Report 103
A weekly newsletter on creativity, ideas, innovation and invention.

Tuesday, 19 October 2004
Issue 39

Hello and welcome to another issue of Report 103, your weekly newsletter on Creativity, ideas, innovation and invention.

As always, if you have news about creativity, idea innovation or invention please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.

AIN'T NO SUCH THING AS FREE INNOVATION

From time to time, when demonstrating our idea management virtual software to prospective clients we are asked about how many ideas the client can expect. We answer: “a highly effective idea management solution can be expected to generate an average of one idea per user per month or 10-12 ideas per user per year.”

This sometimes shocks prospects: “But we have 7,000 employees! How will I ever handle so many ideas!?!”

I must admit I am occasionally tempted to say: “Well, we could help you implement a very bad idea management programme across your company, then you could be sure of receiving very few ideas.” Fortunately, I have thus far refrained from such asinine remarks. And indeed, this is why I try to have as little involvement in the sales process as possible.

The truth is, of course, implementing an innovation culture together with an idea management solution requires a significant investment – and the software costs are but a small part of the investment. The greatest cost is staff time.

In a worst case scenario, a company will need to undergo a complete culture change from a hierarchically managed company where all decisions come from the top and must be obeyed (or else!) to an innovation culture in which the active sharing of ideas and knowledge is the norm. This is an expensive transition. But, truth be told, such companies rarely make such a big jump.

Companies getting serious about idea management generally have a culture which encourages the sharing of knowledge. They usually have some kind of suggestion box system in operation and have discovered the value good ideas offer their firms. Hence, the initial investment is in promoting a new innovation programme based on a comprehensive idea management solution. The cost of an internal promotional campaign such as this will be around Euro 10 (US$12) per employee per year.

The cost of an idea management solution varies greatly. If you purchase a software package, you will also be faced with the costs of servers; licenses (for databases, web server software, etc); IT staff for maintenance of the server; and on-going support. These costs can add up quickly.

We offer Jenni idea management, a “virtual software” solution in that we install and maintain the software on our own secure servers and charge clients a per user subscription fee. So there is no issue of additional hardware or IT management costs. Jenni starts at Euro 30 (US$36) per user per year inclusive of software access (via a web browser), maintenance, regular upgrades, technical support and innovative support.

Every idea submitted to an idea management system requires time on the part of the submitter – anywhere from 10-30 minutes, not including time spent thinking about the idea. Let us assume an average of 20 minutes.

IdeaMasters (the term we use for people who oversee idea management systems and perform initial screening of ideas, rejecting poor ideas and sending interesting ideas to experts for evaluation) spend anywhere from one to 20 minutes on screening ideas. Clearly undoable ideas can be rejected in a minute or two. Interesting ideas take more time and must be routed to evaluators for expert opinion.

Expert evaluators will normally need about 15-20 minutes to perform an evaluation using a tool like our 5x5 criteria based evaluation tool. Of course highly complex ideas can take longer to evaluate – but we are looking at averages here.

So, let us consider a company with 5000 employees, generating an average of 10 ideas per employee per year. We'll assume an hourly cost of Euro 30 for employees and Euro 60 for IdeaMasters and experts.

Promoting idea management: Euro 50,000
Cost of generating ideas: Euro 500,000
Cost of IdeaMastering: Euro 250,000
Cost of evaluating 25% of ideas with three evaluators for each evaluation: Euro 750,000
Cost of idea management solution: Euro 150,000
Total annual cost per year: Euro 1.7 million (about US$2.04 million)

Yikes!!! I hear you say. That's a lot of money.

What can you look forward to in exchange for such an investment?

There are number of calculations for determining the RoI (return on ideas) of an idea management solution. For this article, we'll consider the value per idea.

DaimlerChrysler likes to brag that in 2001, their idea management solution netted 69,000 ideas which generated a savings of Euro 62 million. This works out to about Euro 899/idea – and this fits in with our own observation that a well implemented innovation programme centred around an idea management solution nets an average of Euro 500 to 1000 per idea (in new income or cost savings).

So, in our example 50,000 ideas would mean a revenue increase of between 2.5 and 5 million Euro – certainly a handsome return on your innovation investment.

Indeed, Giga Research (a subsidiary of Forrester Research) also found that a “positive total economic impact within one year is reasonable” for the implementation of an idea management solution.

As the saying goes: It takes money to make money. And while there is clearly a significant risk involved, a well implemented innovation programme centred around an idea management solution can bring an excellent return on investment. Want to know more about what an innovation programme can do you for you?


GROWTH AND FEEDBACK

Over the past couple of weeks, the number of subscribers to Report 103 has grown considerably. I am, of course, delighted with this. More importantly, however, I want you to be delighted with Report 103. Spare a moment and tell me what kind of articles you would like to see in Report 103. Also, let me know what you like and dislike about this newsletter.


HUMOUR AND CREATIVITY

A couple of weeks ago, we facilitated multiple brainstorming sessions for a European project integrating cultural heritage with information technology. During the morning sessions, I noted one group of brainstormers was having a great time. They were laughing, talking about extraterrestrials and scribbling all kinds of crazy things down.

As soon as I observed this behaviour, I reacted immediately: I gave them the thumbs up. I knew they were going to have the best ideas. And when it came to sharing and consolidating ideas, from the various brainstorming groups, at the end of the session, I saw I was right. They not only had great ideas, but had also come up with a nifty model – based on extraterrestrials – for generating ideas.

I must say, every time I have facilitated brainstorming sessions which involve dividing a group up into smaller teams, the teams laughing the most inevitably have the most and the best ideas.

The reason why should be obvious. When people start laughing and joking around, they drop their concerns about risk. They do not worry about other people laughing at their ideas, because they are laughing too hard themselves. And by not worrying about risk, they push their imaginations much further than do their more serious colleagues who worry about looking ridiculous.

Moreover, when brainstormers start laughing and joking, they almost inevitably enter into a friendly competition of each person trying to be funnier and more outrageous than the other. And this is great for brainstorming.

The result, of course, is a lot of crazy ideas, many of which could never reasonably be implemented. But, within those crazy ideas are inevitably a few gems: crazy yet brilliant ideas that would never have been generated were the group not enjoying themselves so much.

Getting people to laugh and enjoy brainstorming can be a challenge. Team dynamics plays a big part. Some teams tend towards having fun. Others do not. Often, there will be one extrovert in the team who gets the laughter rolling. If you can identify the clowns in a group, you can encourage them. If you are dividing a group into smaller brainstorming teams, try to distribute the clowns among all the teams – if possible.

Some creativity consultants are firm believers in funny hats and other props to make people relax and so encourage laughter. Personally, I don't believe in such props. My feeling is that they can make people feel too ridiculous and hurt the dignity of brainstorm session participants, particularly senior executives. (Perhaps this comes from spending most of my adult like in Europe and Asia where people tend to be more reserved than in America).

On the other hand, the facilitator can encourage humour by being humorous herself. Cracking jokes, creating crazy scenarios as a basis for brainstorming and laughing heartily at participants' jokes are all ways of encouraging humour in brainstorming.

I also find, serving a lunch with wine (or beer) helps loosen people up a bit (provided no one gets carried away!) and so brings a more relaxed atmosphere which is conducive to a good laugh... and good brainstorming.


NIFTY WEB RESOURCE

Doubtless you know about Google. No Internet user on the planet could not know about Google. But, Google also offers a number of other tools which are equally nifty and very helpful.

Google news: http://news.google.com/ provides links to the latest articles in more than 4,500 news sources world wide. Needless-to-say, it provides a search feature that allows you to search the news for particular terms, like “Idea Management” or “innovation”.

Most interesting, however, is the news alerts function. If you search Google news for “innovation” (for example), you are also offered the possibility of subscribing to news alerts: e-mails that inform you whenever there is a new article related to innovation. These e-mails can be sent once a day or whenever Google news finds an article related to innovation

For innovation professionals, for instance, it can be useful to receive daily alerts on terms like “Innovation”, “innovate”, and so on.

Give it a try!


Happy thinking

Jeffrey Baumgartner

 

 


 

 

 

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Jeffrey Baumgartner
Bwiti bvba

Erps-Kwerps (near Leuven & Brussels) Belgium