A Multiple Choice Test

Posted on June 3, 2014 by Eugene Ivanov

(This post originally appeared on Innovation Excellence)

Everyone has his or her sense of order. My daughter, for example, arranges her clothes in the alphabetical order of brand names.

The growing adoption of open innovation tools in corporate innovation practices has resulted in a rapid proliferation of firms providing open innovation platforms and services. Often called open innovation services providers (or vendors or intermediaries), these new entities are rushing to fill the new and potentially lucrative niche; some experts put the worldwide number of OISP at around 200 and counting.

The multiplicity of OISP is good news for organizations trying to incorporate open innovation approaches into their internal R&D processes: with a plenty of available options, they can select a platform that would best fit their particular need. The bad news, though, is that just navigating this complex, still very immature, marketplace is a challenging job by itself.

This is why a report by Forrester Research, “Innovation Management Tools, Q3 2013,” comes so timely. Aimed at bringing some order into the fragmented world of OISP, the report analyzed and ranked 14 most significant players in the open innovation management field. The 17-criteria analytic tool used by Forrester can obviously be applied to evaluate the performance of OISP not covered in the present study.

While representing a significant step in the right direction, the Forrester report is not without certain limitations. In particular, the report did not pay enough attention to the differences in specific business models employed by the OISP it analyzed. As a result, the same metrics were applied to companies as diverse as designers of collaborative innovation management software (Brightidea and Spigit), innovation consultants (Imaginatik) and providers of crowdsourcing-based solutions (InnoCentive).

In order to help companies extract more value from existing and emerging OISP, some classification needs be established to help potential users better understand what kind of specific services could be expected from each OISP. It would seem reasonable to divide OISP in at least two large categories. The first category would include providers of innovation management software, such as Brightidea and Spigit. Recently, Spigit has merged with Mindjet, the designer of project management software. The combined company may well become a “Swiss army knife” in the field of innovation management support.

The second category would include the so-called crowdsourcing companies, i.e. companies employing large numbers of external experts (or solvers) to address specific client needs. A great variety of business models exists within this category. Some companies provide an “expert-on-demand” service, allowing their clients to rapidly find a qualified expert in a particular field for an on-line or telephone consulting session. U.S.-based YourEncore and Maven and French Presans fall into this sub-category.  Another flavor of the crowdsourcing approach is provided by the U.S.-based Yet2.com, the creator of an on-line marketplace where companies could buy and sell promising technologies, licenses and know-how. Finally, a number of providers use large crowds of highly diverse “solvers” to crack specific R&D problems posted by their clients. American InnoCentive and NineSigma and Canadian IdeaConnection represent this brand of the crowdsourcing approach.

One might argue that because many OISP offer more than one specific platform or service, such a classification would be difficult to create. True, providers of innovation management software always combine their products with some sort of consulting, and crowdsourcing companies routinely develop stand-alone software products that could be sold separately. Yet, the note of the multifunctionality of OISP does not negate the need for their classification. Rather, it calls for this classification being more sophisticated and purpose-oriented.

Every single morning, a myriad of women around the world, including my daughter and wife, face a difficult choice: what to wear for the day. No one can help them in this daunting endeavor. But we can make the process by which global companies choose their innovation service providers less stressful and more efficient.

Posted in Crowdsourcing, Innovation Service Providers | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

On Cash and Praise: How We Reward Innovation

Posted on June 2, 2014 by Eugene Ivanov

(This post originally appeared on Forward Metrics)

A good friend of mine works for a high-tech company in Massachusetts. Recently, the company’s new CEO, an avid fitness buff, has introduced an initiative: every employee who’d spend certain number of hours per week in the company’s gym becomes eligible to a cash bonus. My friend, a frequent visitor of the gym himself, complains that the exercising space, largely deserted just a month ago, is now jammed with jogging, yogging and cycling people, sweating and determined. I suspect that many of these folks took advantage of the new initiative to rejuvenate their otherwise moribund New Year’s resolutions.

No, I’m not against commercial entities enforcing good behavior of their employees with cash. My point is different. I wonder why so many companies, while rewarding people for something they should be doing anyway, like exercising, don’t reward them for participating in innovation activities. Does innovation not have at least as strong an impact on the company’s future as the physical and mental health of its employees? Is adding innovation to one’s daily routine, already cramped with multiple responsibilities and looming deadlines, not as difficult as finding time to exercise? And yet, we see it time and again: with a great fanfare, a company launches an innovation contest and then expects employees to submit their ideas for free—or for a vague promise of future recognition if the winning idea is eventually implemented, something that in many high-tech companies may takes years.

Granted, there are companies that do recognize and reward their employees for innovation. Predictably enough, even some “best practices” have already emerged. We’re told, for example, that a balanced mix of monetary (e.g., cash or stock-option awards) and non-monetary (e.g., formal and informal recognition within the organization) rewards is needed to incentivize innovation. We’re further told that monetary awards can encourage incremental, but not radical innovation; the latter is better advanced by a formal recognition of the innovator. While sensing certain logic in these claims, I still wonder if any of them is supported by solid field research data.

It appears to me that such a convoluted approach to rewarding innovation—compare it to the simple “you exercise, we pay you cash” scheme—reflects the fact that in the majority of companies, some notable exceptions notwithstanding, innovation is still not organically embedded in the routine business operations. It is still considered a process that is conceptually different from other major business processes, such as marketing, business development or quality control. Consequently, established performance evaluation metrics aren’t used to assess innovation activities, and as a result, companies either invent ad hocrewarding tools or, worse, choose not to reward innovation at all.

Hopefully, this will change over time. As companies get more mature in their approaches to innovation, as they align innovation with corporate strategic goals, as they define what kind of innovation involvement is expected (or not) from each position within the company and then establish metrics by which this involvement will be assessed at each level, from top to bottom, innovation will eventually be “rewarded” as any other top performance would be: with cash bonuses, stock-option grants, promotions, etc.

And if a company has some money to spare, the opportunities to reward good behavior of its employees are endless. Exercising is great. But what about reading? You read one book per month, we pay you cash.

Posted in Rewards and Recognition | Tagged , , , , | 2 Comments

Customer Service

Posted on June 1, 2014 by Eugene Ivanov

(This post originally appeared on Forward Metrics)

A new buzzword is coming into vogue in the media: the consumerization of healthcare. Pundits define this term as a shift in the way the healthcare industry operates: from the traditional B2B mode to the one that focuses primarily on B2C interactions. Consumer advocates, in turn, point out that consumers are taking a more active role in important healthcare decisions. As a result of this trend, they argue, every healthcare company will have to become more consumer-centric, leading to what some enthusiasts have already dubbed “consumer-centric healthcare.”

In real life, so far the consumerization of healthcare has meant two major things. First, providers of healthcare products and services have begun paying closer attention to consumers’ behavior. Some pharmaceutical companies, for example, are adopting the “beyond-the-pill” approach: using web-based engagement tools, they show consumers how their lifestyles can maximize (or weaken) the effectiveness of provided therapies. Other companies take into account consumer and doctor feedback when designing protocols for clinical trials of new drugs.

Second, the consumerization of healthcare is manifested by the rapid proliferation of activist groups calling for a greater patient involvement in personal healthcare decisions. One of the most prominent players on this field, PatientsLikeMe, defines its mission as changing “the way patients manage their own conditions…the way [healthcare] industry conducts research and improves patient care.”

While any attempts to listen to the proverbial voice of the customer can’t be but welcomed—be it healthcare or any other customer-oriented industry—one ought to remember that the history of patient group involvement in healthcare decision-making process is not without controversy.

Back in the 1980s, the outbreak of AIDS brought to life a voiceful and influential advocacy on behalf of AIDS patients. Having launched an unprecedented in its magnitude public campaign, the AIDS patient advocates succeeded in persuading the U.S. policymakers to shift substantial amounts of NIH funds to HIV/AIDS research. The powerful infusion of taxpayers’ money helped rapidly identify the origin of the HIV/AIDS epidemics and then develop the life-saving treatments. Yet many critics bitterly complained that by receiving the amount of NIH funds that wasn’t commensurate with the number of HIV/AIDS patients, the program had siphoned much needed resources away from other, more important, public health needs.

Similar, albeit more muted, criticism has been voiced against generous NIH funding for breast cancer: critics argued that the amount of public money spent on this disease—as a result of active lobbying by dedicated patient groups– was vastly excessive, given the relatively low number of breast cancer patients.

It appears that the AIDS and breast cancer cases are not exceptional. In fact, they are part of a general trend: patient groups—often called disease advocacy organizations—actively influence federal funding in favor of “their” diseases. A 2012 study conducted by Rachel Kahn Best from University of Michigan follows how disease advocacy organizations lobbied Congress for a greater share of NIH funding. Using data on 53 diseases over 19 years, Kahn Best showed that for each $1,000 spent on lobbying for a specific disease, there was an associated $25,000 increase in research funds for this disease the following year.

What is wrong with that, one might ask? Well, the problem is that the amount of NIH funds allocated for any particular disease is now determined not by some objective parameters associated with this disease—for example, by the so-called burden of disease–but rather by the strength of a corresponding patient advocacy group and the amount of money it spends on lobbying members of Congress.

And when you have winners, you have losers too. In particular, Kahn Best points out that diseases affecting primarily women (except for breast cancer) and African Americans tend to receive lower levels of funding because of weaker lobbying. Besides, adequate funding isn’t provided to the so-called stigmatized diseases, such as lung and liver cancer, associated with patients’ “bad behavior” (smoking for lung cancer and alcohol consumption for liver cancer). Year after year, both diseases received smaller funding than would have been predicted based solely on patient mortality.

While welcoming public involvement in healthcare decisions, we as a society at large need to find ways restricting the influence of special interests—and money they bring along—on the healthcare decision-making process. There is so much at stake here.

Posted in Health Care | Tagged , , , , , , , , , , , , , | 1 Comment

Want to be more innovative? Live in a free country!

Posted on May 31, 2014 by Eugene Ivanov

Last year, a consortium composed of Cornell University, European Institute of Business Administration and World Intellectual Property Organization unveiled the annual 2013 Global Innovation Index. It ranked the innovation capabilities of 142 countries by using 84 indicators, which included, among others, the quality of higher education, availability of venture capital and government support.

Even a brief look at the Index led me to a curious observation: the top of the ranking was heavily populated by countries representing established democracies. To make sure this observation had any statistical meaning, I compared the Index with the 2013 Freedom of the World Report published by Freedom House, a U.S.-based non-government organization that monitors democratic developments around the world. (I know, Freedom House is often criticized for its highly subjective, often biased, assessments. Yet, it provides the only systematic source of data on democratic credentials of the world’s countries.)

The Freedom of the World Report makes assessments in two categories, political freedom (PF) and civil liberties (CL), by using a 7-point scale: 1 represents the “most free” and 7 the “least free” rating. Depending on the rating, a country is classified as “Free,” “Partly Free” or “Not Free.” Of 30 countries on the top of the innovation Index, 28 were “Free” (the combined PF/CL ranking of 1.1). Only two countries, Hong Kong (#7) and Singapore (#8) were classified as “Partly Free” (the combined PF/CL ranking of 3.5 and 4.0, respectively).

In contrast, among 30 countries at the bottom of the Index, only two, Lesotho (#124) and Benin (#127) were classified as “Free” (the combined PF/CL ranking of 2.5 and 2.0, respectively). Of the rest, 17 countries were “Partly Free” and 11 “Not Free” (the combined PF/CL ranking of 4.1 and 6.2, respectively).

Indeed, there appears to be a strong correlation between the level of democratic developments in a given country and the ability of this country to innovate. This finding may have implications for U.S. government when it allocates funds to promote entrepreneurship and innovation in foreign countries. Government officials would be wise to consider the maturity of democratic institutions in recipient countries when anticipating potential return on innovation investment.

As for the rest of us, we have yet another confirmation of what we always intuitively knew: to be more innovative, you have to live in a free country.

Posted in Global Innovation | Tagged , , , , , , , | 8 Comments