Perspectives on Innovation

By Alph Bingham

This blog is the final 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 previous posts, 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 Better Way to Organize and Distribute Work (Part 3 of 4) by Dwayne Spradlin

In this last segment of the series, we will address the role of a Challenge as an instrument of strategy.

Too often organizations measure their innovation success by % of sales spent on R&D, how many patents they own, or whether the leading academics in their fields are on retainer. However, in today’s economy, these should all matter much less to the management of the organization or to the shareholders than whether they can get a new product to market before the competition and dominate the category or whether resources are being managed to ensure the firm can aggressively pursue new business opportunities when they emerge.

Too many organizations struggle to even clearly define their problems and goals, much less to innovate with the precision and efficiency needed to compete in the world today. Whether building better business processes or designing new technologies to dominate a market, traditional business practices are no longer sufficient. Nowhere is this truer than in large corporations where years of accumulated standard operating procedures, poorly aligned incentives, ever-increasing bureaucracy, and entrenched culture work together to ensure that increasingly expensive and mediocre innovation is the best they can do. The existing systems are failing and firms are in desperate need of new methods to improve responsiveness and competitiveness.

Dictionary.com defines a “challenge” as “a summons to engage in any contest” or as “a job or undertaking that is stimulating to one engaged in it.” However, it is much more. Well-constructed “challenges” are an astonishingly powerful and uniquely effective tool for focusing the energies of multitudes of creative, inventive, talented audiences on the important problems facing organizations, nations, and the planet on which we live. These audiences can be employees, customers, partners, and a planet of resources. (more…)

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). (more…)

by Alph Bingham, Founder and Board Member, InnoCentive

This blog is the second 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: A Better Way to Organize and Distribute Work (Part 3 of 4) by Dwayne Spradlin
The Profound Importance of Challenges: A Powerful Strategy Tool (Part 4 of 4) by Alph Bingham

Recently Dwayne Spradlin and I published a blog titled “Why Challenges will transform the future of innovation, work and business” in which we laid the groundwork for the topic “What is A Challenge?”  In this blog, we described the Challenge as:

We committed to exploring each of these facets in more depth.  In today’s post, we’re going to begin the discussion of the Challenge as the fundamental unit of problem solving.

The Challenge as fundamental unit of problem solving – Part 1

As we worked to create a successful business around this new model, new language sprang up to characterize it.  We have mentioned the coining of the terms “crowdsourcing” by Jeff Howe and “broadcast search” by Karim Lakhani.   Internally InnoCentive used familiar terms in very deliberate ways.  Our customers, providing challenging problems to our network, became “Seekers.”  And our network was one of “Solvers.”  The problems themselves evolved to “Challenges.”  And we used these descriptions as we analyzed questions like:  What was the value proposition to Seekers?  Why did Solvers engage? And how did the properties of the Challenge serve to effectively contribute to its solution?

As we deepened our knowledge of the Challenge and its role and the means of maximizing its service, we recognized that the Challenge shares DNA with the modularity processes, earlier described by Carliss Baldwin and Kim Clark of Harvard Business School. A portion of the global innovation objective is formulated as a Challenge, in which a “Challenge” essentially represents the problem statement for a block of work that can be modularized and in most cases rendered “portable.” That is, such a block of work can be outsourced or insourced as an integral unit. (more…)

by Alph Bingham and Dwayne Spradlin

This blog is the second 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: The Fundamental Unit of Problem Solving (Part 2 of 4) by Alph Bingham

The Profound Importance of Challenges: A Better Way to Organize and Distribute Work (Part 3 of 4) by Dwayne Spradlin

The Profound Importance of Challenges: A Powerful Strategy Tool (Part 4 of 4) by Dwayne Spradlin

Clearly the notion of a challenge as a tremendously powerful and versatile tool for innovation is gaining credibility quickly.  We explored this idea in depth in our book “The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise” published this year by FT Press.  Below and over the next few weeks we share some of the discussion on Challenges from our book and would love to have your thoughts and feedback.  Enjoy!

What Is a Challenge?

Dictionary.com defines a “challenge” as “a summons to engage in any contest” or as “a job or undertaking that is stimulating to one engaged in it.” However, it is much more. Well-constructed “Challenges” are an astonishingly powerful and uniquely effective tool for focusing the energies of multitudes of creative, inventive, talented people on the important problems facing organizations, nations, and the planet on which we live.

The Challenge is core to InnoCentive’s business, and its power has been on display now for several years. We see early, though isolated, glimpses of this approach throughout history well before InnoCentive’s founding. Striking examples of its use range from the Longitude Prize offered by British Parliament in the 1700s to the Ortiz Prize that induced Charles Lindbergh to cross the Atlantic. It has been shown to have broad and general applicability.

InnoCentive has more experience with Challenges than any organization in the world and provides an intriguing sampling of the potential of Challenges in areas as diverse as business entrepreneurship, life sciences, mathematics, and manufacturing.

Challenges can deliver breakthrough strategies or highly technical solutions and apply to every business function and every type of problem, large and small, strategic and tactical.

But Why Does It Work?

We first began to understand the Challenge as a powerful business tool a few short years ago. It was at this time that a number of key concepts were beginning to converge, namely that a Challenge exhibits three important properties. The Challenge is:

• The fundamental unit of problem solving;
• A better way to organize (and distribute) work;  and
• A powerful strategy tool.

Over the next few weeks, we will explore each of these three properties in more depth.

Warm regards,
Dwayne Spradlin and Alph Bingham

Below is an excerpt from Chapter 6 of the the recently published “The Open Innovation Marketplace”, written by InnoCentive Founder Alph Bingham and CEO and President Dwayne Spradlin. In this chapter, the authors discuss the meaning of a Challenge, and reveal the 6 things that make a good Challenge.  The entire chapter is now available for download here.  For a limited time, Chapter 3 will also remain available, and can be found here.

“Every day you may make progress. Every step may be fruitful.
Yet there will stretch out before you an ever-lengthening,
ever-ascending, ever-improving path. You know you will
never get to the end of the journey. But this, so far from
discouraging, only adds to the joy and glory of the climb.”

—Sir Winston Churchill in Painting as a Pastime

Overview

Imagine every department with a clear picture of its needs, options, and work in process. Imagine each decision being made by managers bound to driving the optimal outcome regardless of where the resources reside. Imagine the vibrancy of an organization whose singular focus is driving performance excellence and not measuring success by patents issued, full-time headcount, or the size of its R&D budget. In such an organization, the CEOs agenda is that of the investor: How can the firm drive the best returns? The CFO not only tracks the business, he also manages risk and opportunity by measuring the effectiveness of all parts of the organization to deliver against its goals—in business and economic terms—with innovation held to the same performance standards as every other part of the organization.

Whether it is marketing, information technology, product development, or manufacturing, every department understands its problems and challenges and its various channels for problem solving, and has the skills to manage the process effectively, take action, and create solutions to drive enterprise value. Too often organizations measure their success by % of sales spent on R&D, how many patents they own, or whether the leading academics in their fields are on retainer. However, in today’s economy, these should all matter much less to the management of the organization or to the shareholders than whether they can get a new product to market before the competition and dominate the category or whether resources are being managed to ensure the firm can aggressively pursue new business opportunities when they emerge. The prevailing mentality of most established businesses slows, if not discourages, innovation while increasing its costs. Ultimately the shareholders pay the price.

Challenge Driven Innovation represents a dramatic evolution in enabling more effective, efficient, and predictable innovation. And our experience with businesses suggests there is enormous benefit simply in managers and employees better defining and managing their own problems. The transformational change, however, is accomplished through the remaking of the organization into the Challenge Driven Enterprise, where the most difficult problems can be solved, effort is aligned with strategic goals, all talent inside and outside of the organization is brought to bear to deliver on the mission, and sustained performance improvement is possible. The Challenge Driven Enterprise represents a new vision with far-reaching implications that can improve the speed, agility, and efficiency of business. It enables new modes of innovation while creating the flexibility to capitalize on new business opportunities. Industry leaders will be those that successfully apply these concepts universally, from business strategy to the manufacturing plant floor.

Read More:  Download this chapter by clicking here.