Sunday, June 29, 2008

The Three Primary Value Positionings For Idea Management Software Tools

Jeffrey Phillips has added more to his recent critique on idea gathering tools such as Dell's IdeaStorm and SalesForce.com's SalesForce Ideas. In a recent article posted to the Innovation Tools website, Phillips argues that
  • the ideas generated need processing, and for Dell's IdeaStorm with over 9000 ideas submitted a brief cursory evaluation of 5 minutes per idea would take 450,000 minutes or 750 man-hours - a third of a year FTE. In addition, ideas from customers or partners may need legal review for IP ownership, adding to the time involved.
  • Social Networking or Crowdsourcing sites do not provide workflow processes for idea evaluation and selection beyond "a simple voting or rating process."
  • Social Networking and Crowdourcing approaches are claimed to generate less relevant ideas as:
. . . these programs primarily generate very incremental ideas, and since these approaches are very open, collaborative and web-based, they expose ideas to a large number of people. The larger the group, the more the thinking and ideas will revert to the mean. So you can't expect really insightful or disruptive ideas from this approach
I think that Phillip's key message is that an Idea Management system is more than a front end for capturing ideas, it is also a back end for efficiently and effectively processing and filtering those ideas and commercialising or investing in the best ones - for a significant commercial return on innovation investment.

I think that anyone involved with Idea Management Systems and indeed innovation generally will easily find consensus on this key message.

But I don't think that that one point alone is a damning critique of Dell's approach. Let's grant that assessing Dell's existing ideas costs 1/3 of a FTE resource? I suspect Dell could afford it. Indeed they could also afford additional extra resources to develop the criteria against which to assess ideas and to give relevant training to their staff involved in assessing the 9000 ideas and afford a team of reviewers and evaluators. The key issue here should not be the cost of evaluating ideas, but the net return on innovation investment after the most promising ideas have been selected and developed and commercialised.

More to the point from my point of view is that Dell, like many organisations, will already have systems in place for New Product Development. Large organisations will typically already have significant investment in software, systems and processes for New Product Development, process improvement, and input into strategic direction and performance improvement - systems which may have already been trialled 'proven' and committed to to a greater or lesser extent. In addition, organisations may have commitments to existing IT infrastructure such as portals and other communications technologies. The question arises therefore of where Idea Management Solutions 'sit' in relation to these existing systems and processes.

There seem to me to be 3 clear positionings for Idea Management Software solutions:
  1. An Idea Management System is expected to generate and capture ideas and feed them into existing systems and processes which will then filter and assess them.
    In this case the Idea Management tool itself is not expected to provide significant initial business evaluation and filtering of the ideas beyond peer review or a very rapid initial assessment (e.g. a go/no-go decision for promotion to the next stage or a selection from a list of defined options) by an assigned business representative
  2. An Idea Management System is expected to integrate with existing systems or processes by providing suitably qualified ideas to the appropriate entry point.
    In this case the Idea Management tool is expected to provide significant initial business evaluation and filtering of the ideas, but more extensive evaluation and development of opportunities is to be fulfilled by other organisational systems and processes.
  3. An Idea Management System is expected to support and facilitate a complete end-to-end stage-gate process from idea generation to idea commercialisation and value realisation
Depending on what the organisation wants, there are distinct value criteria to assess an Idea Management System against.
  • In case 1 above, the system must generate an appropriate volume of reasonable quality ideas.
  • In case 2 the system must not only generate ideas, it must put them through an appropriate process of qualification and evaluation to filter the best ideas to forward to the next stage in the system.
  • In case 3 the system must be capable of stewarding ideas through a complete stage-gate process from idea generation to commercial realisation.
The question of whether and how an Idea Management System integrates with existing processes for market testing, developing a business case, prototyping, project and portfolio management and other activities is an interesting one, and different vendors have positioned their software in different ways to address this question.

It seems to me that most Idea Management software tools are focused around cases 1 or 2, for the primary reason that organisations do typically already have significant investments in existing systems and processes for activities such as NPD, process improvement, strategy and performance management.

In the case of Dell, they appear to have clearly positioned their Idea Management tool in the first category. My reading of Dell's Idea Management process is that what Dell primarily wanted was a front end for generating ideas to feed a stream of ideas into their existing relevant organisational processes such as NPD.

While I agree with Phillips that an Idea Management tool can provide additional value by providing focus to generate more better quality and more relevant ideas and can further develop that value through efficient initial back-end processes for evaluating and filtering ideas, I don't think that focusing the tool on the front-end of idea capture is inherently a fault. The question is whether the back-end processes at Dell efficiently pick up the slack and process the ideas efficiently, whether enough appropriate evaluation and selection is incorporated into the front-end tool, and most importantly whether the system generates enough commercial value and return on innovation investment. These are, I expect, questions that Dell will eventually answer for themselves from their own experience.

An additional point to raise in relation to Phillips' critique is that we need to think carefully about what value an organisation is seeking when it engages employees, customers or partners for ideas. In addition to the commercial value of evaluated, selected and implemented ideas, there is value in engaging customers and employees with the company, in capturing market intelligence and trends, and in general developing a closer relationship with customers, employees and stakeholder groups. For example, the value of social networking tools for enhancing the relationship with customers is described in a recent MIT Sloane Management Review article through the concept of Virtual Customer Environments, summarised here and here. So the possibility exists that regardless of the success of social networking or crowdsourcing tools for generating commercial value as a front end for innovation, such tools may generate commercial value in themselves through enhancing the relationship with key stakeholder groups such as employees or customers.

1 comment:

SusanA said...

Some interesting angles on this problem. nothing is simple, is it. But at least we have the tech to get beyond the suggestion box now.