By Dwayne Spradlin, CEO of InnoCentive
This blog is the third installation of a four part series: ”The Profound Importance of Challenges,” by Dwayne Spradlin and Alph Bingham, authors of The Open Innovation Marketplace, published in 2011 by FT Press.
To read the other posts in this series, click on the links below:
The Profound Importance of Challenges (Part 1 of 4) by Alph Bingham and Dwayne Spradlin
The Profound Importance of Challenges: The Fundamental Unit of Problem Solving (Part 2 of 4) by Alph Bingham
The Profound Importance of Challenges: A Powerful Strategy Tool (Part 4 of 4) by Dwayne Spradlin
In our book “The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise” published this year by FT Press, Alph Bingham and I explored Open Innovation and the Challenge Driven Enterprise. As we continue our discussion of Challenges and why they are profoundly important in this four part series, we turn our attention now to Challenges as a better way to organize and distribute work.
There are many kinds of work. There’s work on the assembly line, analyzing water for impurities, delivering newspapers, and fighting wars. And loosely speaking, Challenges may have a role to play in all these kinds of activities. And there is a different kind of more intellectual work requiring more creativity and invention, whereby a need is identified and a solution sought. Examples include development of a marketing strategy, a new plastic material for manufacturing, or an innovative approach to engaging customers.
In this latter kind of work, well-defined Challenges represent a powerful tool for organizing human activity and motivating innovative outcomes.
Organizations have spent years defining efficient organizational forms, writing Standard Operating Procedures (SOPs), crafting job descriptions, and even developing robust platforms for planning and tracking work. And they are becoming more efficient. Use of contract labor and outsourcing of work, even whole functions, is more commonplace than ever. These approaches have often improved the bottom lines of businesses by increasing flexibility, lowering costs, and enabling projects to be accelerated. However with notable exceptions, these exercises in efficiency and shifting labor costs have done little to fundamentally change the rules of the game—to create anything like a “step change” in business performance and breakthrough innovation. In most instances, the 20th-century approach is essentially institutionalized resource planning and labor arbitrage that is simply commoditizing work and trading high cost labor for lower cost alternatives. It is not creating a unique competitive advantage. And it is certainly not tapping the creative capacity of organizations and the world to innovate. In some cases, it has actually achieved the opposite effect. Consider how many companies arguably lost their innovative edge by focusing so singularly on cost reduction that they lost the very resources and capabilities needed to be competitive over time (for example, Dell, General Motors). Some even created their next generation competition by turning their suppliers and partners into the only true sources of innovation (for example, semiconductors).
Clearly a less simplistic and more intriguing model for remaining both competitive and innovative must exist. If you are to fundamentally transform the economics of businesses, while achieving heightened levels of innovation performance, it is clear that a substantially more scalable approach will be required.
Such an approach would leverage network efficiencies, better economics, and modern technology. Organizations will open up their processes, inviting in thousands or millions of individuals and organizations to participate in their business processes.
Thanks to the Internet, you can now engage a global platform in your problem solving and use this platform to deliver against your goals with precision and consistency, while better leveraging your in-house resources.
But how can you engage this nearly unbounded marketplace of knowledge workers, creative and inventive minds, and productive capacity? You need a robust mechanism of engagement. It must be lightweight. It must be simple. It must be enormously flexible. It must be universally understood. Again, the “Challenge” fills that role, meeting all these requirements. In effect, the Challenge uniquely represents the enabling capability, the universal language, and the rules of engagement in neutral terms in order to empower a truly “open” access to human capital inside and outside the organization. It is magnificent in its simplicity. And in many respects, it has been hiding in plain sight for generations.
What is the inducement to this network of potential problem solvers to answer the call? For a simple idea, a small reward or inducement may be sufficient, whereas a technological innovation may require a team to spend months of time and capital to develop a winning solution, requiring substantial incentives. Internally focused Challenges may reward employees with reputation, points for the company store, or lunch with the CEO. Inducements may be peer recognition or once-in-a-lifetime experiences. (InnoCentive and NASA recently offered a unique viewing of a space shuttle launch.)
All these things must be assembled into a Challenge before it is exposed to the world of problem solvers. This also enables what some call the transition from Not Invented Here (NIH) to Proudly Found Elsewhere (PFE).
In the next and final post in this blog series, we will explore Challenges as a powerful Strategy tool.
Warm regards,
Dwayne Spradlin