Monday, March 29, 2010

The big challenge in Open Innovation (Part II)

What’s in it for me? This is the very first question most of the participants in an open innovation initiative will ask. One of the aspects often overlooked with OI is what will the process or organization give back to the participants. It is very easy to give out cash prizes for winning ideas or participation, but is what is the formula for ensuring participants keep coming back in an open Innovation scenario?

Creativity and The Performance Paradox, by Steve Shapiro, is perhaps one of the best explanations I have seen in trying to understand the right balance of motivation that has to be provided in order to get the desired performance. It reflects on the Yerkes-Dodson law, where performance increases with motivation up to a certain point after which performance drops. (I want to credit Stefan Lindegaard who suggested I look up some of Steve’s contributions in this subject, and thus saving me a long dissertation on this topic.)

Keeping this in mind, there is one more element that is sometimes forgotten when implementing the motivation structure in an open innovation culture. The ‘Learning’ element is sometimes forgotten, but one of the most valuable weapons in ensuring that the OI culture matures and becomes highly effective towards the expected goals of the OI initiative. Many participants in an OI activity join because of the rewards, but as they engage the process they find that they also find a reward in what they are learning from the activity and from other’s involvement. (This could perhaps make a case for continued participation without rewards, however, at a given point, as their experience and knowledge grows their ‘learning’ reward begins to diminish.)

From the OI side it’s critical to keep these ‘learned’ individuals coming back. They are no different than employees who you’ve spent significant resources on, and the OI initiative benefits each time they return. These individuals are more adept at the process, and with each return their ideas increase in quality and they become more adept at making those critical ‘idea connections’ that need to occur as multiple individuals from different walks of life collaborate on a particular problem (see Innovation: Collaboration has a multiplier effect.)

In the attempt to ensure the participants return, I usually like to take a page from the Airline Industry’s handbook… frequent flier miles. Making a flight on a particular airline will get you nothing but points, but continuing to loyally fly the airline can eventually get you free tickets. What this means is that there has to be a motivation transition or connection from one OI initiative to the next in order to maintain participant loyalty.

In OI there really is no need to provide a large ‘home-run’ prize, after all, as Steve Shapiro clearly explained, participants will be engaged for the wrong reasons and their creativity, which is essential to OI, will likely be diminished. The learning experience is a significant reward in itself and coupling it with a structure that allows participants to incrementally build towards a reward (like in the frequent flyer case) can be a powerful weapon at securing their loyalty to the process while in return they increase their ability to add-value with each subsequent open innovation challenge.

The big challenge in Open Innovation (Part I)


2 comments:

  1. Very interesting article on applying my Performance Paradox to OI. There is some interesting research on the topic of motivation and OI. One excellent one is http://sloanreview.mit.edu/the-magazine/articles/2009/summer/50413/how-to-manage-outside-innovation/ written by Kevin Boudreau and Karim Lakhani.

    Thanks!

    Steve Shapiro

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  2. Steve, thanks for your comments. You probably have more knowledge and experience on the motivation topic than many of us do.

    The learning aspect of motivation really stems from Lean. In Toyota's house of lean, the entire structure is based around people and the respect for people, and one of the key goals in this structure is to achieve a learning organization. The lean structure gives them freedom to take risks and learn in the process. After all, becoming lean requires innovation, albeit incremental as oposed to disruptive.

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