure.

So I don’t see any easy way to make crowdsourcing performing at the top of its potential any time soon. A lot of work needs to be done on educating companies how to use crowdsourcing effectively. Again, two questions are critical here: how to choose the problem to crowdsource and how you assemble effective crowd (embedded in the latter is a question about appropriate digital platform). I’m going to address these questions in my future posts.

Image credit: “In the Crowd” by Francesca Bifulco (http://www.mymodernmet.com/profiles/blogs/francesca-bifulco-in-the-crowd)

 

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Dis-r-r-r-uption!

Posted on June 20, 2016 by Eugene Ivanov

Wrecking_ballMy previous post has triggered a number of interesting, often negative, comments in various LinkedIn Groups. My opponents criticized my suggestion that the current state of innovation wasn’t as bad (“broken”) as a few recent articles I referred to were implying. They argued that the corporate innovation process was indeed fundamentally broken because the majority of companies were pursuing mostly incremental improvements of their core offerings, instead of going after completely new, “disruptive”, products.

The idea that companies should stop wasting time and resources on incremental innovation and focus entirely on disruption–interpreted as the creation of products and services generating completely new markets–has become so popular that some clarification seems to be in order.

Let me first go back to the roots of the term “disruptive innovation.” As originally described by Clayton Christensen, disruptive innovation represents a process by which a product initially appears at the bottom end of a market, usually as a simpler and cheaper version of the current product. Then, by accumulating improvements–often by steps completely incremental in nature–the new product gradually moves up the market, eventually displacing (“disrupting”) the existing incumbent product. Importantly, at the initial stages of the disruptive process, its products are often characterized by lower gross margins and smaller target markets; they also have less attractive features than the dominating (incumbent) products.

From this perspective, I can see why startups or early-stage companies would become obsessed with disruption. Usually having no products on the market–and therefore nothing to improve–their only chance at survival is to come with a product or business model that would “disrupt” the business of an incumbent, usually a large company dominating the existing market. In doing so, they can live, at least in the short-term, with low margins, small market share and even somewhat inferior product.

But why would large companies pursue disruptive innovation? What are they going to disrupt? An incumbent? They are incumbents! The very term “disruptive innovation” is completely meaningless when applied to large and established companies. I hate saying that, but I suspect that many folks who call “disruptive” every product or technology that looks exiting are simply unfamiliar with Christensen’s work.

Sure, in order to stay ahead of the competition and to improve the bottom line–and, of course, in order not to be disrupted themselves–large companies must always look beyond incremental improvement of their core offerings. To describe this “higher-level” type of innovation, the largely interchangeable terms “radical”, “breakthrough” or “transformational” have long been proposed. So why use the term that has completely different meaning? Because we love how energetic and optimistic the word “disruption” sounds? Dis-r-r-r-uption!

Of course, I don’t want to be a terminology cop and although I do believe that precisely defined terminology is vitally important for any substantive discussion, I’m ready to concede to my critics and agree to call any innovation above incremental “disruptive.” I’m doing so with the only goal: to address the very nature of their assertion that companies must pursue nothing but disruption.

First of all, the innovation process is laden with risk–a lot of it!–and the higher level of innovation, the heavier the risk. To mitigate this risk, companies adopt the 3-Horizon Model of Innovation Management. According to this model, as much as 70% of all innovation resources should be spent on the improvement of the company’s core products and only 10% on highly risky projects aimed at breakthrough (“disruptive”) products or technologies.

Now, I assume that when my critics make investments within their own retirement portfolios, they spread the money over various investment options; they don’t put all of it in one speculative stock. Why then do they expect a fiscally responsible company putting all 100% of its innovation resources in a number of projects with the highest probability of failure? Does it make any sense?

Second, let me tell the fans of disruption a little secret: innovation is difficult, and the higher level of innovation, the more difficult it is. If companies could come up with a “revolutionary” product or technology every quarter, they would. But they can’t, and blaming them for that is about the same as blaming Usain Bolt for not breaking the world record every time he hits the track.

So let’s relax and give to incremental innovation the respect it deserves. Inc-r-r-r-emental!

Image credit: https://en.wikipedia.org/wiki/Demolition

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Is Innovation Broken?

Posted on June 1, 2016 by Eugene Ivanov

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I’m amused with the recent stream of publications describing the supposedly dreadful state of innovation. We’re informed that “innovation today disappoints,” that it’s “not delivering” and that “our innovation systems are breaking down.” We’re also told that “people are fed up with innovation” and that we should reduce using the very term “innovation” and ban the term “innovation culture” at all.

What’s going on? Sure, I’m not particularly happy with what I see in the field myself. Recently, I pointed out to the troubling findings in the Accenture’s 2015 Innovation Survey indicating that there is a mess in the heads of innovation practitioners with regards to the different types of innovation–a confusion that may indeed easily derail any innovation program. And before, I complained that many organizations fake innovation instead of making it.

But the glass of innovation isn’t completely empty; it’s rather half-full. The same Accenture study finds that, despite setbacks, companies keep establishing formal corporate innovation programs, utilize digital platforms to manage innovation process and, most importantly, increasingly approach their customers in search for new ideas. Is it a bumpy road? You bet! But they are trying. Imagine that you’ve just started to learn driving a car. Despite your best efforts to do everything by the book, your car is often frustrating you with sudden stops, risky moves and strange noises under the hood. Is this a reason to trash this car and buy a new one?

The great German philosopher Hegel taught us that small quantitative increases in some entity, when reaching a certain threshold, give rise to a qualitative change in this entity. This is exactly the stage the innovation process is at today: accumulating small, incremental changes–by way of trial and error–which will sooner or later give rise to acquisition of new knowledge and experience. Rushing this process or complaining that it’s not fast enough is counterproductive, to say the very least.

And the best that innovation practitioners, including consultants, can do today is not to push the proverbial panic button. They should instead provide a clear vision of what a real (not faked) innovation is and what strategic roads to reach it are. They should carefully observe things, detect problems and help their organizations or clients correct the course. They should also stop playing childish games of name-calling by fiddling with the established business terminology.

Image credit: https://musicfrombrokenchords.wordpress.com/2013/10/05/broken-trampled-torn/

 

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Chief Decision Maker

Posted on April 20, 2016 by Eugene Ivanov

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This blog has a recurrent theme: I’m interested in corporate policies that organizations may try to foster the culture of innovation. The only requirement for making the cut is that this policy must be specific and actionable (i.e., not just a call to “celebrate failures”). As of today, the list of such policies is very short; it actually includes only two entries.

  1. I propose to make stock option grants, as opposed to cash bonuses and other monetary rewards, the principal incentive for engaging employees in innovation projects.

This proposal is based on a 2015 finding that companies offering stock options to non-executive employees were more innovative, and that the positive effect of stock options on innovation was more pronounced with longer-term grants.

  1. I propose to place employees involved in innovation projects on fixed-term employment contracts, as opposed to employment-at-will. Alternatively, the creation of tenure-like job arrangements for people involved in strategic innovation initiatives can be considered.

This proposal capitalizes on a 2001 study showing that labor laws making difficult to fire employees increase their participation in corporate innovation activities. It was argued that the lower threat of termination produced by stronger anti-dismissal encouraged employees to engage in potentially risky innovation projects.

A recent article in Harvard Business Review prompted me to introduce one more policy to my list. The article author, Simone Ahuja, identifies an important structural barrier preventing corporate intrapreneurs from “owning” their innovative ideas: the decision to proceed with the idea further or terminate it belongs to managers rather than to intrapreneurs. Ahuja then describes a successful corporate policy introduced at Intuit: there, it’s up to individual intrapreneurs to decide “if and when to pull the plug on a project or prototype.” And if they decide to discard the original idea, the intrapreneurs are encouraged to pivot to another solution instead of terminating the project completely.

Sure, I understand that writing off the cost of “failure” when developing software–as opposed to areas where building prototypes requires significant investments–is easier at Intuit that at other companies. And yet, giving individual intrapreneurs the power of decision-making–granting them the status of the Chief Decision Maker, so to speak–provides an enormous boost to fostering the culture of innovation: it eliminates the very word “failure” from the corporate innovation lexicon. For, if it’s your manager who closes your innovation project, it’s failure (no matter what the followers of the “celebrate failure” cult would tell you); but if it’s you who decide when to bury your idea, it is learning.

So, I propose the following addition to my list:

  1. Whenever possible, provide employees involved in innovation projects with fixed budgets and timeframes to conduct validation studies/prototype building while giving them, within defined borders, the authority to be solely responsible for the key project decisions.

In the future, I’ll try to refine the language of the above proposal.

Image credit: https://www.pinterest.com/pin/64668944619099954/

 

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Cloudy Vision, Cloudy Execution

Posted on April 14, 2016 by Eugene Ivanov

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As every high-quality report on innovation, Accenture’s 2015 U.S. Innovation Survey is a mixed bag of news. On the one hand, responses provided by “500 managers and executives with roles in innovation at large U.S. companies” paint a bright picture of the state of the American corporate innovation. Consider this promising numbers:

  • 74% of the respondents reported having formally established corporate innovation processes
  • 63% of companies are appointing Chief Innovation Officers (a note to those who hastened to bury the poor CINO alive)
  • 85% utilize digital platforms to manage innovation process; 84% practice virtual prototyping; 91% use customers as a source of new ideas.

But here comes the bad news. The study found “that a significant gap exists between what companies want to do in the area of innovation and what they are able to do.” Take a look at the numbers leading to this sobering assertion:

  • 72% of companies miss opportunities to exploit under-developed areas or markets (53% in 2012)
  • 60% admit their companies don’t learn from past mistakes (36% in 2012)
  • 67% believe their organizations are becoming more risk-averse (46% in 2012).

Based on these conflicting trends, the authors of the study gave it a peculiar title: “Innovation: Clear Vision, Cloudy Execution.”

With all due respect to the esteemed Accenture folks, I’d disagree with the first part of their two-pronged heading. My own experience with corporate innovation programs suggests that in very many companies, there is no clear understanding of the very fundamentals of the innovation process: what innovation is (and what it is not), what types of innovation and innovation tools exist and which particular tools are suited for each type of innovation.

Signs of such “unclear vision” are evident in the study itself. For example, 84% of the respondents admit that their organizations prefer chasing “silver-bullet” innovations at the expense of developing a portfolio of opportunities. Yet 72% complain that pursuing “line extensions” takes over “developing totally new products or services.”

Wait a minute! Do these two statements not contradict each other? How can any organization prefer chasing “silver-bullet” innovations and at the same time ignore developing new products and services? Is it not supposed to be the same type of innovation?

This is a sign of a total confusion, not a “clear vision.” Yes, you can establish a formal innovation program, appoint a Chief Innovation Officer and buy a piece of innovation management software. However, if no one responsible for innovation in your organization understands the difference between incremental, “adjacent” and radical innovation (a.k.a. the 3-Horizon Model of Innovation) and is familiar with the concept of Integrative Innovation Management, both your innovation vision and execution will be…well, cloudy.

It appears to me that the C-level executives responsible for corporate innovation are becoming increasingly better at using “correct” innovation vocabulary. Sure, innovation is a top-3 priority for our organization. Sure, we strive for disruptive innovation. Sure, in our organization, innovation is everyone’s job. It’s also automatically assumed that this “vision” is universally shared by the rest of their organizations.

But I keep coming back to another innovation survey, the one sponsored by Wazoku, a UK collaborative idea management software company. In their survey, 85% of respondents too considered innovation important to their companies (exactly the same number as in Accenture’s); yet 72% had no understanding of what innovation meant to them. 53% of surveyed managers were unaware of their organizations’ definition of innovation; 38% of the managers said innovation wasn’t their job.

Clear vision?

So, I have a suggestion for Accenture folks. Next time they run an innovation survey, they poll the same number of people (500). However, instead of posing questions on corporate innovation to 500 of executives working for different companies, Accenture would present the same questions to 500 people working for the same company–at every level of the organizational ladder. I’m sure the results of the survey will surprise Accenture’s analysts.

Image credit: Zdzisław Beksiński (1929-2005) (http://www.lazerhorse.org/2013/05/12/terrifying-visions-hell-murdered-polish-painter/)

 

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I Love You, I Love You Not… (Our short-lived romance with Chief Innovation Officer)

Posted on March 27, 2016 by Eugene Ivanov

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Oops! It turns out that we don’t love a Chief Innovation Officer anymore. Just a short time ago, Chief Innovation Officers (CINO as per popular abbreviation) were heralded as a new frontier in innovation management. Considered a missing link between the perennially aloof CEO and enthusiastic crowd of innovation rank and file, they have been promoted as a panacea for all corporate innovation ills.

It’s over now. In a recent post, Stefan Lindegaard calls on companies to “shy away from the Chief Innovation Officer role.” Lindegaard’s own prescriptions to improve corporate innovation process are curious though. First, he wants companies to “go all-in on digital” (whatever that means) and replace a CINO with a Chief Digital Officer. Second, he proposes to trash the very term “innovation” and replace it with something else (he suggests “transformation”). OK, now I at least understand why innovation has been difficult for so many organizations for so long: they’ve been using wrong terminology.

George Bradt of Forbes doesn’t like CINOs either: not only he considers CINOs “useless” for the innovation process; he calls them “utterly counterproductive.” His argument is simple: “If one person is in charge of innovation, everyone else are not.”

This is a strange argument. What about other C-level functions? Does the role of the CEO imply that no one in the company can make an executive decision? Does the role of the CMO imply that he or she is the only person involved in marketing efforts? Does the role of the CFO deprive everyone else of fiscal responsibility? Unfortunately, Bradt doesn’t explain what is so unique about the CINO role that it effectively shuts down innovation in the rest of the company.

Bradt’s hostility towards CINOs seems to be rooted in his belief that “everyone can and must innovate.” It’s not a secret that the “innovation is everyone’s responsibility” point of view is very popular, due to its perfectly democratic and egalitarian appeal. And yet, it’s completely wrong. Bradt and other believers in “innovation holacracy” confuse innovation with operational improvement. True, in any organization, everyone from a janitor to a division head can improve his or her performance in such a way that it’ll benefit the whole organization. But innovation is not any improvement; innovation is a strategic process of improving the company’s products, services and business models.

Not everyone can do that because not everyone has skills, experience and access to proprietary corporate information to understand the company’s strategic goals. And not everyone must do that because not everyone has an authority to allocate resources required to implement strategic decisions.

No, I’m not saying that innovation should be restricted to a limited number of corporate executives. Quite to the contrary, what makes a company truly innovative is its ability to harness the “collective wisdom” of all of its employees. And that’s where the role of a Chief Innovation Officer (or whatever fancy label one might stick to this person) becomes crucial. Because things, be it innovation or any other corporate process, don’t happen by themselves; they need to be planned, executed, monitored and repeated. Because anyone who understands how corporations work would tell you that when everyone is in charge, no one is.

Some time ago, I wrote about ways we fake innovation. Incidentally, I mentioned that we’re faking innovation when we appoint a Chief Innovation Officer, but give him or her neither line authority nor fixed budget. I’d like to add here that we’re equally faking innovation when we replace discussing the nuts and bolts of innovation process with a childish game of calling names.

Image credit: “1395 Daisy” by Diana Marshall (http://paintingthedayaway.blogspot.com/2011_01_01_archive.html)

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The Game of Acceleration

Posted on March 15, 2016 by Eugene Ivanov

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What helps startups succeed? One of a few factors identified so far is providing startups with mentoring. According to the U.S. Small Business Administration–and a 2014 similar study in the U.K.–small businesses receiving mentoring services survive longer than non-mentored enterprises.

This fact points to a potential importance of startup accelerators and incubators. Yet, the real value of startup accelerators, which is a relatively new phenomenon, is far from being properly understood. That’s why one can’t but welcome a recent study on the topic conducted by Ian Hathaway who presented his findings in a Brookings Institution Brief and a Harvard Business Review article.

First of all, Hathaway does a great job by precisely defining the very term “startup accelerator” and then explaining why this type of startup support must not be confused with others, primarily with startup incubators and angel investors. Hathaway also provides useful data on the regional distribution of startup accelerators in the U.S.

However, quite naturally, I was mostly interested to know whether or not startup accelerators accelerate startups. Well, it turns out that some of them do and some of them don’t. Published data show that top accelerator programs do shorten the time for their graduates to reach key milestones, such as gaining customer traction, raising venture capital and exiting by acquisition. However, these positive effects dissipate when looking at a broader sample of accelerators. In fact, many programs do not accelerate startup development, and in some cases may be even harmful.

It appears to me that the data collected by Hathaway call for the creation of a national catalog–the U.S. News & World Report of Best Colleges Rankings immediately comes to mind here–providing all existing startup accelerators with a ranking reflecting their effects on the future trajectory of their graduates. Using such a catalog will help startups make informed decisions when considering joining an accelerator program–exactly as the college ranking helps high-school graduates find a school of their dream. Sure, not every startup will be able to enter an accelerator of their choice. But at the very least, they’ll be prevented from spending time and equity on the programs that can’t really accelerate them.

Image credit: http://www.dailygalaxy.com

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Don’t Fire Me: I’m Innovating

Posted on March 6, 2016 by Eugene Ivanov

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It is election season here in the United States, and the stump speech–a standard, boring and short on substance pitch delivered by the acting and aspiring (and often uninspiring) politicians–is back in vogue. Recently, I recognized what the stump speech reminds me. It reminds me of our endless talks about establishing a culture of innovation. The same stuff: too many words, too little substance.

What really bothers me is that while calling to “nurture a culture of innovation,” “promote risk-taking and experimentation” and “celebrate failure” (why on earth should we celebrate failure?), we ignore practical measures to support more entrepreneurial corporate spirit.

So I decided to compose a list of specific corporate policies that organizations may try in order to establish the culture of innovation. I must admit that at the moment, the list is depressingly short. It actually includes only two entries.

  1. I propose to make stock option grants, as opposed to cash bonuses and other monetary rewards, the principal incentive for engaging employees in innovation projects.

This proposal is based on a 2015 finding that companies offering stock options to non-executive employees were more innovative, and that the positive effect of stock options on innovation was more pronounced with longer-term grants.

  1. I propose to place employees involved in innovation projects on fixed-term employment contracts, as opposed to employment-at-will. Alternatively, the creation of tenure-like job arrangements for people involved in strategic innovation initiatives can be considered.

This proposal is taking cue from a 2001 study showing that labor laws making it more difficult to fire employees increase their participation in corporate innovation activities. The authors of the study argued that the lower threat of termination produced by stronger anti-dismissal laws decreased the “cost of failure” for employees to engage in potentially risky innovation projects.

As it turns out, labor laws may have surprisingly strong effect on innovation. Another study has recently found that companies in 34 U.S. states having the so-called constituency statues produce more high-quality patents than those in 16 states lacking the statues. A constituency statue encourages corporate directors to consider non-shareholder (e.g., employees) interests when making business decisions, therefore forcing them to think of the long-term interests of their companies rather than the short-term profits.

The both studies strongly suggest that the best way to encourage risk-taking and experimentation is to remove the proverbial Sword of Damocles of punishment for innovation failure, something that any organization can easily do by modifying its termination policies. In other words, providing employees with immunity for failed innovation projects is better than celebrating them.

Image credit: Richard Westall, “The Sword of Damocles” (1812)

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Don’t eliminate email. Charge for it.

Posted on February 26, 2016 by Eugene Ivanov

1l Gerard Terborch (Dutch Baroque Era Painter, 1617-1681) Woman Writing a Letter 1655

In a recent Harvard Business Review piece, Cal Newport proposes to eliminate email. Newport argues that email creates what he calls an “unstructured workflow” that reduces corporate planning and decision making to overcommunication. Newport further asserts that the unstructured flow of emails negatively impacts productivity by preventing employees from working on important tasks. Worse, by being transformed into message-passing robots, highly-skilled knowledge workers are losing satisfaction with their jobs.

Newport wants to replace emails with a system of office hours, in which employees would post a schedule of 2-3 stretches of time during the day when they will be available for communication (in person, by phone or using a messaging app like Slack). The major benefit of the system, in Newport’s view, is that outside their office hours, workers won’t be wasting time answering endless messages and will instead get on doing meaningful things. Needless to say, no one will be bothered to respond to any message at home or on vacation.

I definitely see useful elements in Newport’s proposal, although I’m afraid that creative employees will rapidly find ways to abuse his system of office hours too. But I disagree with Newport on principle: I don’t think that the best way to prevent an excessive use of a commodity (and that’s what email is: a commodity) is to ban it. What is a better way, for example, to prevent tobacco or alcohol abuse: to completely prohibit them or to tax their consumption? I think we all know the answer to this question.

So I propose that instead of eliminating corporate emails, we start charging for them. In practical terms, every business unit in an organization will be paying for each email sent by its worker from its budget, exactly as it would pay for other expenses, such as travel or buying office supplies. Within units, each worker will be assigned a “quota” appropriate to his or her position and responsibility. Alternatively, email usage of each worker will be monitored for signs of “abuse” (exactly as many companies are tracking expenses for the notorious “business meals”).

Admittedly, charging for emails won’t make their flow “structured,” but it will dramatically reduce their volume–and with all due respect to Newport’s disdain for “unstructured workflow,” it is email volume rather than anything else that troubles people. (Not to mention that charging for emails will essentially stop using them for private purposes, something that many companies are concerned about).

I also suspect that paying for email will help many people “hate” it less. After all, don’t we all value things that we chose to pay for?

Image credit: Gerard Terborch “Woman Writing a Letter” (1655) (http://bjws.blogspot.com/2013/01/1600s-women-reading-writing-letters-no.html)

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