Your newsletter on applied creativity, imagination, ideas and innovation in business.
Thursday 23 March 2011
Hello and welcome to another issue of Report 103, your twice-monthly newsletter on creativity, imagination, ideas and innovation in business.
As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.
Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.
JEFFREY IS ON TWITTER: “creativeJeffrey”
As I announced in the last issue of Report 103, I am now on Twitter and you can find me at http://twitter.com/creativeJeffrey. I confess I have yet to see the value of adding more noise to the network, but will try to keep my noise useful or entertaining or both!
THE $12.50 IDEA
We innovation enthusiasts often talk about the value of an innovative idea. We love fantastic, game changing ideas and recognise that many of them generate products worth millions or billions. But do you have any idea how much an idea actually costs? I do: they start at US$12.50 each and can get considerably more expensive.
How Did Jeffrey Work That Out?
How did I work that out? Easy. As you probably know, my company makes the world’s greatest innovation process management software (see below). I’ve also facilitated a number of formal and informal brainstorming sessions over the years, so I know a thing or three about the idea generation process in corporate groups.
In a massive on-line brainstorm (also sometimes called an ideas campaign), it takes the typical user 10-15 minutes to enter an idea, review it and submit it. Some ideas are submitted faster, but they are often not very well thought out. And some ideas, especially if they involve product or package design issues can take considerably longer. Such ideas often include uploaded documents, images and other material. Moreover, some idea management submission forms require a lot of data. Completing them takes longer than 10-15 minutes. These timings, incidentally, do not take into account time spent thinking about an idea prior to submission.
Although I have no proof of this, my belief is that highly creative ideas (and hence those most likely to spark breakthrough innovation) require more time than lesser ideas. Creative thinkers spend more time dwelling on such ideas, discussing them with others and often researching their viability before submitting them. Moreover, such ideas often require more time to submit on-line as they demand more explanation than simple, incremental improvement ideas. So, highly creative ideas are more costly.
In any kind of brainstorming, idea management or other activity that generates ideas, you also need a process for reviewing ideas in order to identify those which deserve further consideration. This is a critical element of the innovation process, but it is one that many innovation managers and consultants fail to consider when planning ideation events – often with the result of generating an unmanageable number of ideas.
In our experience, and from what I have gleaned from others in the field, it takes about 5-10 minutes to perform an initial review of an idea. This is sufficient for determining whether or not an idea deserves further consideration and development. Since we are only looking at the cost of an idea, we will not price these later steps in the process.
Let us assume an employee in a knowledge industry is worth about $50 per hour. This includes salary, benefits and overheads. Of course some people are less costly to employ. On the other hand, most subject experts are highly experienced and knowledgeable people – in least in their areas of expertise – so their time is generally more costly. Nevertheless, we will use $50 as our base hourly value.
So, a minimum ten minutes to submit an idea plus a minimum five minutes to evaluate an idea works our to a quarter of an hour or $12.50. That, of course, is the base price. Ideas, such as highly creative ones, can be considerably more expensive. And note, this is simply the cost of submitting and reviewing an idea. Implementation costs are far higher.
Ideas generated in brainstorming events are typically more expensive. Although less time is spent on formulating each idea (whether shouted out or written down), such events involve people being out of their offices for hours, the hiring of a professional facilitator and often travel costs if participants are not all in the same office. Cost cutting, such as using an inexperienced internal person to facilitate, usually leads to worse results than using a professional – so being cheap in this respect is not a wise investment.
A lot of idea generation activities, like suggestion schemes, idea jams and crowdsourcing activities are judged by how many ideas they generate. However, armed with an appreciation of the cost of ideas, it becomes clear that every 1000 ideas generated will cost your business at least $12,500.
That said, if you are crowdsourcing, then ideas are also being generated by non-employees. Since you are not paying for their time, their ideas require only 5-10 minutes of your employees’ time for review. Hence they cost you a minimum of $4.17 each and every 1,000 ideas only cost a minimum of $4,170.
Bearing in mind that implemented ideas are more costly still, we should be looking for a minimum 100% return on ideas (RoI – yes, I know that RoI usually stands for “return on investment”, but this is my article so I am using my acronym!) per ideation activity. For internal activities, this means that each 1000 ideas generated should result in implemented ideas that lead to increased income or reduced operational costs worth at least $25,000.
Moreover, it also implies that in any idea generation activity, more ideas are not necessarily better than fewer ideas. If you can generate 100 ideas, of which 25 are implemented, that is surely better value for money than generating 1,000 ideas with 25 being implemented. Incidentally, unfocused suggestion schemes or idea jams (in other words, those that simply ask for ideas rather than focus on a particular innovation challenge), typically see implementation rates of around 1-3%. This low rate is because a very high percentage of ideas are not in line with business strategy, irrelevant to business needs or otherwise non-doable. Open crowdsourcing tends to result in even lower implementation rates as the public is generally less informed about your activities than are employees.
As you know, you will always get better, more relevant results when an ideation activity is based on a specific innovation challenge. The more precise the focus, the better the results in terms of generating usable, creative ideas that solve specific business problems and help your business grow. Clearly, when ideas cost at least $12.50 each, it is in your best interests to invest time in formulating good challenges in order to maximise the number of ideas implemented and therefore the RoI.
Putting It All Together
Arguably, no one form of idea generation is better than another. Even unfocused suggestion schemes (which you probably know I dislike for their inefficiency) can be profitable if the value of implemented ideas exceeds their costs.
However, this notion of using the number of ideas submitted, as a metric for evaluating the effectiveness of an idea generation activity, is flawed. Each idea costs an average of $12.50 (you can work out the numbers in your own currency and costs) and more ideas translates into more costs. With this knowledge, you can work out the success of an ideation event over the longer term simply be looking at the number of ideas generated, the number implemented and the value generated.
Admittedly, this takes time. Sometimes ideas take years to generate income or cost savings. However, over the longer term, it will enable you to see which idea generation activities are most cost effective in your company.
WHY YOU SHOULD READ MY BOOK
Five reasons why you might enjoy The Way of the Innovation Master
- If you like Report 103, you will like The Way even better.
- If you are responsible for a corporate innovation initiative, you will find that The Way provides the guidance you need, from planning through to implementing. And for less than US$20 – it’s a heck of a lot cheaper than hiring a consultant!
- The Way is written in my usual, light, easy-reading style. So it won’t put you to sleep as many business books do.
- The Way is available in paperback and two eBook formats – so you can read it any way you’d like to read it.
- You would make me very, very happy if you were to buy it!
For more information and some sample reading, see http://www.creativejeffrey.com/books/. If you cannot wait, you can order directly from Amazon (USA), directly from the distributor or ask at your favourite bookshop.
COMPARISON OF INNOVATION PROCESS MANAGEMENT SOFTWARE OPTIONS
By Andrew Greaves
More and more organizations are appreciating the necessity of tapping into their employees’ and suppliers’ knowledge to identify potential savings and new revenue possibilities. The most effective system to use is an “innovation process management” system which allows the progression from a focused request for ideas through evaluation and on to the implementation of the identified solutions. A less comprehensive variation on innovation process management is an “idea management system” which is essentially an electronic suggestion box and which has no electronic capability to process the numerous submitted ideas. Ask yourself whether you would like to be the person who has to sift through the ideas, respond to submitters and get the best ideas implemented.
So, let’s suppose you are contemplating the value of an innovation process management system. What are the key factors to consider and what are the options available to you?
Below is a table which will hopefully inform your thinking:
Understanding the Results
1) Buying necessitates a comparatively large one-off expense to purchase the software license, user support and any relevant upgrades for one year. Subsequent years of maintenance and support can be purchased at a greatly reduced rate (typically 15-20% of license fee).
2) Payment level will normally be determined by the number of users included in your implementation’s database. Renting allows for a phased roll out which may be more desirable depending on your organisation’s circumstances and objectives.
3) How long is a piece of string? How many people are available and sufficiently skilled in programming and what level of innovation awareness do they possess? As the table suggests the answers to these questions will determine how long it will be before you launch and can actually start to achieve your objectives.
4 and 6) An innovation process management system has two main components. A front end dealing with idea capture and a back end that facilitates idea evaluation, provides feedback to submitters, caters for different levels of user access, fosters collaboration and initiates the next steps for eventual implementation. It goes without saying that the front end is appreciably easier to deliver than the back end.
It is unrealistic to expect a programmer to have a sufficient understanding of the innovation process to be able to devise a back end that will make your implementation successful. Only an innovation process professional will be in a position to fully appreciate the subtleties of the process. They can then partner with you in satisfying user needs and the likely future requirements of your organization and its implementation.
5a and b) Your choice of either of these two options will have different implications for your IT department. The option to buy will require either the connecting of a pre-configured web server to your network or a full installation of the necessary software.
If you were to opt to rent your implementation (Software as a Service or SaaS) then it is a relatively straightforward process as it hosted in the “cloud” and thus unlikely that IT will have much involvement at all.
How might your IT department view either of these scenarios?
7) Doing nothing and assuming (hoping) that what you do currently is going to suffice is arguably what most organizations have defaulted into doing. In the knowledge driven world you inhabit it would seem absurd not to tap into the creative resources on your doorstep, i.e. your own work force and your suppliers who have a shared interest in your success.
Can you really afford to just sit back and miss out on such benefits as cutting operational costs, improving efficiency, identifying additional revenue streams and developing ways of differentiating yourself in your customers’ eyes?
As Talleyrand said quite a few years ago now: “Nobody knows as much as everybody”
About the Author
Andrew Greaves is the founder of The Idea Hunter, based in London. The Idea Hunter helps companies in the marketing sector to generate better ideas more often and then coaches them to present the solutions more effectively to the relevant stakeholder. Client experience includes Sky Media, Cartoon Network, Imperial Tobacco Group, Bacardi Martini and a whole host of PR and media agencies. Andrew is also part of the management team at jpb.com and is the Innovation Consultant responsible for the UK and other markets.
GO ON, LET THE BRAINSTORMERS CRITICISE!
You know the number one rule of brainstorming, don’t you? There is to be no criticism of ideas! Criticism of ideas impedes free thinking and squelches creativity. At least that has been common knowledge since Alex Osborn coined the term for the process he developed in the 1940s. Now, however, it seems that this golden rule of brainstorming may not be true afterall!
According to research by Matthew Feinberg and Charlan Nemeth of the University of California at Berkeley, rules of any kind inhibit creative thinking during brainstorming. Moreover, they found that “exposure to a persistent minority dissenter sparks more flexible, open-minded, and multi-perspective thinking which, in turn, produces less conformist and more creative outcomes.” In other words, criticism can actually improve creativity during a brainstorming session.
The researchers looked at brainstorming sessions in which there was a strict rule not to criticise, sessions which emphasised that participants should debate and sessions in which no rule was given with respect to criticism. In the sessions in which criticism was encouraged or in which no rule was stated, they found a higher level of creativity than in sessions where criticism was expressly forbidden.
The authors, citing previous research, theorise that: “because the instructions to criticize liberated participants to more freely generate ideas. These instructions allowed for discussion that would otherwise have been kept in check, and such discussion led to more ideas and improvements on ideas.”
They also suggest that the mere act of having rules in a brainstorming event, which should encourage free thinking, inhibits that free thinking.
As a brainstorm facilitator who has always made a big deal of my “no squelching rule”, this paper suggests I need to change my approach. I shall!
This paper is worthwhile reading for anyone who facilitates brainstorming sessions or who has an interest in brainstorming. You can download it from http://jobfunctions.bnet.com/abstract.aspx?docid=2555083 (free registration is required).
I will be speaking at the South African Innovation Summit (http://www.innovationsummit.co.za/) in Johannesburg which runs from 30 August to 1 September 2011. The details have yet to be confirmed. But watch this space for updates. And do consider attending this conference. South Africa is a vibrant, exciting and growing economy which is grappling with a number of issues that result from its growth, its unique culture and its history. That makes for an exciting mix when it comes to innovation potential! And I know the organisers are going out of their way to create a great event.
I will also be delivering a workshop at the European Conference on Creativity and Innovation (http://www.eaci.net/eccixii/index.php) in Faro, Portugal, which runs from 14-16 September 2011. Being European in scope, this conference boasts a diversity of exciting speakers from all over the place. So it is a guaranteed inspirational and learning event.
Also, the Algarve is a beautiful region of Portugal, a country that is special to me (I lived there for a year and a half in the mid-80s).
I am also in talks with groups in Namibia, China and Mexico about doing workshops or other activities. Watch Report 103 for more news.
I am also at the Brussels Imagination Club, which I manage with my good friend Andy Whittle, every 2nd and 4th Wednesday of the month. More information at http://www.imaginationclub.org/brussels and http://www.imaginationclub.be/
IMPROVE YOUR PRODUCTS, PACKAGING AND PROCESSES THROUGH INNOVATION
Jenni innovation process management software allows your managers to set up massive focussed, on-line brainstorms to their teams, departments, the whole company and even partners if they wish. At the end of the brainstorm, Jenni allows the managers cluster ideas as well as to set up criteria-based evaluations, SWOT (strengths, weaknesses, opportunities and threats), income/cost savings projections, further development and more.
Jenni then compiles this information into scorecards for each brainstorm as well as detailed reports for individual ideas. This process enables your managers to make intelligent business decisions about implementing ideas and to defend those decisions to senior managers.
Unlike many idea management tools, Jenni provides your managers with a clear, logical and effective process for the front end of innovation.
Want to know more? Check out http://www.creativejeffrey.com/jenni/ or reply to this newsletter and someone will be in touch with you soon.
KILLER INNOVATION CHALLENGES FOR YOUR BUSINESS!
Whether running brainstorming events, ideas campaigns or any kind of ideation activity, it is absolutely critical to start with an effective innovation challenge. A great challenge makes it easy for you and your colleagues to generate excellent, creative and relevant solutions to your business problems. A poorly defined or ill-framed challenge, on the other hand, will at best generate irrelevant ideas and at worst leave brainstormers confused and demotivated.
Following years of supporting clients on Jenni innovation process management software and countless brainstorming sessions, we can provide you with killer innovation challenges that will positively inspire great ideas.
If you want someone to help you formulate a set of of innovation challenges that are in line with corporate strategy, contact me at: email: firstname.lastname@example.org or ring +32 478 549 428 to discuss.
Report 103 is a complimentary eJournal from Bwiti bvba of Belgium (a jpb.com company: http://www.creativejeffrey.com). Archives and subscription information can be found at http://www.creativejeffrey.com/report103/
Report 103 is edited by Jeffrey Baumgartner (email@example.com) and is published on a monthly basis.
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