My three principles of new product development

Spigit recently released a Facebook application that exposes Spigit's social innovation management functionality on the platform. It is always thrilling when something you help create sees the light of the day. In this case it was particularly satisfying because we followed my three principles of new product development with a great degree of success (thanks to FacebookEngage product manager Nina Chai and Pratim Mukharjee, the lead developer on the project).

Simple but not Simpler
I have lead the evolution of the Spigit platform from an abstract concept to the leading social innovation platform used by over 100 organizations all over the world. Initially we had to take a leap of faith in creating the first version of the product. Combining idea management with social networking was a new concept for a lot of our prospective users. We certainly made a lot of untested assumptions to create that first version. We did strive, however, to minimize the number of assumptions and create something that was simple (with a minimal feature set) but not simpler, i.e. it provided unprecedented benefit to the end users. We have started Spigit's Facebook application development much the same way. The initial version exposes minimal functionality. It's a proposal to our customer base which they use, review, and evaluate.The rest of the course will be charted by combining customer feedback with our own intuition and understanding of the marketplace.

Native Experience
There are some products that are so revolutionary that they change existing interaction paradigms, processes, or even the way of thinking. Most others need to seamlessly fit into existing  lifestyles and usage conventions. They must blend with established usage patterns and feel completely native to the user. We had to be very careful about this blend for the facebook application. A large portion of Spigit's user base is in the enterprise space. Facebook users are significantly different in their expectations, attention spans, and motivation to participate. Spigit's Facebook application deliberately sports a non-enterprise, lightweight look. The primary motivation of Facebook users is keep in touch with their social circle. The Spigit apps plays into that by making the user aware of ideas posted by your friends and how many of them made into the top ranking list.The ideas are displayed very much in a wall-style format. When a user posts an idea, posting that on the wall or sending message can be done with minimal effort. In general, we have made every effort to introduce Spigit functionality in a way that is consistent with ethos of Facebook community.

The Wow Factor
A new product should have at least one or two features that make a user go "Wow that's useful!" when s/he uses the product. When I started using iPhone, I had that reaction when I realized that unlike my previous mobile windows-based phone, the screen goes dark when I put it to my ear but it comes alive when I hold it in front of me. With Spigit's facebook launch we did not have a problem introducing the Wow factor. We pulled in some of Spigit's key features deemed relevant to Facebook. We included idea theme clusters that allows administrators to get a sense of emerging trends and topics. Reputation scores identify key contributors in the community. Spigit's social analytics is available to the administrators via Spigit's regular user interface. Subsequent versions of the app will track user feedback and will build upon the initial feature set to make it even better.

Thoughts on spigit, idea management, and future of social innovation

Javed Mohammad, a community manager at Spigit, interviewed me recently. This blog post simply the transcript of that interview. The conversation has also been posted on the Spigit blog.

JM Before companies like Spigit came along how was idea management handled?


PD Before spigit, idea management was mainly done in a very top-down manner. A very small set of technology and business leaders were responsible for innovation. The flow of ideas was mainly uni-directional, going from the leadership to the rest of the organization.

JM And what was the implication of that?

PD The process was very rigid and lacked transparency. We have now seen several instances where so called experts make decisions that turn out to be worse than those made based on input from a diverse set of people. The universe of ideas was also vastly smaller since the process relied on a very small group of people.

JM Somewhere along the line you got the inspiration for Spigit. What was it?

PD At the time we founded Spigit, social networking was already popular in the consumer space. We had seen isolated instances of blogs and wikis that went beyond just the social chatter and attempted to provide business value. For example, we were noticing a lot of bloggers proposing interesting ideas with business potential. The original concept was to create a product that would facilitate turning these raw ideas into real products and services.

JM How did you combine what would seem to be two incompatible applications one consumer and the other business into a product like Spigit?

PD That's really our key distinction. When we started Spigit, you either had consumer-facing applications that supported online social networks or you had traditional enterprise applications that supported very opaque and rigid processes like Stage Gate. We wanted to retain and leverage the social, fun aspect of consumer oriented applications, but at the same time channel that social energy in a very productive way. Secondly, we needed an engine for analyzing social exchanges and create actionable intelligence for our enterprise sponsors.

JM How does one provide “fun” in an Enterprise application?

PD Introducing "fun" in enterprise applications is getting very popular these days. In face now there is a name for it: "Gamification". Gamification is the application of game design principles to non-game applications to influence user behavior in accomplishing real life tasks. It is about creating a fun, engaging experience for users that encourages them to perform tasks that they might otherwise find tedious or common place. Frequent flyer programs is a classic example of how gamification helps build loyalty. In spigit, we realize it via leaderboards, user badges, reputation, idea markets, etc.

JM We hear a lot about “the wisdom of crowds.” Who or which type of organizations have been able to leverage this wisdom?

PD Any organization where there is a common goal and collaboration of its community. They have to be open, transparent and able to execute. As long as they are willing to implement ideas that come through the idea funnel, and the community sees that as a reinforcing behavior, those are the organizations that thrive.

JM Can you give any examples that are public?

PD AT&T has a company-wide innovation program built on top of the spigit platform. That's an example of an internal idea management program that is very democratic. Cisco's I-Prize that was looking for the next billion dollar idea is an example of external facing application of Spigit's technology. I-Prize is also an excellent example of the power of idea markets, one of the key gamification features in spigit. The top three ideas predicted by the markets were exactly the same as the ones selected by Cisco.
JM Gartner in their Hype cycle for emerging technologies shows Idea Management as having crossed the trough of disillusionment. When do you think it will reach the plateau of productivity which I guess is Nirvana?

PD Idea management, the way Spigit pioneered it, began about 4 years ago. I have seen a measurable change in the attitude of enterprise decision makers towards this technology. Questions have changed from "should we" to "which tool". I think it would still take one or two more years to reach maturation and it may not reach the plateau in isolation. Idea Management will most likely be combined with other business processes like Talent and Resource Management, CRM, etc.

JM What excites you about the field of social innovation and what’s your prediction for the future of ideation?

PD The current solutions have done a good job of decentralizing idea collection process. We could definitely improve collaboration and idea evolution by providing intelligent matchmaking between potential collaborators. In many cases, ideation framing is still done by a central group. There is still a single sponsor and they are responsible for doing selection and implementation. That part needs to be decentralized. Fundamentally, it is all about collaborative problem solving and the future should enable a decentralized, peer-to-peer communication among seekers and solvers.

JM Thank you.

A word from innovation professionals

I had never thought of myself as an "Innovation Professional" but I heard the term during the Process Driven Innovation conference I recently attended in Philadelphia and realized that I fall into that category or at least deal with that bunch every day. There was off course much more to learn besides the existence of aforementioned term. This was a small conference with around 50-60 people in attendance, very similar in size and scope to the one I attended a few months ago in Ibiza. Great thing about such smaller conferences is that they give you an opportunity to have in-depth exchange of ideas with people that are actively involved in innovation management (aka innovation professionals).

A lot of what I heard during the conference is common wisdom shared by the community. For example many speakers emphasized the need to have top down support, a continual communication strategy, obstacles created by the nay sayers, etc. I was on a panel that discussed such best practices along with Jon Bidwell (Chubb), Kevin Paylow (Halliburton), and Steve Fenessey (InnoCentive). I did have a few surprises and heard some interesting perspectives.

The Rise of "The Innovation Professional"
Innovation is undoubtedly the hottest buzzword these days. For example, you will find vastly increased number of people with the word "innovation" in their titles or job function if you search on Linked In today. That's great news, however, the innovation owners very often do not have the budget or the authority to implement ideas; that is the prerogative of the P&L owners. I have found this dichotomy very frustrating since it requires a dance between two different owners to achieve your innovation objectives.

My view was that innovation should really be a part of everyone's job function and we need to eliminate this dichotomy. Contrary to my belief, I heard overriding sentiment in the conference that the specialized innovation role is a must-have in an organization. This view sounds self-serving at first but as I heard people talk about their experiences I found an answer to this dilemma. No one was disputing the fact that every employee, customer, and partner should be part of the innovation process. They were simply pointing out that innovation teams are instrumental in orchestrating that process. They play a role very similar to the one played by brokers, advertisers, distributors in the free market economy.While everyone chips in with their ideas and sponsorships, innovation team administers the process, helps people present their ideas, and connects different players to optimize the process.

Have idea management tools become a commodity?
The speaker from 3M made a comment that the ideation tools have become a commodity. We certainly seem to hear about a new ideation tool every day that has a catchy interface and a cool slogen that claims to help you eliminate world hunger. I agree with this assertion if you limit the scope of idea management to idea collection, commenting, and voting. That has certainly been commoditized and almost all ideation tools would work very well for smaller communities with campaign style ideation. Unfortunately if you select a platform that is limited to this functionality only, it does not scale very well for large communities.

Innovation is not an event, it is an ongoing process. Making this process successful requires a combination of active community management, education, and the right tool set. Many routine tasks become major pain points as the community size increases. Spammers and users that try to game rankings and rewards becomes a bigger issue. Sponsors find it increasingly difficult to read each and every idea posted in the system. They need assistance in finding common themes and duplicate ideas. My feeling is that social innovation (or for that matter socializing any business process) is in it's infancy. Some of the tools in the market offer a far better alternative to older methods but there is still much to be learned. Until that happens, it is hard to imagine this space becoming commoditized.

Prelude to Idea Collection
Can Campbell Soups learn anything from Nike? Seems like the soups folks were inspired by the way Nike is improving customer loyalty by creating a Web site that provides fitness help. What does cat litter have in common with burn bandages? Both need absorbent material that removes odors. These are some examples of how businesses can innovate by observing other companies in acompletely different sector or products that seem unrelated but have solved analogous problems. Such strategies are crucial for a successful ideation process. In fact idea sourcing or collection itself is the easiest phase compared to what comes before (ideation framing and creative thinking methodologies) and after (evolution, evaluation, selection, and implementation).

Whirlpool presentation described another strategy to spawn creative thinking. Traditionally the decision to buy appliances is made by the woman of the house and appliances go either in the kitchen or the laundry room. When you present these observations, somewhat obvious questions that come to your mind are: why target only women? and what about other rooms in the house? This lead to the Gladiator brand that caters to men and focuses on solutions for organizing the clutter in the garage.

A couple of presenters including the person from Campbell Soups described observation-focused ways of innovating. Both of these projects, however, involved a small number of people in the analysis of those observations. I think they will see much better results if they allowed a much larger number of people to examine those observations. In other words combining traditional methodologies with social innovation tools like Spigit would provide a huge benefit.

Miscellenous Tidbits

• Innovation is a Sale - Really? - Jean-Mark Frangos from British Telecom took the innovation professionalism to yet another level by casting his job function as making a sale. In this analogy, ideas are products, P&L owners are the customers, articulation and visualization are your sales tools. Now that's innovative
• Andrew Douglass from Rhodia illustrated how six-sigma techniques can be applied to the innovation process. Their existing process was resulting in a high failure rate for ideas that had passed the proof of concept stage. By examine the causes of failure and preparing a check list of criteria at the early stage reduced the failure rate substantially.
• Heard about the thank you program in IBM where employees can suggest gifts for other employees based on their personal experience. I thought this would be a good addition to Spigit's virtual economy

Social networks and Dunbar's number

In response to my earlier post about Metcalfe's Law, Lior Sion brought up another magic number that is frequently cited when it comes to the number of social relationships: Dunbar's Number. I remembered reading about this in Malcolm Gladwell's Tipping Point and it got me thinking about how it applies to online social networks.

To get started in my investigation, I looked up the Wikipedia article on Dunbar's number. The article describes the number as "a theoretical cognitive limit to the number of people with whom one can maintain stable social relationships". As I continued my search I found a better reference, Dunbar himself explaining how he arrived at this number in this video . According to Dunbar, the number of meaningful relationships a primate can maintain depends on the ratio of the size of neocortex (which exists only in mammals) to the overall brain size. You can compare this ratio and corresponding social unit size in different primates and arrive at a number of roughly 150 in humans. There are several examples of social units without a significant hierarchy that support this hypothesis including Goretex micro-businesses cited in Gladwell's book and Hutterite communes.

So how is this number related to online social communities? Apparently Dunbar is investigating this issue as reported in this article. The full report is due some time later this year. Not surprisingly he notes that even in case of people who have millions of "friends", the communication frequencies indicate that the number of meaningful connections is less than 150. I ran some numbers on Spigit's communities and I came away with the same conclusion. The chart below shows the total number of connections as a function of individual users for three community sizes: small (< 500), medium (< 5000) and large (> 5000). I cut off the long tail in order to clearly show the variation in the fat part (please note that no animals where harmed in this process).

The most conspicuous thing about the charts is the fact that the number of connections as a function of users seems to follow the power law. An interesting property of power law functions is that the natural log of frequencies (y values) varies linearly with log of x values. I did exactly that to the values shown in the first chart and plotted the resulting values in the chart below.

The top few highly connected users fail to live up to the power law expectations (Wikipedia article mentions similar deviations in other phenomena that otherwise follow power law), but the shape of the curve is quite close to being linear towards the end.

Looking at the first chart it is quite clear that the bulk of users have less than 150 connections but what about the highly talkative users that seem to have communicated over a thousand other individuals? The answer lies in the fact that none of these users maintained all these conversations simulteneously. Online communities differ significantly from  the social groups studied earlier in three inter-related respects:

1. Lower barrier to entry - Internet is highly efficient communication mechanism. It is incredibly easy to get virtual access to people that you have no prior knowledge of. 
2. Higher mobility - It is much easier to leave or join a social cluster compared to other social units where physical proximity plays a critical role.
3. Driven by Individual Goals - Online clusters form around a common interest or a goal that is initiated at the individual level not at the communal level. Offline social units form around a set of predefined common goals (e.g. Gore factory unit, HOAs, etc.). Social units (certainly within Spigit communities) in online communities are spawned by people who want to change the world around them.

These three factors contribute to a very dynamic set of social clusters that are formed around topics of interest, gain traction with a small group of users and are eventually replaced by other hot spots with a different membership. In fact looking under the covers, it was clear to me that even highly social users changed their group affiliations over a period of time. Even though they remained interested in communicating with a handful of individuals on a continuous basis, they communicated with different sets of people at different times. The chart shown below illustrates this point. It shows the communication pattern of some of the most connected users in highly successful Spigit communities. Each data point reflects the number of connections in a 30 day period. As you can see from the chart, that number is below 150 with the exception of one data point even though the total number connections over the entire period is above 1000 for some of these users.

So why is this analysis so interesting (other than satisfying one's academic curiosity)? Well, because it helps us evaluate the breadth of collaboration in an online community which is strongly correlated with diversity of participation.  The analysis presented here and in my last post about Metcalfe's law helps us set expectations in this regard. First, the number of interactions per user follows the power law even in the most successful communities. In general the best you can hope to achieve is to lift the long tail  part of the curve upwards. Second, whether it is due to cognitive or bandwidth limitations, the number of active communications in a short time frame that can be maintained by even the most active individuals seems to be below 150. As a result it is not realistic to judge the level of collaboration in terms of the total number of possible connections (n*(n-1)/2), but Dunbar's number seems to be an achievable ceiling for the most active users in your community.

Living up to Metcalf's law on social innovation communities

In my presentation last week at spigit's customer summit, I presented some statistics on spigit's social innovation communities including a comparison between actual connections established over a social network and the maximum possible connections - the basis for Metcalf's law (which is really not a law but we will continue the tradition for the time being). Given the warm reception from the audience at my explanation, I thought I will dig into this a little bit more. This blog post is the result of my investigation.

First let me set some context on Metcalfe's Law. Metcalfe, inventor of the Ethernet protocol, was originally talking about how the "value" of a network of compatibly communicating machines grows quadratically (not linearly). I found this post that shows a reproduction of his original slide. The basis for this assertion is the fact that in a network of "n" nodes, each node can communicate with n-1 nodes hence there are n*(n-1)/2 possible pair-wise connections on such a network. The value of a network is really in its power of establishing communication among its nodes. The number of possible connections is of the order O(n²) as n becomes large which leads to Metcalfe's law.

The mathematics works the same for any network so it is possible to apply the basic thought to other networks including human ones. If each person in an on-line community communicate with all other members, the total number of communication links will be of the order O(n²). Although this may be the ideal scenario, what's the reality like? I performed some analysis on Spigit communities to answer that question. The chart below shows the number of connections in the network plotted against the size of the social network. Three types of connections are plotted:

1. Conversational - Post-response connections between original poster of an idea, blog post, forum thread etc. and a commenter. Note that multiple exchange between two people count as one connection.
2. Conversations and Evaluations - In addition to conversations, this includes voting/rating interactions between two users
3. All connections - These include viewer-poster and linked-in style connections in addition to 1&2

This sanitized version of the graph does not show the numerical data but does depict the trends I observed in my analysis. The chart also shows a plot of linear and nlog(n) functions to give readers an idea about the order of change. Looking at the chart and the numbers behind it, it is clear that the number of conversational connections increases more or less linearly with the community size. The number of connections representing all interactions certainly did not grow at a quadratic rate but the fluctuations were too high to draw any meaningful conclusion. The linear variation in conversational connections is consistent with the long tail pattern of conversations found in all communities. There are a relatively fewer number of individuals who are extremely well connected, but the majority of users are part of the long tail and have a limited number of connections that is independent of the community size.

It is evident from the chart that there is a significant variation in the connectivity utilization between different communities. When I examined the dynamics within more successful communities (in terms of user connections), I found three key factors:

1. Well-defined innovation process -  All successful communities have a very well defined process consisting of idea sourcing, evaluation, and selection. The process is well publicized and executed as promised.
2. Incentives - Most communities have fine-grained incentives for encouraging broader participation in addition to allocating funding for implementing selected ideas. The incentives range from tangible items like gift cards to recognition by leadership to purely monetary rewards corresponding to the play money earned in Spigit's virtual economy.
3. Emphasis on "social" - Some of the well connected communities emphasize social interactions by promoting blogging, open exchange of thoughts on discussion forums, and (now) traditional collaboration over wikis. Innovation is embedded within this larger context.

It is interesting to note that not every successful community incorporated all three factors. Also in general increased connectivity did not necessarily lead to a better result in terms of number of quality ideas that get selected for implementation. That is strongly correlated only to the first two factors. Conversely in some communities,  organizational culture inhibited people from freely collaborating on proposed ideas, but the outcome has been significantly better compared to traditional processes due to support from the executive team and strong innovation process management. This is an important point to consider when setting up enterprise communities. Whereas communication within consumer-oriented social networks is very often an end in itself, for enterprise communities communication is a means to an end. For spigit communities, the goal is the selection and implementation of ideas that provide business value and achieving that requires channeling community interactions to that end.

It's also worth mentioning a few patterns that I thought I would see but didn't. I didn't find any correlation between different business sectors and network connectivity nor did I find more interactions within communities that had higher percentage of knowledge workers. There was C-level involvement in a couple of cases but in many communities the innovation effort was lead by an internal champion who was passionate about making the innovation effort successful. Finally the size of the community didn't seem to have much effect on the networking pattern even though it did have an effect on the number of participants that posted on the innovation site.

Designing idea markets for social innovation communities

Cisco's I-Prize competition hosted by Spigit concluded recently. I thoroughly enjoyed seeing lots of interesting ideas coming through and the amount of collaboration that followed. From Cisco's viewpoint the great success story was the billion dollar idea that was selected at the end of the competition. For me, the most successful outcome was the fact that our idea market worked! The idea selected by Cisco had the maximum amount of investment in the market and the overall ranking matched up very well with the internal evaluation process.

I am a big proponent of deploying Idea Markets within social innovation communities. Some of our key clients have made that core to their idea ranking and selection process and have seen excellent results in terms of the quality of ideas that bubble up to the top. In this blog post I explain the main concept behind idea markets, how to use them in practice and why I think they work better than some of the other techniques for ranking and rating ideas.

Role of Idea Markets in Social Innovation
One of the core features a social innovation platform is its ability to leverage the crowd for evaluation and ranking of ideas. There are many ideation tools that attempt to do this based on simple voting measures. In the simplest case, ranking is done based on popularity, the idea with the most "Thumbs Up" votes wins. This approach is appealing for its simplicity but is prone to gaming. The gaming behavior can be significantly reduced by introducing user reputation in idea ranking computation. Instead of simply counting up votes or ratio of positive to negative votes (approval rating), ranking can be computed as a reputation weighted average of votes. We have seen this work very well in ideation communities especially in the initial stage of the idea lifecycle. The approach still has its limitations. Very often frivolous ideas (e.g. 20% raise for all employees) get to the top even though there is no chance of them getting accepted for implementation. Voting is almost too easy to perform. On the positive side this leads to greater participation, on the negative side it promotes careless or even worse cliquish voting behaviors.

Idea markets, if designed in the right way, can overcome these shortcomings. Spigit uses its virtual economy as a basis for an incremental reward system for users. Idea market is one of the most interesting aspects of this economy. We usually introduce idea trading after filtering out the noise via conventional means. Idea market is then used to determine idea ranking in the final stage. The market is set up in such a way that users see a pay-off on their investment only if the idea gets selected. When the currency is tied to a reward system, users are motivated to invest only in those ideas with a higher chance of getting implemented. As a result idea markets more effectively suppress adverse behaviors like gaming, careless selections, voted-for-my-friend, etc.

Market Design Principles
Simplicity
Idea Markets work well only if the markets are thick and diverse. Simplicity of the investment model is probably the most critical factor that determines participation levels. For example, "short selling" may be understood very well by Wall Street traders, but is quite confusing for the average user and will most likely inhibit participation.

Incentives Tied to Success Potential
The ultimate objective of running idea markets is to recognize the best ideas based on the crowd's input. The "stock" price of an idea determines the ranking and therefore must be tied directly to its potential for success. Correspondingly the payoff model must incent users to invest in ideas based on their eventual chance of success and suppress day trading and cliquish behaviors that work against the main goal of identifying promising ideas.

Early Investment equals Bigger ROI
The design should provide better rewards to those who invest early and should decrease as the idea gets more popular. In general this encourages users to spread out there investments in many ideas and inhibits "jumping on the band wagon" behavior.

Embedded Collaboration
While prediction market traders are investing in outcomes they cannot control, idea markets are about trading in ideas that can be greatly enhanced or be allowed to fail fast based on inputs from market participants. Idea markets therefore should provide users the ability to express their views, suggest modifications, and supply additional information.


Independent Idea Selection
Idea markets should have an independent mechanism for selecting successful ideas and should reward investors in those ideas. Without independent verification, markets are much more prone to gaming since being on the top of the stock market fully guarantees a reward. Many users then choose to invest for guaranteed rewards albeit for a lesser amount.

Idea Market Models
The main concept behind idea markets is simple. Market participants are given play money when they join. They may earn more money by posting ideas, voting, commenting, etc. The market administrator allows participants to invest their money in some or all ideas posted on the system. The "stock" price (although it is not visible to the user in the variation that I like) of an idea goes up with the number of investors and/or amount of investment. I have seen and experimented with three different idea markets that implement the basic concept described in the last paragraph. These are described below.

Stock Markets with Continuous Double Auction
Traditionally idea markets have simulated real world financial markets to a large extent. Each idea is traded as a stock market instrument. Ideas typically open at a fixed price (typically $10 with idea price varying from $1-$99). The markets run using the Continuous Double Auction (CDA) mechanism in which traders place bids and asks at a certain price and share quantity. The system executes a trade when it finds a bid at an equal or higher price than an ask. Markets either allow short selling or award a fixed number shares to all traders in order to inject liquidity in the market. The final closing price is based either on the last executed trade or more often Volume Weighted Average Price (VWAP) over the last few days preceeding the close. Users are awarded prizes based on their portfolio value

Stock Markets with a Automated MarketMaker
I have seen automated market maker implementations in prediction markets but not within idea markets except the one offered by Spigit.  We have used the stock market paradigm combined with a system market maker on Spigit platform with a fair amount of success.  In this model, the market maker sets the idea price based on the level of investment and number of investors in that idea relative to all other ideas in the market place. Users trade with the market maker when they want to buy or sell shares in an idea.

Investment-Based Market
In this market implementation, users bet or invest money in ideas they like. They don't buy or sell stock, but simply indicate the amount of money they want to invest in an idea. A user can adjust their investment at any time before an idea is closed. Users that invest in successful ideas make profit on their investment. The virtual ROI is conveyed to the user at the time of the investment. Early investments often yield higher profits and changing investments does not yield any profits.

Market Comparison
We have deployed all three types of market for our clients. The collaborative aspect can be embedded in all three models. An independent mechanism for selecting successful ideas can be established for all models as well. The models do differ with respect to the other three considerations that I have laid out earlier.

The stock market like models are hard to understand for most users outside of the financial sector and companies with highly educated workforce. Some companies do prefer the stock market paradigm due to the fun factor they bring in. They both reward early investors but encourage more active users in purely profit-seeking transactions that go against their own evaluation of ideas.

The pure investment-based model is simple to understand for most people. The only way to earn profit is to bet on the right idea and the ROI diminishes as the idea gets more popular with investors. We have successfully used this model for Cisco I-Prize and some of the internal communities. That's certainly my preference but would love to hear your thoughts!

Building trust within social innovation ecosystem

I recently sat in the kick-off meeting of one of the biggest roll outs of Spigit's social innovation platform. As we started exploring goals and needs of different working groups, one of the group leads started talking about an issue that comes up very frequently: lack of interest/buy-in from middle management. As I listened to his experiences, it occurred to me that we spend a lot of time talking about what motivates the "crowd" but seldom discuss how to best involve other parts of the social innovation ecosystem and build trust within the ecosystem for effective collaboration.

For a social innovation effort to be successful, it must be engineered to build trust among key stakeholders (depicted in the figure below). The key to building trust is to prove that the system "works" and mitigate fears (even though some times they are either irrational or selfish). Anyone starting a purpose-built community must conduct stakeholder analysis and design technical and social elements of the system accordingly. Once you establish trust, you can build upon it by offering appropriate incentives for meaningful participation. Since the topic of incentives has already gained a lot of attention, this blog post mainly focuses on strategies to allay stakeholder fears and creating proof points that demonstrate that social innovation works.

The Champion
We almost always work with a "Champion" in the client organization in the beginning of a Spigit deployment. The champion is passionate about making social innovation work in his or her organization and in general NOT a sponsor with the budget or the authority to implement selected ideas. In most cases, the champion is really a team of people responsible for bottom-up innovation. The champion's goal is to successfully deploy innovation platform that provides real value to all other stakeholders. Her fear off course is the possibility of conducting a failed experiment that generates little traction from the target community and does not produce results expected by the business leadership. The needs and fears of the champion are really about addressing the same for all other stakeholders and satisfying them requires implementing approaches described in the rest of this blog post.

Upper Management
When it comes to senior leadership, there are three important concerns that need to be addressed: IP and licensing issues, leakage of confidential information and the risk of allowing participating employees/customers to air dirty laundry in public. All of these concerns are valid but it is important to recognize situations where the benefits outweigh the risks and prove it to the leadership. The biggest proof point is increasing number of companies, both large and small, that have engaged in collaborative innovation both inside and outside organizational boundaries. Companies like P&G (Connect + Develop), Shell (Game Changer) have started open innovation programs that invite ideas from public at large. They have successfully co-created products in a semi-open (collaborative aspect is missing from these sites) environment. Customer feedback and suggestion sites maintained by Dell and Starbucks have demonstrated the benefits of social innovation (albeit at an incremental level).

To address confidentiality and information leakage possibilities, there needs to be clear strategy both at the technology level and community governance policies. At the technology level, the social innovation platform must be proven in terms of network, storage, and application level security. The governance policies must be encoded in the form of information monitoring and access control rules protecting sensitive information. The concern about negative input can be addressed by recognizing that if users don't do it on the designated site, they will do it some place else (which is much harder to monitor and control). It also helps to convey to the community members that being able to share information is a privilege (e.g. Facebook makes this clear to their employees when they share information in an open forum) and explaining the rule of proper conduct. 

To prove the benefits of social innovation, it crucial to understand how the top leadership views innovation. My personal viewpoint is that innovation is any change that makes a difference in your lives. Most leaders however think "game changing" when they hear the word "innovation". In my experience, focusing purely on game changing innovation is often frustrating since these ideas are very hard to come by, take relatively longer time for evaluation and years to implement. The best practice is to allow multi-level innovation efforts to co-exist and set expectations matching the degree of abstraction in each case. In any event, the champion should focus on the following to build trust among senior leadership:

• Pick the right scope and focus area that is consistent with the strategic direction defined by the leadership
• Create a frame of reference by articulating the vision, expected outcomes, and time frames
• Convey intermediate milestones and achievements in a concise and quantitative manner
• Provide feedback regarding softer metrics that convey improvements in customer satisfaction, employee morale, etc.

Middle Management
Middle management (MM)  is mainly responsible for execution of the policies set by the top level leadership and therefore is far more interested in efficiently running day-to-day operations of the organization. This puts them inherently at odds with innovation, especially breakthrough innovation. In many organizations, it is far easier for MM to take no action than engage in something novel that may subsequently fail.  In general I have seen three things that MM is scared of: 1. Destabilizing existing processes by introducing a change 2. Loss of control over business operations 3. Loss of productivity due to employees spending time on non-essential work (i.e. innovation).

Given MM's focus on managing the daily grind, it is clearly important to frame innovation efforts around incremental improvements such as process efficiencies, cost cutting measures, etc. Selecting a well defined problem with a high likelihood of finding an answer within a short time span will go a long way towards getting MM interested and bought into the new paradigm. Such an effort can be accompanied by a number of strategies that will increase MM involvement and trust:

• Create an example- People learn to trust something new if there is a precedent. You can create a precedent by finding an MM lead user that is willing to try open innovation, has a problem that needs a fix, and has the budget to fund the solution. Socialize the results of the first campaign so that they are widely known and other managers feel more comfortable following it.
• Templatize Sponsor Experience - Use the first campaign experience to create a cookie cutter solution for others to follow. Many times managers are unwilling to participate due to the perception of high overhead and lack of well-defined procedure. We have done this many times and have had great success with this approach.
• Limit "unproductive" time - Enable access to the platform for a restricted amount of time. This can be done by physically restricting access (especially in case of retail clients) or by making the software accessible for a limited amount of time
• Subordinate pressure - Enlist the help of people who work for MM in proving the impact of social innovation on employee morale. This can be done in a positive way. For example I have seen very appreciative employee emails grateful for the fact that the company is listening to them. Such communication must be encouraged and propagated to MM. MM can also be made aware of the employee desire for active participation in company operations. The sense of frustration in this regard can be used to signal the need to change.

 R&D Gurus/Subject Matter Experts
Traditionally this class of employees bore the sole responsibility for all innovation in large organizations, especially knowledge intensive sectors like pharmaceutical and technology. Broadening the scope of innovation to include rank & file employees in the organization obviously poses a threat to this hierarchy. As a result R&D stakeholders are fearful of losing control (from the technical standpoint) and authority to direct innovation activities. They are concerned with preserving confidentiality of intellectual property and dilution of decision making responsibilities in areas that require deep domain knowledge and expertise. Senior R&D technologists are also reluctant to participate in a democratic process and spend time in "marketing" their idea to the masses.

R&D stakeholders have a legitimate concern when it comes to innovations that do require technical depth and experience. For example, I was involved in a prediction market exercise conducted at a pharmaceutical company focused around FDA approvals, efficacy of certain molecules, etc. Clearly, expressing opinions about such matters or innovating at that level requires proper training, education, and experience in pharama. Some the concerns may not have as much merit, e.g., getting a consumer focused idea evaluated from a diverse set of users in terms of its usability, value, implementation difficulties is clearly valuable.

Some of the strategies to gain trust of R&D stakeholders are:

• Make it clear that there is an alternate avenue to transform ideas to innovation in the good old way. Ideas deemed to have merit by the traditional decision makers can be fast forwarded bypassing the social vetting process.
• Highlight importance of the role and contributions of SME's within innovation communities by use of appropriate badges, assigned reputations, and visually separating SME provided content.
• Make SME approvals part of you idea graduation process as well as idea selection process to minimize the fear of loss of control

The Crowd
The only way to gain trust of "The Crowd" is to treat them the same way Southwest Airlines handles their customer complaints: provide a constructive response and close the loop for each idea posted on the community site. This does not mean that each person must be personally contacted by the team managing social innovation. It simply means that the ideators must clearly understand the decision making process that follows his/her post and the rationale behind selection or rejection of the idea.

In general I would suggest following this simple recipe: document the business process behind innovation life-cycle, execute the process as documented, and provide closure by telling them periodically (or at the end in case of a time-bound ideation campaign) about the end results. A well designed innovation platform like Spigit will decentralize and automate the task of providing individual feedback to the ideator. Augment this process by periodically publishing key metrics related to ideas (e.g. total ideas received, under implementation, innovations that began their life on the system, etc.) and participants (highly reputed members, successful innovators, implementation teams, etc.).

Reputation on social innovation systems: how and why

I introduced the notion of user reputation within the context of social innovation platform via spigit's idea management system about three years ago. Judging by the growing list of competitors that are incorporating reputation in their products, its utility has certainly been validated beyond doubt. In this blog post I want to spend some time on the central idea behind the reputation score and why it is such a critical aspect of a social innovation environment.

What is Reputation Score?
Within a "purpose-built community", reputation score is an number representing the "quality" of user contributions measured against the stated purpose of that community.

I want to stress a few points here. First it should reflect the "quality" of contributions not the "quantity". I have talked to quite a few people and seen implementations that confuse reputation with "virtual currency" or "points". Although we have found a high correlation between active users and high reputation scores in practice, the score must not be computed based on the contribution volume.

The second point is that it should take into account how user is performing with respect to the community goal. For innovation communities this obviously relates to the quality of ideas suggested by a user. The figure below (grossly over-simplified but hopefully gets the point across) shows four factors that can potentially influence the reputation score:

1. Peer Feedback - This perhaps is the most important factor influencing reputation. Peer feedback can be positive or negative. Depending on sponsor's preference, one can include purely social interactions such as making a connection or providing a testimonial, or take into account goal-driven interaction such as voting patterns or topical conversations.
2. Achievements - User accomplishments in the context of the community goal is also an important factor. In social innovation system, it can be tied to the quality of ideas posted by a user as reflected by the stage advancement or acceptance ratio.
   
3. Predictive Ability - At Spigit, we preach the value of involving the community, not just for idea collection, but for collaborative evaluation and selection of ideas. An individual's ability to spot good ideas early in their life-cycle is very important function of the system and therefore should be considered in reputation score calculations.
4. Designated Status - This is similar to the notion of designating certain Web sites as "trusted" in certain web page ranking algorithms. Organizations always have certain individuals that have an "off-line reputation". Even if this does not automatically assign a higher score to a person, it can be factored in to control the degree of influence the person has on reputation of other users s/he interacts with.

Finally, the reputation score is really not a single number. Reputation scores can be attached to different segments of user contributions such as pre-defined categories, tags, ontological subjects, etc.

Putting Reputation Score to Use
Reputation score has three important uses. First it is a tool for bubbling up community leaders. Second, it can be leveraged to manage online behavior of community members, both positively and negatively. Third, it helps add relevance to idea ranking and reduces effect of gaming/clique behaviors.

Identify Emergent Leaders
A well designed Enterprise 2.0 platform must help in recognizing good ideas and good people. Reputation scores help identify "natural" leaders in the community as opposed to the "designated" leaders identified based on their position within the organization. Users that earn high reputation provide direct value via their knowledgeable contributions. They can also become part of community governance process. Community sponsors can rely on such users to channel user input in the right direction and spreading the word about new initiatives and ideas.

Reputation as a positive motivator
I discussed different types of motivations in another blog post. Reputation scores can be used as a powerful motivator directly and indirectly. Depending on the culture of the organization, being on the reputation leaderboard can be a source of peer recognition and bring out individual competition. We have seen this happen in communities that have a high percentage of knowledge workers. Some of Spigit's customers are also making this a basis for recognition by the leadership.

Inhibit spamming/gaming behaviors
This is one of the less known and less understood use of reputation score. A good reputation system should have the ability to detect behaviors that add little value to the community and correspond to spam-like content or deliberate attempts at gaming the system. For internal facing communities, such behaviors are rare (less than 0.5% of total user population). I have seen some external communities where the spam has drowned out legitimate content. These "bad apples" (as I fondly call them within Spigit platform) have to be detected and their reputation score and points need to be adjusted accordingly.