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How Crowdsourcing Evolves: The 4 Stages to Transformation

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By: Tim Woods, VP of Marketing, HYPE Innovation 

The innovation management industry is highly fragmented today,
which makes it confusing to understand which methods apply to which scenarios,
and what the difference is between those doing crowdsourcing, and those doing
enterprise programs designed to facilitate business transformation.

Front-end, back-end?

Terminology is part of the problem, which stems from the overuse
of the word innovation (how about
we stop using it?
). Generating ideas is not innovation, for example, but are
commonly bundled together. More specifically though, we notice that there is
confusion between the front-end and back-end of innovation. Many people
consider the evaluation phase of ideas to be the back-end of innovation, but in
fact this is still part of the discovery process, because we are in the domain
of figuring out what to
implement
, not in the actual implementation phase. The back-end is where
the value creation process begins, and where the outcome of that process is
captured.
The back-end - the domain of implementation where innovation
truly happens - is drastically undervalued and ill-considered in crowdsourcing.
Ideation is not innovation at all, and it's also not where business
transformation happens - for this, you must execute. You will never transform
the way you work simply by generating a lot of ideas, and making people feel
engaged. Michael Schrage's observation from The Innovator's Hypothesis is worth putting up on a poster in our
offices to remind us:
'Good ideas have nothing to do with good implementations '
Implementation - not the idea - is the superior unit of analysis for assessing
value creation. How organizations enact ideas - not the ideas themselves - is
the soul and substance of innovation. More often than not, implementation ends
up redefining both the boundaries and the essence of the original idea.
'

What is Crowdsourcing?

Crowdsourcing can also mean anything from the outsourcing of
effort to tackle a task, like Amazon's Mechanical Turk; a call for solutions to
a specific problem; or an employee idea suggestion scheme. Jeff Howe, who
coined the term, defines it as the first of these:
'...the act of taking a job traditionally performed by a
designated agent (usually an employee) and outsourcing it to an undefined,
generally large group of people in the form of an open call.'
In a research
paper
 by Estell's-Arolas
and Gonz'lez-Ladr'n-de-Guevara, the
authors found 40 different definitions of the term. Yikes!
Specifically, when we look at the major platforms available to
organizations, we see more confusion. In a recent analyst report,
Forrester listed 15 vendors in their Wave assessment, 11 of whom were ranked as
Market Leaders, the other 4 were Strong Performers, and there are no Contenders
and Challengers. How can it be that there are 11 market leading solutions on
offer? It must both be true that the criteria used by Forrester is somewhat
flawed, requiring more nuance, and the market itself is not clearly defined.
There is a big difference between something like MyStarbucksIdeas, and an
enterprise platform which has real-time trend scouting integrated, multiple
channels for ideation to happen, different and specialized workflows,
individual governance models for different areas of the business, and a
back-end that supports concept iteration and tracking.
There is of course nothing wrong with MyStarbucksIdeas, but it's
designed for branding and engagement purposes. A program that is there to
support a transformation in the way a company is working looks entirely
different.

The Perils of Crowdsourcing

The BP oil spill crowdsourcing challenge garnered a lot of press
attention when launched, but a retrospective view saw that 43,000 ideas were
submitted, from 120,000 people, taking an enormous amount of time to triage and
evaluate, but ultimately resulting in: 'a lot of effort, for little result'.
See the Guardian's
summary
 for more
background.
More recently, the Natural
Environment Research Council (NERC) in Britain asked: 'What shall we call
our fancy new boat?
' In a moment of brilliance, somebody submitted the idea
of Boaty McBoatface, and it quickly gathered 30,000 votes before the website
crashed. See the Independent's
article
 on the
'perils of crowdsourcing' for more info.
It's tempting therefore to conclude that crowdsourcing is really
a bit of a joke, and not a serious initiative to facilitate transformation. But
far less publicized cases of enterprise crowdsourcing exist, which demonstrate
an altogether more serious effort of large companies trying to do things
differently. A recent example comes from Liberty Global - the largest international
TV and broadband company - with their program which further extends its reach
and capabilities every year, and includes a well thought-out plan to train and
educate employees on innovation methods and tools, and develop a network of
innovation managers who magnify the program's reach. Many of the initiatives of
the program are actually offline, but the online platform is the single source
of truth for everything, the visible window into the transformation. You can
read more about it in a deep dive
write-up here
.

The Four Stages

At a macro level, all enterprise crowdsourcing programs move
along the same trajectory, although many get stuck half way - let's look at the
stages briefly. 
Engagement
All programs begin with the challenge of achieving a certain
level of engagement; getting people on board and collaborating together. For
some companies, this is already a major challenge, because of a skeptical or
disengaged audience - and/or a lack of empowerment from management. For others,
the culture is such that engagement, even across divisions, comes easily.
However, it is important to note that engagement and
collaboration by themselves have no inherent value. Unless it is converted into
the second stage, it is essentially worthless - sometimes even damaging. This
is a delicate trap, because engagement can feel like momentum, and give the
program a positive outlook, but ultimately reveal itself as a fool's gold.
Insights
Engagement must deliver insights. Otherwise the program will
surely die - it's just a question of when. The goal of getting the critical
mass of people to engage in innovation is ultimately to discover new
perspectives, new ways of thinking about a problem, or surfacing new
opportunities. If you didn't need these new perspectives, then you could just
have the same folks sit down in a room and come up with the same ideas.
Ideas are cheap, and you can get plentiful ideas just through
engagement, but what you really need is a new viewpoint, new insights; this is
how innovation starts. There are many subtle difficulties to generating
insights, as opposed to just generating ideas. For example, the quality of the
question being posed is critical, and so is the way collaboration is guided
(think of De Bono's Six Thinking Hats 
methodology to explore different perspectives on an idea). It's not as simple
as just asking for ideas, and getting the valuable new insights. Quite the
contrary.
Solutions
Ideas, insights, and perspectives, are only just fragments.
Another step is required to develop the fragments into something the business
can work with - i.e., a solution. For some companies, this means creating a business
case that makes the idea fit with the existing performance engine, rather than
antagonize it (see Trimble
and Govindarajan
). For others, it means quickly iterating through build,
measure, learn cycles to find a product/market fit (see also: The Most
Important KPI for Building Innovation Muscle
 for more on this piece).
Solutions are synonymous with concepts, or lightweight
innovation projects. The challenge here is finding a suitable way to realize
the value from the concept. A company is ideally looking to have a portfolio of
these solutions, or concepts, rather than just a portfolio of ideas.
It is extremely challenging for those companies who struggle
with transformation, because unlike generating engagement and ideas, this stage
requires that all parts of the business confirm the value of the solution, and
a process must be established to handle the creation of innovation (the
implementation, back-end phase!).
Transformation
It's tempting to think that the previous stage is the end of the
process. But transformation happens only once the company has successfully
implemented these solutions, and has made the entire process a part of the way
work is now done. Employees must be able to clearly recognize and understand
the process, and the process has overcome any significant organizational
resistance.
The investment axis is important to note, since it is often
cheap and easy to get engagement, and with careful consideration you can also
get the valuable insights too. But it becomes significantly more expensive to
convert this into tangible outcomes - it requires resources, education, budget,
and constant negotiation with different parts of the business. But of course
the impact is far greater, exponentially so, because of the return on
investment with new products, services, disruptive innovations, and the impact
on company culture.
Because of the issues around terminology, and the disparity
between idea crowdsourcing and enterprise innovation management, it can be hard
to pick apart the differences. But from my perspective at least, the four
stages above are a window into the process, and a way to start the dialogue
about where companies get stuck, and how they get to where they really need to
go.

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