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11Volume 11, Issue 1, April 2009 IINNNNOOVVAATTIIOONN:: MMAANNAAGGEEMMEENNTT,, PPOOLLIICCYY && PPRRAACCTTIICCEE

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VOLUME 11 · ISSUE 1 · APRIL 2009

INNOVATION: MANAGEMENT, POLICY & PRACTICE

22 EDITORIAL — Innovation in China – Mark Dodgson and Lan Xue

FEATURE ARTICLES

66 Crafting organizational innovation processes – Kevin C. Desouza, Caroline Dom-browski, Yukika Awazu, Peter Baloh, Sridhar Papagari, Sanjeev Jha and Jeffrey Y. Kim

3344 The innovation deficit in public services: the curious problem of too muchefficiency and not enough waste and failure – Jason Potts

4444 The content and role of formal contracts in high-tech alliances – Gjalt de Jong andRosalinde JA Klein Woolthuis

6600 Structural changes in mature Venture Capital industry: Evidence from Israel –Gil Avnimelech and Dafna Schwartz

7744 Managing marketing externalities in innovative natural resources-based clusters– Christian Felzensztein and Eli Gimmon

8855 Examining partner experience in cross-sector collaborative projects focused onthe commercialization of R&D – Paul K. Couchman and Liz Fulop

CASE STUDIES

110044 Nature and strategy of product innovations in SMEs: A case study basedcomparative perspective of Japan and India – MH Bala Subrahmanya

111144 PROCEEDINGS OF INNOVATION LEADERSHIP GROUP FORUM ON INNOVATION AND

SMES, BRISBANE, SEPTEMBER 2007 – convened by Terry Cutler and Mark Dodgson.Hunting the Snark: Some reflections on the UK experience of support for thesmall business sector – Alan Hughes

112277 PROCEEDINGS OF INNOVATION LEADERSHIP FORUM ON INNOVATION AND PROCUREMENT

POLICY, CANBERRA, OCTOBER 2007 – convened by Terry Cutler and Mark Dodgson.Using government procurement to help grow new science and technologycompanies: Lessons from the US small business innovation research (SBIR)programme – David Connell

BOOK REVIEWS

113355 Applied Evolutionary Economics and Economic Geography – Koen Frenken.Reviewed by Wenyue Zhuang

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Innovation is on the mind of most executivesand is part of almost every company’s strategic

plan (Lengnick-Hall, 1992; Govindarajan &

Trimble, 2005; Kim & Mauborgne, 2005). Theneed to innovate, and to do so effectively andefficiently, is essential to one’s ability to endureand thrive in a fiercely competitive marketplace.

Copyright © eContent Management Pty Ltd. Innovation: management, policy & practice (2009) 11: 6–33.

Crafting organizationalinnovation processes

KKEEVVIINN CC.. DDEESSOOUUZZAAThe Information School, University of Washington, Seattle WA, USA

CCAARROOLLIINNEE DDOOMMBBRROOWWSSKKIIThe Information School, University of Washington, Seattle WA, USA

YYUUKKIIKKAA AAWWAAZZUUMcCallum Graduate School of Business, Bentley College, Waltham MA, USA

PPEETTEERR BBAALLOOHHFaculty of Economics, University of Ljubljana, Slovenia

SSRRIIDDHHAARR PPAAPPAAGGAARRIIDept. of Information & Decision Sciences, University of Illinois at Chicago, Chicago IL, USA

SSAANNJJEEEEVV JJHHAADept. of Information & Decision Sciences, University of Illinois at Chicago, Chicago IL, USA

JJEEFFFFRREEYY YY.. KKIIMMThe Information School, University of Washington, Seattle WA, USA

AABBSSTTRRAACCTTInnovation is a crucial component of business strategy, but the process of innovation may seem dif-ficult to manage. To plan organizational initiatives around innovation or to bolster innovationrequires a firm grasp of the innovation process. Few organizations have transparently defined sucha process. Based on the findings of an exploratory study of over 30 US and European companiesthat have robust innovation processes, this paper breaks down the innovation process into discretestages: idea generation and mobilization, screening and advocacy, experimentation, commercial-ization, and diffusion and implementation. For each stage, context, outputs and critical ingredi-ents are discussed. There are several common tensions and concerns at each stage, which areenumerated; industry examples are also given. Finally, strategies for and indicators of organiza-tional success around innovation are discussed for each stage. Successful organizations will use anoutlined innovation process to create a common framework for discussion and initiatives aroundthe innovation process, and to establish metrics and goals for each stage of the innovation process.

Keywords: innovation; innovation processes; competitive advantages; organizational capabilities

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In today’s hyper-competitive marketplace, organi-zations that have robust processes for innovationwill lead their industries. Newly emerging com-panies, such as Google and Amazon, have beensuccessful at innovating at rates faster than theirtraditional counterparts. We can also find suc-cessful innovation programs at traditional organi-zations. These organizations adapt to changingmarket conditions and execute innovative strate-gies in a range of effective ways:

GE has been known for its traditionally strongand successful approaches to generating andmanaging good ideas. Through a well-executedtransition between two charismatic leaders withvery different managerial and leadership styles,GE managed to capture and nurture both theagility of small businesses and organizing powerof the larger organization. The majority of GE’sinventions do not come from central R&Dlabs, but originate through acquisitions of othercompanies into a GE unit or as the result ofalliances. One example of invention integrationis Lunar, a Wisconsin-based company whichGE Healthcare acquired for its work onportable bone density scanners. Working withGE gave Lunar greater access to markets, espe-cially smaller international markets, as well asaccess to product couplings and marketresearch throughout the company. GE Health-care benefited by gaining the new technology,which has been adapted to test for percentageof body fat, thus widening the potential marketconsiderably (Newman, 2006).

Whirlpool had been known for its focus onbuilding high-quality product while utilizing acost-cutting approach in innovation. In 2000,they created a new vision for customer-centeredinnovation: ‘a creative idea focused on a cus-tomer touch point that: Creates unique andcompelling solutions valued by the customer;Creates real and sustainable competitive advan-tage; Creates extraordinary value for Whirlpoolshareholders; Comes from everywhere and any-one’ (Cutler, 2003). These points emphasize a)

stakeholders – especially customers and b) dem-ocratic innovation. Whirlpool focused on ideageneration, advocacy for customer needs andmarketing, organizational learning, mentors/sponsors, and alliances with other retailers aswell as suppliers. Information technologies wereused throughout the innovation process. Men-tors/ sponsors supported and assisted the peoplewho innovated. Prior to rolling out the focus oninnovation, new executive-level positions (suchas the VP of leadership and competency cre-ation) were created (Melymuka, 2004). Topmanagement supported the innovation processevery step of the way, from providing funding(20–35% of the annual budget was intended tobe spent on innovation and innovation process-es in 2001-3) to featuring slogans like ‘Think-ing outside the box, inside the home’ in theannual report (Richard, 2002). Whirlpool’s cul-ture can be described as an ‘innovation democ-racy’ (Melymuka, 2004) because anyone mayparticipate. Top management’s unwavering sup-port for the technology infrastructure, sloganspromoting the innovative process, and seedfunding for pilot projects contributed to thedevelopment of a highly collaborative and inno-vative culture, which enabled Whirlpool to out-perform its competitors.

Procter and Gamble (P&G) treats the con-sumer as its boss; the company thinks and liveswith consumers. P&G researchers have spenttime with young mothers to research diapersand behaviors. They carefully followed youngChinese girls and examined their behavior andattitudes toward cold-water shampoos (Teather,2005). Through insights obtained from cus-tomers, P&G has successfully developed andcommercialized innovations (such as diapersthat stay wet for two minutes to aid pottytraining). In addition to their consumer focus,P&G now circulates problem stories through-out a network of technology entrepreneurs andsuppliers (e.g. NineSigma, YourEncore [retiredscientists and engineers], and Yet2.com [an

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Crafting organizational innovation processes

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online marketplace for intellectual propertyexchange]) (Huston & Sakkab, 2006). Theproblem stories are presented to these groups,and anyone with an answer can respond – andthey usually do, quickly. Through this network,P&G wants to ‘connect and develop’ to supple-ment internal innovators.

These aforementioned traditional companieshave found a recipe for successful innovation.Moreover, they have found a recipe for sustain-able innovation programs rather than mere spurtsof innovation. The question then becomes: whatis their recipe?

Many organizations continue to fare poorlywhen it comes to development of sustainableinnovation programs (Tushman & O’Reilly,2002). One reason for this is poor understandingof the process of innovation (Christensen &Raynor, 2003). The process of innovation mayseem complex and difficult to control or orches-trate. Many organizations continue to take ablack box approach—only by chance or by hap-penstance might some ideas catch fire, and onlythose lucky ideas are investigated, developed, andcommercialized. Innovation may seem disruptiveto normal business operations because there areno standard procedures, rulebooks or guidelines.Consider the following quotes:

‘Innovation is a must to survive in our envi-ronment.…All of my [executive] colleaguesunderstand the need for innovation and are100% supportive of employees who inno-vate.…Yet, I cannot say that we have an orga-nizational process for innovation…innovationhappens, but I cannot outline the process toyou because I do not think we have one.’ –CEO, Information Technology Organization

‘A process for innovation is missing in thisorganization.…One reason why I have beenharping on setting up a process, or at least atemplate, is the need to measure ourefforts…we spend money on [R&D] work-shops, brainstorming retreats, experimentation,

and a million other things; some of these workand some don’t.…I could not tell you whereare the strengths and weaknesses of our innova-tion capacities.…I can guess that we are verygood at getting ideas from our employees, andnot so good at the ways we commercialize theideas…but these are my guesses.…It is difficultto manage with guesswork.’ – VP of Research,Information Technology Organization

In too many organizations, innovation occursby serendipity rather than by deliberate manage-ment. Without a process to understand, stimu-late, and analyze innovation and an organization’sstrengths and weaknesses around innovation,most companies rely upon serendipity. Waitingfor inspiration to strike is not a sustainablemethod of securing competitive advantage (VonOetinger, 2005).

Having a well-defined innovation process isimportant. However, we found following thatsimple rule difficult to implement. We positthat this difficulty is caused by the inherentand complex nature of innovation, whichdemands organizational robustness and flexibil-ity. In this paper, we use the concept of robust-ness to designate organizations that aresuccessful in repeated instances of innovation.We define ‘robust organizations’ as the oneswith well defined innovation processes andclear-cut protocols for the evaluation andscreening of ideas. Robust organizations use anestablished innovation process to create a com-mon framework for the management of ideas,from their inception to commercialization.Moreover, they constantly seek to refine andoptimize their innovation processes. On thecontrary, ‘brittle organizations’ are defined asthe ones without well-defined and vigorousinnovation processes. In brittle organizations,innovation steps are laden with confusion andindecision. These organizations miss goodinnovation opportunities, and they are not ableto swiftly recover from the mistakes and fail-ures in their innovation efforts. As a result,

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Kevin C. Desouza, Caroline Dombrowski, Yukika Awazu, Peter Baloh, Sridhar Papagari, Sanjeev Jha and Jeffrey Y. Kim

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these brittle organizations are exposed to morerisk. They may have spurts of innovation. Theymay even be good at one or more stages ofinnovation, but may fare poorly in other stages(e.g., commercialization).

This paper seeks to outline a framework oforganizational innovation practice. Such aframework will help to introduce and managetimely organizational actions, and will make thevoyage from idea generation to product com-mercialization both efficient and effective. Wewill use industry examples to illustrate organ-ized and systematic approaches that managerscan follow in each stage of innovation. Our aimis to explore how organizations with less effec-tive innovation processes can improve theirpractices and become robust organizations.Moreover, by making this complex processtransparent, managers are able to advance eachof the stages by infusing them with knowledge-based activities. In light of that view, this paperfocuses on the following questions: What arethe stages of the innovation process? What arethe various issues that organizations face as theymove through the innovation process? What arethe differences between organizations with suc-cessful and vigorous innovation processes andthose without such innovation guidelines? And,what can managers do in order to make theirinnovation efforts successful?

RREESSEEAARRCCHH MMEETTHHOODDOOLLOOGGYYWe draw on several case studies gathered fromthe large-scale research project, Ideas for Innova-tion.1 We found that organizations with a

defined and robust process for innovation nor-mally fare better at developing sustainable inno-vation programs. Researching various innovationissues in an exploratory-type study allowed for arich qualitative understanding of contemporarybusiness practices.

We first reviewed relevant streams of existingresearch. From existing literature, relevant char-acteristics of successful innovation processesand issues surrounding them were derived.Exploratory multiple case study research designwas chosen, as case studies are particularly use-ful for problems where the context of action iscritical (Benbasat, Goldstein & Mead, 1987),and the research and theory are at formativestages or call for a revision of understanding(Lee, 1991). Using this approach, researcherscan gain a rich understanding of the context ofthe research.

We chose multiple sources of evidence, as thisfacilitates a deeper understanding of the researchphenomenon. Our sample of over 30 diverseAmerican and European companies ranged fromfinancial services to information technology,federal research and development laboratories,advertising agencies, non-profits, manufacturers,retailers, and pharmaceutical organizations.Data collection involved semi-structured inter-views with senior executives from R&D, mar-keting, and product management areas. Theinterview data were complemented by analysisof corporate and annual reports, company pre-sentations, and business press. Most interviewswere conducted on-site. On average, six execu-tives were interviewed per organization. The

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1 This project examined innovation practices in over 30 organizations to identify critical drivers of successful innovationprograms. The project resulted in over 800 pages of documentation describing the innovation programs in organizationssuch as Leo Burnett, General Electric, UBS, Motorola, 3M, Whirlpool, Microsoft, Hewlett Packard, Johnson & Johnson,and Air Products, among others. We examined innovation programs in the context of (1) how firms engaged with customersfor innovation, (2) collaboration with business partners for innovation, (3) the development and management of innovativecultures, (4) the role of information and communication technologies in fostering innovation (e.g. the use of informationtechnologies of sharing ideas), and (5) the development of metrics to link innovation efforts to business value measures.

In this section we are discussing the organization-sanctioned experimentation process. Ideas go through multipleforms of experimentation during their life-time. For example, an individual might experiment with ideas before evenrealizing that an idea is in front of them. These are local and personal experimentations. Similarly, teams may toss aroundideas without support from the organization. In this section, we are looking at experimentation of ideas that areorganizationally sanctioned and motivated.


interviews ranged from half-hour to over fourhours, with the average being about ninety min-utes. In follow-up sessions, findings and inter-pretations for each company were reviewed andvalidated with the help of key informants toimprove the credibility of the research findings.Upon completion of the research project, theresearchers presented their integrative findingsto several of the organizations. The findingswere received positively; both by organizationswho originally participated in the research proj-ect and other organizations only had a chance tohear the final findings.

TTHHEE IINNNNOOVVAATTIIOONN PPRROOCCEESSSSMost organizations encourage innovation anddiscuss the need for it, but do not specify aprocess of innovation (Dobni, 2006). The firstsign of a successful innovation program in anorganization is the presence of a defined innova-tion process. The very act of defining and creat-ing a common language around innovationencourages those within an organization to valueand critically consider innovation processes. Con-sider the following:

‘One of the most difficult things that weundertook was to articulate the process ofinnovation. We were coming up with newideas, discoveries, and solutions to client prob-lems, and even new business models for rev-enue generation. All of these were good.However, we asked the question, how goodare we at coordinating resources for trulyleveraging the value of these innovation?…Arewe exploiting each of the ideas to the maxi-mum? Are we crafting our ideas in the mostefficient manner? Are the appropriate expertsevaluating ideas?.…The need for an organiza-tional-wide process of innovation was clear.’ –VP of Global Markets, Consumer ProductsOrganization

Based on our analysis, the following stagesof the innovation process are the most com-

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mon: generation and mobilization, advocacy andscreening, experimentation, commercialization,and diffusion and implementation (see Figure 1).

The stages are interlinked in a cyclical manner.An organization may choose to execute eachstage on its own, outsource it, or execute it inconjunction with external entities (e.g. customersor business partners). An idea, whether internallyor externally generated, moves through a series ofstages before it is adopted wholly into a companyor a marketplace. The stages of the innovationprocess detail the major steps that an idea mustgo through to become fully implemented andaccepted. Not all ideas complete all stages of theinnovation process, but all ideas that lead tonovel practices which are integrated into a com-pany or products and services that are commer-cialized for the marketplace do pass throughthese stages.

We will now describe each stage. We outlinethe critical issues that organizations need to payattention to when executing each stage, and thetensions that arise when doing so. Differencesbetween organizations that have robust innova-tion processes and those that have brittle process-es will also be articulated. Table 1 contains asummary of critical differences between organiza-tions that have robust and brittle processes forinnovation.


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• Employees are unsure what constitutes anidea

• Need and pressure are used ininappropriate situations

• Idea sources are limited in range andscope

• Guidelines and processes exist tostandardize stages of idea generation

• An ‘idea’ is defined• Multiple venues exist to identify ideas• A conscious balance exists between the

pressure of need and an environment ofopen playfulness

• Procedures are defined to evaluate sources• A wide range of defined idea sources exists• Are often subject to information overload

or an absence of ideas

Idea generation

• Idea generators are unclear about how tocommunicate ideas

• The value of ideas is often not recognized• Sources and idea flow is unmanaged• Rewards are lacking for good idea

generators or recognizers• Idea hoarding may be present, limiting

mobilization• Methods and track record of recognizing

and mobilizing ideas are not part of jobdescriptions or evaluations

• Idea generators may be isolated from keystakeholders

• Idea sources are connected across depart-ments, geography and authority ranks

• Idea sources are focused on the most likelyor useful areas for the organization

• Reward and recognition systems show valuein both generation and mobilization of ideas

• Accountability for recognizing andmobilizing ideas is specified

• Idea generators and those involved withmobilization interact with stakeholders

Idea mobilization

• Employees are nervous about sharing ideasbecause evaluation is unclear

• Little feedback, support or constructivecriticism is available

• Limited processes exist by which to shareideas

• Reward systems are skewed towards ideagenerators, do not recognize advocate role

• Organizational and customerconsiderations are clear to advocates

• Possible ideas are broadly communicated• Numerous avenues to advocate for ideas

and find supporters exist• Dedicated advocate roles exist, and/or

reward systems are standardized to rewardadvocates

Advocacy

• Evaluation process is unclear andsubjective

• Egos play a large role in idea evaluation• Secrecy surrounds the evaluation process• Focus is on short term impact and

revenues, or local context

• Standards for evaluation are articulatedand communicated across the organization

• A clear, conscious shift towards evaluativeobjectivity is made

• Evaluation is as transparent as possible• Long term and immediate consequences of

ideas are built into the evaluation system

Screening

• A lack of resources or incentives exists• Structure and definitions are nonexistent• Experimentation is on employees’ own

time, without standard process• It is difficult to customize existing

experimental processes to current need• Documentation procedures do not exist• Experimenters are isolated• Failure, risk and resource expenditures are

emphasized

• Resources are in place for experimentation• Process is defined and sanctioned• Adoption of external ideas is valued• A variety of avenues exist to experiment,

some of which involve external parties• Documentation of process contributes to

the organization• Technology is utilized and invested in• Process is transparent and communicative• Failure is part of the process, not an end

point

Experimentation

• Isolated or internal processes exist• Weak evaluation of market trends

decreases likelihood of success• One hit wonder syndrome exists• Ideas are not evaluated against market

demands or service scope

• Public forums are utilized• Consumers are involved• Distinctions are drawn between

immediately useful and ideas needingrefinement or market changes

• Benefits are articulated and documented• Scope is considered

Commercialization

(Continued)


GGeenneerraattiioonn aanndd mmoobbiilliizzaattiioonnIdea generation is the process whereby new ideasare created, whether through redefinition of con-cepts, changes in processes, creation of new com-ponents of service, or development of new services(Von Krogh, Ichijo, & Nonaka, 2000). Mobiliza-tion is where modifications to any existing prod-ucts, processes, services, or frameworks of thoughtlead to the movement of ideas from one location(physical or logical) to another (Argote & Ingram,2000). Ideas may originate internally (e.g. employ-ees) or externally (e.g. customers, business part-ners, academia, government, and competitors)(Desouza & Awazu, 2005; Desouza, Awazu, &Jasimuddin, 2005). Not all ideas need to be gener-ated (or created) from scratch; some ideas can betransported to a domain from allied or foreigndomains. Consider the following quote:

‘Ideas for us can come from our employeesand also our customers and even our businesspartners; we even occasionally read the aca-demic journals…But an idea to a local depart-

ment – let’s say the ABC group – can comefrom the XYZ group…mobilizing ideas thatreside in one corner of the organization isimportant.…Ideas that are good can have amultiplicity of uses.’ – VP of Global Strategy,Financial Services Organization

GGeenneerraattiioonn ooff iiddeeaassIdeas can be generated in playful, relaxed environ-ments (Dougherty & Takacs, 2004) or in environ-ments of need (e.g. as when a firm is in troubleand needs to change) (Mueller, McKinley, Mone,& Barker, 2001). People who don’t adapt well tonew environments and who don’t integrate whollyinto the organizational culture can lead to startlinginnovations by unsettling norms and assumptions(Sutton, 2002). On the other hand, creating anadaptive, warm, and constant learning environ-ment where employee input is valued can also leadto innovation (Pettigrew, Massini, & Numagami,2000). Ideas can seem instantly accessible orincredibly bizarre and risky, but generating ideasconsistently seems to require extreme democratiza-

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• Is not differentiated from or manageddifferently from previous innovation stages

• Loose and uncoordinated control exists• Failure is considered the end of the

process

• Presentation of components is re-evaluated• Bundling is possible• Centralized unit manages this process• Commercialization is controlled and

objective driven• Market response feedback is given to

experimenters

• Process is draconian and top-down withlittle regard for existing processes

• Lack of dialogue exists• Objectives may be arbitrary• Old processes persist and unlearning is

slow and not encouraged• Minor failures threaten culture• Existing culture and stories disregarded• Changeis not obviously in line with existing

values or culture• External stakeholders are disregarded• Technology is not fully supported• Failure is an end point

• The whole organization is targeted• Existing initiatives are incorporated• Realistic objectives are established• Knowledge broker role is acknowledged• Dialogue is emphasized with all stakeholders• Older, duplicative processes are eliminated• Unlearning is understood and prepared for• Storytelling and metaphor is used to

inspire and convey the need for and typeof change

• Values and culture are emphasized• Social networks are utilized• Customer segmentation is established• Technology is used to communicate• Failures are evaluated and considered for

further stages or processes

Diffusion andimplementation

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tion, wherein all employees’ input is valued, or anunsettling, learning-focused environment where‘borrowing’ from other industries and other peo-ple is encouraged (Hargadon & Sutton, 2000).

One vital tension that occurs in the generationof ideas is in the balance between generating ideasthrough environments of playfulness versus envi-ronments of need. An environment of acceptance,playfulness and thinking that emphasizes unusualanalogies can be found at some of the idea ‘facto-ries’ like IDEO. In these environments, hierarchiesare demolished regularly, and toys and mecha-nisms are commonly found in the environment toencourage free association. Lateral communicationis encouraged and collaboration is expected. At theother end of the spectrum are environments ofneed. In these situations, problems are paramountand solutions are sought. Consider the followingcase: Proctor and Gamble’s ‘connect and develop’strategy seeks solutions from the outside, and thendevelops them for internal use. Proctor and Gam-ble uses a network of small and medium-sizedbusinesses, retired scientists, and seasoned advertis-ing groups to find solutions to problems articulat-ed within its organization (Huston & Sakkab,2006). Customer needs are identified and thenstructured into ‘problems’ that are given to thenetwork. Thus, in some instances, idea generationis outsourced to competent experts who supple-ment internal knowledge.

Balancing between the tensions of generatingideas via loose (playful) versus tightly controlled(problem-driven) mechanisms is critical. Robustorganizations combine these two mechanisms,and will use them for the problems for whichthey would be most effective. Loose mechanismswork well for ideas that are emergent in natureand those that do not fit pre-defined problems orareas of investigation. Ideas that emerge fromthese environments are normally abstract, andmay be broad and overarching. On the otherhand, ideas that emerge as solutions to problemsare narrower in scope and operational in nature.Not all sectors of the organization will respond tothe two mechanisms in a similar fashion. For

instance, engineering teams might arrive at ideasmore easily with problem-driven solutions,whereas marketing teams will thrive in loose andplayful environments. Customer-driven problemsnormally appear in the form of need-based state-ments, while working through un-chartered terri-tories, such as the future strategic direction of adivision or product, might be better handledthrough playful settings that are more tolerant offree-flowing ideas and unrestricted thinking.

MMoobbiilliizzaattiioonn ooff iiddeeaassNot all ideas need to be generated from scratch.The movement of ideas from a domain wherethey are well-known to another domain wherethey are fresh can inspire idea generation byrevealing assumptions in practices, processes, orproducts. For instance, if the marketing depart-ment has been using a wiki to brainstorm andrefine ideas, and that wiki is shown to theresearch and development unit of a large organi-zation, the R&D unit may recognize the need fora similar process, and ideas may be generated tomeet its newly discovered need. It is crucial toconsider wiki as a potential way to increase andencourage idea generation.

The mobilization of ideas can also originatefrom traditional, entrenched places and movethem to more nurturing environments. For exam-ple, the reason spin-offs are philosophically andphysically separated from major firms is becausethe ideas which are at the roots of these neworganizations were not likely to have been well-received in the original organization. Firms maypurposely send ideas outside the firm to provide amore inviting and open environment, and/or tominimize risk (Chesbrough, 2003). If the ideafails and the spin-off goes under, the main busi-ness will be largely untouched. Large organiza-tions are particularly likely to do this both toavoid disrupting day-to-day business and toreduce negative reactions or the image of failure.

Idea mobilization can be extremely difficult.There are two main reasons for this: idea hoard-ing and context specificity. Some people perceive

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knowledge as power and feel that sharing ideasweakens their position; some organizational cul-tures encourage such notions. When peoplehoard ideas or act as unofficial gatekeepers ofinnovative ideas, the organization cannot benefitfrom the innovations. Competition can encour-age this tendency. Sometimes, a unit clings toideas even if it is not the best group to nurture orgrow those ideas. In these instances, the individ-ual or team may want the glory of developing theidea fully, even though the organization as awhole would benefit from idea transfer.

Another barrier arises because some ideas arecontext-specific and simply will not be useful oraccepted in other environments. This does notinvalidate or devalue the ideas themselves, nordoes it imply that the unit that did not absorb theidea failed. Sometimes there is simply a lack of fit,either organizationally or within teams (Chua &Lam, 2005). For instance, brainstorming in frontof a whiteboard may work spectacularly well withsome departments. However, a group of chemistsor electricians may find it more useful to shareideas or new approaches by using and manipulat-ing physical objects like test tubes or circuitboards. Another common instance in whichmobility of ideas becomes problematic due tocontext is the global movement of ideas. Ideas thatare culturally-ingrained in one community mightnot make sense in a foreign area. For instance, themanner of handling customer service calls needsto differ depending on the specific cultural con-texts of the customers. Incentive schemes toencourage customers to share ideas will also differacross geographical regions. Organizations thusmust tread the fine line between trying to general-ize and diffuse ideas across an organization and fil-tering ideas to suit the particular context.

The outputs of this stage are ideas that couldalter business models, services or products, orcould improve upon those models, services orproducts. This can be achieved by changing thethoughts, feelings, or reactions of people so thatthey perceive old problems in new ways or seeother ideas in new contexts, applications or uses.

SSuucccceessss iinnddiiccaattoorrssOrganizations with robust innovation programshave clearly articulated guidelines and stages tohelp in the recognition and construction of ideas.We might begin at the level of a thought orhunch, a personal idea. The idea generator willthen need to do some homework on the idea togauge its potential. In doing so, the idea generatorwill go through an internal refinement process andwill document the idea, if the idea is valuable. Atthis stage, the idea may be ready to be shared, butonly in a limited fashion. The employee might usethe idea in his or her daily work and also encour-age team members to try out the idea and providefeedback. Through this process, the idea is refinedand improved, or is deemed to have limitedpotential and discarded. If the idea moves for-ward, it might be considered for greater mobiliza-tion and organization-wide advocacy andscreening processes, which we discuss next.

Having clear guidelines to demarcate what isan idea and what is not, and to demarcate thelevel of robustness and growth of an idea, helpsavoid information overload. Robust organizationstake a lot of care to identify domains of interest,problems of interest, and other zones of innova-tion. These are communicated to all internal andexternal stakeholders of the organization. Havingthese clearly defined helps focus the creative ener-gies of all. In arriving at these zones of innova-tion, the robust organization not only considers itcurrent position in the marketplace, customerneeds, product and service enhancements, butalso the future strategic direction of the organiza-tion. Moreover, they take the time to clearly spec-ify which group within the organization shouldbe primarily responsible for innovation in a givenspace. It is important to stress that only primarygroups are identified, so as not to discourage oth-ers from attempting to innovate in a given space.The rationale behind identification of a primarygroup is to focus resources and avoid battles andin-fighting between groups.

Robust organizations guide sources. Ratherthan letting sources generate any ideas, at any

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time, in any direction, robust organizations focusthe activities of sources. One example of this is anorganization identifying clear areas of interest ordomains where innovation is particularly encour-aged. For instance, Whirlpool seeks ideas frommany sources, but often limits the area in whichideas are to be given. Suppliers are involved inidea generation through structured contests(Sheridan, Graman, Beck, & Harbert, 2001), forinstance, while students have been sought toidentify and target the needs of students, ratherthan of the general public (Dodson, 2002). EliLilly has adopted a similar strategy to tap intoexperts outside the company by bringing specificproblems to virtual arenas. Eli Lilly foundedInnoCentive, a wholly owned subsidiary, to takeon the task of bringing outside researchers’ atten-tion and energy to the drug development processthrough an incentive system. The process is simi-lar to bounty hunting in the Old West: ‘Wanted’posters describing a scientific problem and areward are posted, and bounty hunters can thencompete in an online project room to answer firstand best. Confidentiality was the first hurdleInnoCentive tackled, but even scientists whohave won large bounties argue that the processputs undue risk upon the scientist, particularlywhen research must be conducted to get to a par-ticular target or answer (Breen, 2002). Many sci-entists are signing up for InnoCentive: in 2002,‘7,000 scientists [had] registered at InnoCentive,and there [were] 2,400 project rooms in use,organized around 33 problems’ (Breen, 2002). Asof 2006, more than 95,000 scientists have regis-tered with InnoCentive (Kramer, 2006). Scien-tists from India, Russia and around the globehave signed up with InnoCentive (www.innocen-tive.com), and companies like Boeing, Proctor &Gamble, Dow Chemical and Nestlé all have paidthe membership fee and now seek solutions usingInnoCentive (Kramer, 2006). In this case, openinnovation seems to be working for the organiza-tions, the scientists, and the broker.

Brittle organizations are more likely to seizegood, immediately applicable ideas, but not to

reward sources for particularly apt ideas, or ideasthat complement the direction of the organizationwithout being immediately applicable. Taking thelong-term, business process view of idea genera-tion allows robust organizations to highlightappropriate ideas. Brittle organizations have a dif-ficult time with idea generation and mobilizationdue to lack of clear definitions about what consti-tutes an organizational idea. One crucial concernfor idea generation is for employees to recognizewhen they have done something innovative.Sometimes, employees will be too modest or toounfamiliar with standard business processes toidentify their own behavior as innovative. NPowerSeattle deals with this concern through employeedialogue, where employees discuss recent prob-lems and how they dealt with them. The listener,not the originator of the behavior, then reports tomanagement about innovative processes and pro-cedures. In this way, ideas are articulated andshared after basic screening.

Creating a long-lasting culture of openness isdifficult, and not all people adapt well to thatenvironment. Too much openness can lead torisky decisions and poor long-term management,while too little can lead to a staid and risk-averseculture. Similarly, striking the appropriate bal-ance of need can be difficult. Overemphasizingneed will cause some employees to leave for morestable jobs. Not emphasizing it enough willdecrease urgency and idea generation across theboard. Some companies choose to de-emphasizethe time-consuming and sometimes unpre-dictable stage of generation in favor of collectingideas generated by others. Robust organizationsprovide their employees with not only the neces-sary room for innovating, but also the necessaryresources. Many organizations harp on themantra of innovation, but few provide theiremployees with the necessary resources. Robustorganizations, such as Air Products, will fundemployee expenses to conferences that not onlyin the areas of expertise but also seemingly unre-lated areas so as to provide the employee withresources to explore learn about auxiliary areas.

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Moreover, several companies such as 3M providetheir employees with time (15% of their workweek) to explore and develop ideas that are notdirectly related to their work assignments.

Robust organizations find a balance betweenemphasizing play and emphasizing need. Forinstance, at IDEO all employees are encouragedto bring objects that inspire them and leave themlying around the office to stimulate thinking.This is in part because IDEO’s specialty is com-ing up with radical, big solutions, and thinkingthrough analogies and having objects to pick upand manipulate sometimes encourages thatprocess. On the other hand, many companieshave to focus on both need and play in differentsituations. When a new client must be wooed,sometimes the driving force of need (to increaserevenue or to earn a commission, for example) ismuch more suitable. Like organizations, individ-uals react differently to playfulness and the pres-sures of need. Robust organizations have assessedand balanced the two for the best results.

Robust organizations also explore ideas from awide array of sources, both internal and external.For instance, Whirlpool underwent a majortransformation when barriers to communicationwere eliminated and a website, the InnovationPipeline (or I-Pipe), was constructed to facilitatethe contribution of ideas from all employees,regardless of their places in the organizationalhierarchy (Melymuka, 2004). Furthermore,Whirlpool has initiated competitions and com-munication channels with suppliers to improveits products (Sheridan, Graman, Beck, & Har-bert, 2001; Atkinson, 2003). Whirlpool alsoseeks ideas from business partners like Lowe’s andBest Buy (Dodson, 2002).

Brittle organizations have more limited rangesof sources and are less likely to be open to ideas.This is partly because they are less capable thanrobust organizations of evaluating sources.Robust organizations encourage boundary-span-ning activities; they have individuals or entities(e.g. departments) tasked to examine domainsoutside their primary areas of interest for new

ideas and sources. Determining the credibilityand applicability of sources requires deep under-standing of the market and of source context andexpertise. Further, evaluating sources demandsthat an organization continuously update its eval-uations of services – a source may become out-dated or surpassed by a new, better ideagenerator. For instance, if a single employee withdeep expertise in a single department constitutesa source of ideas, that employee may be able togain a wider understanding of the organization orthe market by being promoted, thus becoming aneven better source of ideas.

Robust organizations know how to connectsources of ideas. Sources of ideas are distributedacross the organization. Physically, sources maybe located in different countries or geographicregions. Logically, sources may span various func-tional units of the organization (e.g. teams anddepartments) (Desouza, 2006). Unless sources areorganized and connected in a meaningful andoptimal manner, the mobility of ideas will belimited. Connectivity among sources can bearranged via physical arrangements (e.g. thedesign of office spaces to facilitate more interac-tion among employees) and also technologicalsolutions (e.g. the use of intranets or other com-munication technologies). Unless sources are con-nected in an explicit manner throughstandardized idea generation processes, two prob-lems will occur. The first is that ideas will notfind communication channels. An idea generatormight not know who is the best person to whoman idea can be sent; as a result, ideas may be sentto incorrect destinations, where their value mightnot be appreciated. Second, ideas might get lostin the regular traffic of other communications.Information should pass through the least num-ber of hops between nodes, so as to get the mes-sages to their destinations efficiently. Similarly,the more time ideas take to reach a destination,the less current the ideas will be and the lessattention they will receive. Organizations mustchoose the appropriate connectivity solutions toenable the most effective and efficient mobiliza-

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tion of ideas. For example, the use of communi-cation technologies may be productive for shar-ing ideas in highly structured domains and forsolutions to well-defined problems. However,these technologies might fare poorly if ideas arein the early stage of development or are for prob-lems that are currently unknown or poorly speci-fied; a face-to-face discussion might work best inthat case.

The next aspect of robustness is to hold somepeople, teams or units responsible for idea gener-ation. Some level of accountability must exist foridea generation, even if those ideas are unsuccess-ful. Someone must be in charge, and evaluationand promotion systems must recognize this cru-cial role. However, controlling the sources ofideas too tightly can limit innovation. Brittleorganizations sometimes have very isolatedresearch groups that no longer engage with thestakeholders of the organization. In thoseinstances, the core innovation group becomesaccountable to stakeholders whose needs they donot understand enough to satisfy. Furthermore,particularly in small groups, very isolated researchor idea generation groups may fall into ‘group-think’ and become considerably less innovativethan more heterogeneous, engaged researchers. Inthese instances, both the impact and quality ofideas decreases. Robust organizations balanceaccountability, time and space to innovate, andengagement with stakeholders.

AAddvvooccaaccyy aanndd ssccrreeeenniinnggAdvocacy and screening is the process of identify-ing the potential benefits and problems present ata particular time. Advocacy and screeningencompasses evaluation of potential opportuni-ties for ideas within a particular organization’scontext. The process of advocating for andscreening ideas reveals another tension in theinnovation process. Once ideas have been gener-ated, they need to be evaluated, because not allideas will be worth the effort of implementation.However, new ideas may be risky and mightundercut the status quo, so the natural inertia

against new ideas must be counteracted withadvocacy; otherwise, ideas risk rejection in favorof the known. Thus the processes of screeningand advocacy must take place simultaneously.

The joint processes of advocacy and screeningallow ideas to undergo a period of refinementduring this stage of the innovation process. Bydiscussing an idea and hearing arguments for andagainst it, the idea itself becomes streamlined.Excess is removed and new notions may beadded. This stage is crucial to the adoption ofnew practices and development of new products.Even a great idea must be pitched to upper man-agement, and that advocacy calls upon very dif-ferent skills than those utilized in idea generation.Advocates often play a role in helping innovatorsmake their ideas and their benefits more explicitand communicable.

Idea generators do not always have the skillsnecessary to effectively advocate for their ideas(Heng, Trauth, & Fischer, 1999). Whirlpoolagain provides a great example. A structuredtraining program with an emphasis on businessstrategy and analysis produces Innovation Men-tors, who aid those with ideas in the process ofadvocacy to management (Cutler, 2003). Thesementors do not manage idea generators, but facil-itate, encourage and support them. InnovationMentors also lead brainstorming sessions andevaluate ideas based on market environment andmanufacturing concerns. This support network isbalanced by a formalized review process that eval-uates and grades each idea based on its potentialto meet customer needs and its fit with the com-pany (Warner, 2001).

Screening helps to discard ideas with lowprobabilities of success or high costs of imple-mentation (whether those be social, structural orfinancial). The identification and refinement ofideas with high probabilities of success is themajor, desirable output of this stage of the inno-vation process. To increase the likelihood of suc-cess, both advocates and screeners must bepresent in an organization and have the collabo-rative skills to interact productively.

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In older companies, established hierarchies canmake advocates hard to find and screeners overlynegative about new, risky ideas (this concern canbe counteracted with careful changes to cultureand enhanced collaboration (Kodama, 2002)). Innewer, younger companies with an emphasis onteamwork and collaboration, screening and cost-benefit analysis may be incomplete or lacking,which can lead to the demise of the business.Striking the right balance is difficult and differentfor every organization.

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‘One of the things I have struggled with isevaluations on my ideas. Some of my ideaslight up fires around here, while others aresquashed…When I ask why was a given ideanot pursued, I get wishy-washy responses…We clearly lack standards in how we evaluateideas…Needless to say, I grow skeptical whenthey [the executives] ask for ideas and then donot provide feedback as to why an idea wasnot pursued.’ – Software Engineer, Informa-tion Technology Organization

‘Evaluating ideas used to be a highly subjectiveprocess. Often, ideas were evaluated differentlydepending on who came up with them…Eval-uation also depended on who was reviewingthe idea…The analogy I would draw is howdisciplines review scientific research…On anygiven day, any idea might make it or might getrejected…Over the last six months we haveput in place a systematic, transparent, open,and feedback-laden process to review andscreen ideas. Any employee that turns in anidea via our Intranet can track the idea, seewho is reviewing it, see the comments, askquestions and interact with the reviewingmanagers, and get constructive feedback…Both the number of submissions and the qual-ity of ideas have increased since we imple-mented the standardized review system.’ – VPof Research, Pharmaceutical and Bioengineer-ing Firm

One of the major distinctions of a companywith robust innovation processes is the existenceof clear-cut protocols for the evaluation andscreening of ideas. Usually this involves two stages,one at the organizational level and the other at thecustomer level. Checking the fit between a newidea and the mission and values of an organizationas well as the organization’s current capabilitiesand resources helps weed out ideas with lesspotential. In the second stage, screening focusesthe energies of employees on ideas that havedemonstrable commercial value. Thus, the firststage identifies possible ideas, while the secondclarifies which ideas are most likely to succeed.This is a highly pragmatic approach.

Another screening consideration present inrobust organizations is the need to assess both theidea’s relevance to the current operational needsand its potential long-term impact. This helpsorganizations avoid being blindsided by issues ofthe future because they become aware of howmany immediate, ideas of the present they sup-port, and can evaluate if long-term benefits orconsequences are likely to accrue. Of course, thisbalancing act requires paying attention to imme-diate costs and benefits, as well as long terminvestment and return on that investment. Com-panies such as MAK Technologies have internalR&D funds to promote ideas that support orrefine operational concerns, while they prefer towork with customers for ideas with longer-termimpact. In this way, MAK Technologies uses mar-ket concerns and needs to guide long-term feed-back, but implements operational changesquickly. Brittle organizations are less likely to bal-ance appropriately between immediate andlonger-term ideas. Often, brittle organizationsbecome trapped in a cycle of working on prob-lems of the present, then falling behind. Robustorganizations also know how to advocate andscreen for ideas and risks that have varyingdegrees of impact, locally or globally. Some ideasmay be highly context-specific and local in theirimpacts. Robust organizations have dedicatedteams in place that examine the potential of ideas

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and then advocate and screen for them. Theseteams are comprised of representatives from thevarious functional areas of the organization, aswell as the various geographic sectors. The teamrepresents the wide array of activities and capabil-ities of the organization. Brittle organizations, onthe other hand, are more likely to view ideas inthe confines of local contexts, thereby not under-standing risks and potentials fully.

In robust organizations, employees also havenumerous avenues through which to advocate forand get feedback on their ideas. For example, atAptima Inc. employees have weekly company-widebrown bag lunches where they can present ideasduring the early stages of development to receivefeedback. More structured processes are in place toreview ideas at a later stage of development.Robust organizations also recognize that advocat-ing for ideas is a risky and time-consumingprocess. If dedicated advocate roles do not exist (asis the case in most organizations), then employeesmust advocate on their own time, with littleencouragement and with the formalized screeningprocess against them. In the case of radical innova-tions, advocacy needs to be particularly deter-mined and skillful, because opposition is likely tobe raised against the general notion of change, nomatter how good or useful the change might be. Inbrittle organizations, the reward system is skewedtowards successful idea generators, who receivecredit and recognition for idea generation. Robustorganizations recognize the difficulties and therisky nature of idea advocacy, and provide rewardsto those who advocate for ideas in addition torewards and recognition for idea generators.

Robust organizations also understand the chal-lenge of evaluating truly innovative ideas. Thechallenge can be put forth as follows – if an ideais truly innovative and involves a radical depar-ture from the current state of affairs, chances arehigh that there might not enough qualified indi-viduals within the organization who can evaluateit. Moreover, if highly innovative ideas are evalu-ated by the same screening procedures as incre-mental ideas, many of the radical ideas will be

discarded. It is much easier to calculate theReturn-on-Investment (ROI) for an idea that theorganization has experience with and under-stands. This is because there is an established his-tory in the given domain and the presence ofwell-understood governance processes to managethe idea. However, in unchartered spaces, screen-ing for ideas requires a higher degree of tolerancefor risk, uncertainty, and incompleteness. Robustorganizations understand this issue and appreci-ate the complexity of advocating and screeningfor radically innovative ideas. It is common forrobust organizations to employ the assistance ofexternal entities (e.g. professors and researchers atuniversities, venture capitalist, etc) to help in theadvocacy and screening for these ideas. Robustorganizations have a network of trusted externalsources that they can bring into the innovationprocess at this early stage without risking loss ofintellectual property or suffering other negativeoutcomes. Brittle organizations, on the otherhand, do not clearly understand the differences inevaluation criteria when screening for differentkinds of ideas. Moreover, they are less likely toinvolve external entities in this stage of theprocess as they fear loss of intellectual property.

Finally, robust organizations take great care inbuilding transparent evaluation and screeningprotocols. Openness reduces confusion abouthow ideas are evaluated, resulting in a participa-tory process. The protocols are made known inadvance to all employees, Moreover, employeesare solicited to serve as reviewers of ideas, advo-cates for ideas, and even to help peers in the craft-ing of ideas. This is a stark contrast to brittleorganizations, who often promote secretive andselective evaluation protocols. In these organiza-tions, ideas are promoted and advocated forbased on the egos of the ideas creators, the prefer-ential treatments provided by managers, andother nuances. Brittle organizations thus fre-quently create black-box innovation processesthat discourage the submission of ideas andreduce belief in the merits of screening and advo-cacy processes.

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EExxppeerriimmeennttaattiioonnOnce an idea has passed through the screeningprocess, experimentation and prototype-buildingbegins. Even if the idea generator(s) or an advo-cate has created a prototype as part of an earlierstage of innovation, the idea’s applicability to aspecific problem, context or production chainmust be tested. Experimentation does not test anidea’s objective merits, but the suitability for a par-ticular organization at a particular time. Ideas thatare generated, advocated for, screened, and evenfound desirable might be ahead of their time orbeyond the present capacity of the company. Ateither the screening stage or the experimentationstage, ideas may be set aside into an idea bank oridea library for development at a later time.

For instance, when the notion of redesigningthe look and feel of bank interiors was raised atWashington Mutual, it was deemed worthy ofexperimentation. Washington Mutual thendesigned and implemented a new design in a fewbranches. That new style, named Occasio, wasbased on the open, friendly feel of many retailstores, and moved bank tellers from behind tallcounters and into the same space as customers.Only once response to the new design was favor-able did Washington Mutual then decide torevamp older structures and to apply the Occasiodesign in new branches.

Experimentation is an iterative process ofdevelopment, and at each stage an idea may bere-evaluated by advocates and screeners alike.Because of this, experimentation may be contin-uous or may occur in fits and starts, dependingon the presence or absence of advocates, screen-ers, and resources. Tested ideas are evaluated forsuitability within a particular context and eitherare set aside or enter the diffusion and imple-mentation stages. Experimentation results indata, prototypes, or feasibility studies that topmanagement can use to evaluate an idea or inno-vation. Possible ideas are identified. The majoroutputs of this stage are libraries of ideas for thefuture and the identification of suitable ideas forcommercialization. Another output is work-in-

progress prototypes. Evaluating work-in-progressartifacts can point to new ideas that might trig-ger newer cycles through the innovation process.

Critically, resources must be present to experi-ment, and those in charge of the process must begiven time to do so and time to reflect on theexperiments so that refinements and evaluationare ongoing. This need not be an internalprocess, and in cases of product development andconsumer response testing, it may be outsourced(Kambil, Eselius, & Monteiro, 2000). For busi-ness model, strategy, or service changes, however,this process must be internal. Experimentationcan be resource-consuming, especially if an idea isfound unsuitable or too expensive. Further,experimentation is an unstructured process that isdifficult to make routine or familiar, since con-text is key.

SSuucccceessss iinnddiiccaattoorrssRobust organizations tend to encourage experi-mentation, while brittle organizations emphasizethe risk of failure and lack reward systems andstructures that would encourage experimentation.The variety of ways in which robust organizationsmake it possible for employees to experimentwith ideas in itself encourages experimentation.For instance, employees may be encouraged towrite articles and attend conferences and tradeshows to present ideas. Employees may also beencouraged to work with academic partners informal arrangements to build and test ideas.

In general, robust organizations seek externalconstituents and their opinions, feedback andinput for experimentation purposes. They thriveon taking in and understanding a multiplicity ofinterpretations. Robust organizations will alsoforge external partnerships to undertake risky andcomplex experimentations. For example, anorganization might collaborate with a businesspartner or even a customer (e.g. a lead user) oreven a research lab at an academic institution toexperiment with a new product enhancement orservice provision. Brittle organizations, on theother hand, do not know how to experiment with

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external entities. Much of this can be attributed tothe fact that they have little experience sharingideas with external entities or working on early-stage product development activities with out-siders. As such they perceive these activities ashigh-risk and dangerous, leading to an insular atti-tude on experimentation. The downside beingthat they very often have to assume all the losseswith experimentation, leading to a negative con-notation to the concept of experimentation, whichin turn, negatively affects the innovation process.

For robust organizations, the process of experi-mentation itself is valuable and rewarding; even ifthe experimentation does not result in any prod-ucts, organizational culture becomes furtheraccepting of innovation processes. Brittle organi-zations lack these protocols and discourage whatthey perceive as risky, potentially-failed efforts atexperimentation. Robust organizations do notview experiments lacking in results as failures, butas a learning activity. Learning throughout theexperimentation phase is encouraged and soughtafter. After each run or trial, employees documenttheir findings and connect them to originalexpectations and also to previous runs of theexperiment. The output (i.e. the finished productor service), while important, is not the onlymeasure of the value of experimentation exercises.One of the features of experimentation programsin robust organizations is the sharing of data andother artifacts that result from experiments.Robust organizations are more willing to sharedata between innovators so that mistakes are notrepeated and a collaborative atmosphere to exper-imentation is developed. Moreover, sharing ofdata allows for hidden or latent connections inthe data to the discovered through exploration oflarge data sets that have been collected over timeand by multiple innovators. Today, especially inindustries such as pharmaceuticals, biotechnolo-gy, and even financial markets, the sharing ofdata and the construction of large-scale data setsfor experimentation is critical. Robust organiza-tions have the capabilities and processes to fosterthe process of large-scale data collection and inte-

gration from experimentation. Brittle organiza-tions, on the other hand, seldom have an organi-zational-view of experimentation. Each innovatoris left to his/her own devices to experiment andhence are limited in their foresight and ability tosolve complex problems.

Robust organizations identify ways to creative-ly use technology in the experimentation process.An example of this is the evolution of Goodyear’stire design and testing process. In the past, newtire designs at Goodyear were tested by subjectingthe tires to road tests that included hours of driv-ing around a track. This was slow and expensiveand had an adverse impact on the environment.Due to the number of parameters involved,building a computational model to automate thistesting process was perceived to be very difficultand challenging. In spite of this, Goodyear wentahead and developed computational models fortesting tires virtually. The result was a faster,cheaper, and environmentally friendly processthat used computer software to get the job done.Moreover, engineers at Goodyear were able toperform more tests and experiment more. Conse-quently, this led to the development of new prod-ucts (Levinson, 2006).

Another example of a company where technol-ogy played a major role in enabling experimenta-tion and thus helping innovation is JEA, aFlorida-based public utility. JEA produces elec-tricity using natural gas and oil. It implemented aneural-net-based solution to determine the opti-mal production of electricity by calculating theoptimal amount of fuel required, based on thecurrent oil and natural gas prices. The computer-based model also incorporated the governmentguidelines for prescribed emissions limits. Theresult was reduced operating costs with increasedsavings on oil and natural gas costs, and increasedcompliance with government emissions guide-lines. Although the computer-based solution costwas significant ($800,000), the cost was recov-ered within eight weeks. Moreover, JEA is alsoplanning to experiment with the system withinits water business (Levinson, 2006).

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The process, through which a prototype isconstructed, tested, evaluated, refined, andimproved upon, needs to be clear and known.Only a handful of organizations have sanctionedexperimentation processes. Experimentation ismost often conducted in a haphazard way by var-ious individuals, teams, or organizational units,resulting in poor development of products andservices. An apt analogy would be every scientistdeciding to invent his or her own researchprocesses and metrics. The growth of sciencewould be stifled, as it would be difficult to evalu-ate, build upon, and even commercialize knowl-edge. The process of experimentation allows forthe sharing of data, prototypes, ideas, and alsopast knowledge. Experimentation with ideasneeds to be rigorous and in a manner that makesthe ideas open to inspection (i.e. anyone whowants to know the process by which an idea hasbeen developed should be able to examine theprocess). The experimentation process should bedefined, yet not constraining. Not all experi-ments will be able to follow the outlined processexactly, and there might be developments in theenvironment that might warrant modifications tothe process. Particularly in this stage, agility iscrucial. Brittle organizations may have an experi-mentation process that is outdated, difficult tocustomize, and even cumbersome.

Finally, the experimentation process is viewedboth as a necessity and as an asset in robustorganizations. Experimentation allows the organi-zation to not only test and build upon ideas, butalso to renew existing products and services. Inaddition, experimentation engages the workforcein learning and training programs wherein newideas can be creatively integrated into workprocesses. Consider the following comment:

‘For us, experimentation is fundamental. Even[when] our experimentation process comes upwith no commercial outputs, we learn. Learn-ing has to be part of the experimentationprocess and we value all learning efforts…During experimentation with new ideas we

may learn that our thinking, the entire frame-work, on a problem has been incorrect. Thismay have been the reason why we did not suc-ceed in a given set of trials… The emergenceof a new framework might be significant inand of itself, especially if it helps us address thehundred other problems that the experimenthad never intended to solve…Experimentationis a skill, a core capability, and a strategic dif-ferentiator for us. We pride ourselves on beingable to experiment in a more rigorous, skillful,and agile manner.’ – VP of Sales and Market-ing, Consumer Products Organization

CCoommmmeerrcciiaalliizzaattiioonnWhile experimentation focuses upon the possibil-ity of executing an idea, commercialization focus-es upon the potential impact of an idea. Onceideas are developed within a context, the nextstep is to make them appealing to the intendedaudience. This involves choosing methods topackage the ideas, whether for internal or externalaudiences. Commercializing involves clarifyinghow and when ideas can be used by people otherthan the group that developed them, and usingdata or prototypes from the experimentationprocess to demonstrate tangible or visible bene-fits. Commercialization takes possible ideas andcreates internal or external market value, creatingparameters within which value can be expressedor shared in a coherent fashion. External audi-ences may need to be introduced to products orservices, either as entirely new products or asimproved versions of existing outputs.

There are many mechanisms for commercial-ization. Some organizations encourage employeesto write papers and attend conferences, therebyexperimenting in a public forum while gaininginsight from audience responses. This is a varia-tion on the marketing focus group, wherein asmall group of consumers is brought in to testreactions to a product or service. Commercializa-tion weeds out the ideas that need refinement inorder to win an audience, from the possible ideasthat can be immediately and persuasively present-

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ed to an audience (whether internal or external).Part of the work of commercialization is to

establish the specifications of an idea. The prom-ises and potentials of the earlier stages of innova-tion must be discarded so that the actual benefitsof the new innovation can be perceived and com-municated. Documentation, both of the com-mercialization process and of the demonstrableand communicable aspects of the innovation,becomes crucial. The very act of documenting aninnovation’s benefits establishes a base for com-municating value.

Much of the time, commercialization involvesrefining scope. For instance, when introducing anew wiki, understanding who is most likely tobenefit from the wiki, who will be using it, howoften it will be maintained and the scope of ideasintended to be explored will greatly affect lateradoption and use. Commercialization allowsorganizations to identify stakeholders and theirneeds (or desires) and sometimes to redefinethose stakeholders, including or excluding groupswith conflicting or complementary needs. Asidefrom identifying target markets or users, com-mercialization also ensures that only the rightparts of an idea are made public, usually withplans to continue to release ideas. For example,when introducing a new service, sometimes itbehooves an organization to announce the mostappealing component of the service first, to drawpeople in and pique their interest, and then toexplain the details only when the consumer hasbeen engaged and demonstrated interest.

The output of a commercialized idea is adefined product or service (or a combination ofthe two). Crucially, a business plan must bedeveloped for how the idea is to be diffused andimplemented, which constitute the next steps inthe innovation process.

Commercialization is the stage where the focusof innovation shifts from development to persua-sion. After the experimentation stage, the idea’spossibility has been demonstrated; commercial-ization requires creating or revealing the idea’smerits in the current consumer or user context. If

an organization lacks contextual knowledge orcannot shift gears from engineering ideas todetermining market feasibility, outsourcing thisstage or selling the realized invention may be thebest route.

With process or business innovations, howev-er, outsourcing is almost impossible. In theseinstances, a keen understanding of organizationalculture must back up any changes. Some organi-zations bring in consultants or lay off large num-bers of employees and bring in fresh blood as away of circumventing this stage of internal com-mercialization of business processes. Other com-panies, like HP Labs, initiate a dialogue andinvolve employees from the beginning of thecommercialization process, asking them whatthey want and engaging them in the businessprocess of internal commercialization (Albert &Picq, 2004).

SSuucccceessss iinnddiiccaattoorrssThe challenge here is for organizations to com-mercialize ideas in the best ways. To this end,they need to understand the costs and benefits ofvarious types of commercialization. This givesrobust organizations an edge because they oftenhave already involved the customer in the innova-tion process. Robust organizations are also morelikely to be able to package their new ideas withinexisting products and services without disruptingcurrent customers, services or offerings. The mostrobust organizations can balance the bundling ofproducts and services, to continuously increasethe value of their offerings with low-cost imple-mentation of new innovations. Robust organiza-tions also tend to underplay successfulinnovations because they are hungry for the nextbreakthrough. Brittle organizations tend to getcaught up in a single success and try to ride theirown waves, often resulting in one-hit wonders.

Robust organizations understand the differ-ence between idea (knowledge) creation and idea(knowledge) commercialization (Desouza &Awazu, 2006). The stages that have been dis-cussed up to now are those that represent the cre-

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ation of ideas. The stages of commercialization,diffusion and implementation are quite differ-ent – they represent the full realization anddemonstrated value of ideas. In order to invent,organizations must be able to go through theknowledge creation cycle multiple times and,ideally, obtain new knowledge with each cycle.The second phase of knowledge management isthe commercialization of knowledge. This iswhere organizations wish to transform inven-tions into innovations. An invention is consid-ered an innovation only when it has beencommercialized (Dahlin & Behrens, 2005).Invention and innovation feed into each other.Inventions can be the result of needs ordemands that existing innovations fail to satisfy.On the other hand, innovations are dependentupon the existence of new ideas that lead tonew products, services or processes.

However, these two processes require differentgovernance structures and approaches. Theprocess of idea creation blossoms in fluid and safespaces. In such spaces, creativity is encouraged,not managed; individuals are provided a safehaven for experimentation without being pun-ished for failed attempts to innovate. In the caseof idea commercialization, the main task is tocommercialize the ideas that are generated (i.e.the inventions) so that they create value for theorganization. Innovations can be internal orexternal to the organization. For example, agroup may invent a best practice, such as aknowledge process, and then seek to commercial-ize it in the organization by promoting its accept-ance and adoption. Similarly, an R&D lab maydevelop a product enhancement. Interestingly,many of the ‘rules’ for successfully transforminginventions into innovations are similar, regardlessof internal or external focus. This is because bothcases involve transferring inventions from their‘original spaces’ to ‘foreign spaces.’ Successfulknowledge commercialization occurs when anorganization has a systematic process (Brown &Duguid, 2001). An essential aspect of such a sys-tematic process is the centralization of the com-

mercialization process in the organization. Just asrecruiting in different divisions of an organizationis handled by the human resources unit of theorganization, commercialization of inventionsproduced by different units of an organizationshould be handled by a centralized organizationalunit. In academic research institutions, such afunction is served often by a separate unitinvolved in technology transfer that seeks com-mercialization of inventions. These units share asymbiotic relationship that reflects the constantinteraction of the idea creation and idea commer-cialization processes. Success derives from usingdifferent principles to manage the knowledge cre-ation and knowledge commercialization units,and recognizing the differences between decen-tralized and centralized control regimens.

Robust organizations understand these differ-ences. Brittle organizations may try to centralizeand control idea creation, and leave the process ofidea commercialization loose and uncoordinated,thereby wasting resources. Consider the followingquote:

‘We finally learnt a simple thing – researchersand idea creators do not appreciate thenuances of marketing and commercialization.Even better, our business development folks donot understand the intricacies of research andthe fuss that goes along with design, robust-ness of solutions, etc. In the past, we tried toget the researchers involved in the commercial-ization aspects of the business and the BD[business development] folks in the labs. Thegoal was to build better knowledge transferflows and all the other niceties that go alongwith cross-functional teams. The end resultwas pain and more pain. Now, we keep thesetwo distinct, yet integrated. Distinctness playsout by allowing researchers to be researchersand for the BD folks to be happy with revenuegenerations. BD folks provide need analysesand idea requests to our R&D groups whohave incentives to address these commercialproblems. The researchers work to come up

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with the solutions in direct cooperation withthe customers, most often the engineeringteams of the customers. Then, the BD folks atboth ends, ours and the customers, go througha structured process to work on the financial,legal, and other operational details of theagreements... Before, we tried to centralize andtightly control the entire innovation life-cycle.Today, we have structured and optimized thecommercialization aspects and preserved theserendipity associated with a decentralized andchaotic, yet manageable, idea developmentaspects.’ – CEO, Research & DevelopmentOrganization.

Finally, robust organizations experiment fre-quently with minimal cost because they knowhow to learn from their failures as effectively asthey learn from their successes. Every failure ofcommercialization is thoroughly scrutinized; les-sons are learned and then fed back into the vari-ous stages of the innovation process to increasethe chances of future success. Robust organiza-tions have built clear and robust linkages betweenexperimentation and commercialization efforts. Ifa product or service, or an internal process, iscommercialized, the robust organization will haveindividuals who were part of the experimentationprocess collect feedback from the customers.Feedback is scrutinized to evaluate both theprocess (how the ideas moved through the vari-ous stages of the innovation cycle) and the out-puts (the tangible products and services).Feedback then influences future activities in eachstage of the innovation process.

DDiiffffuussiioonn aanndd iimmpplleemmeennttaattiioonnDiffusion and implementation are two sides of thesame coin; diffusion is the process of generatingbuy-in and acceptance for a new innovation, whileimplementation is the process of setting up thestructures, maintenance and resources to allow theinnovation to develop and be utilized or produced.Most organizations recognize the critical nature ofthis stage. Consider the following comment:

‘We come up with great ideas. Sometimes weeven can commercialize them with ease. Butgetting people to accept them and then changetheir behaviors to actually utilize the innova-tions in the optimal manner is difficult. Diffi-cult is putting it modestly. Most of our effortgoes into ensuring that we can change themindsets of customers.’ – VP of Global Mar-kets, Consumer Products Organization

Three potentially useful strategies for diffusionof ideas are 1): targeting key actors to align thecompany for knowledge management by involv-ing all levels of the organization and buildinginternal alliances with various stakeholders; 2)building on existing initiatives and actively foster-ing knowledge networks to generate momentumby linking decentralized initiatives and emphasiz-ing the company mission; and 3) communicatinga purposeful message that aids the cultural andmental transition by focusing on realistic objec-tives (Raub & Von Wittich, 2004). Executives arenot always the agents of innovation diffusion –anyone can take on that role. Diffusion happensat all levels, whether department-wide, company-wide, or partner or network-wide; or regionally,nationally or globally (Waarts & Van Everdingen,2005).

One way of formalizing and systematizing thisprocess is to use ‘knowledge brokers,’ key figureswho bring new ideas to the table either within anorganization or as representatives of a partnercompany or outside organization (Hargadon &Sutton, 2000; Hagel & Brown, 2005; Sawhney,Prandelli, & Verona, 2003; Smyth & Longbot-tom, 2005; Cillo, 2005). Knowledge brokers dif-fer from idea advocates in that knowledge brokersknow the specific context and application intowhich an idea, product or service can be inserted.Knowledge brokers present nearly finished, i.e.mostly refined ideas, for the purpose of rapidimplementation. Knowledge brokers are oftenviewed as consultants who try to solve specificproblems, but a growing literature suggests thatwithin large companies, knowledge brokers can

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fulfill a crucial advocacy role for internal ideas aswell, particularly because they can mobilize ideasinto other areas of an organization and illuminatepotential benefits. As previously discussed in themobilization stage, transfer of ideas into newcontexts sometimes results in idea generation forthat particular context; at other times, idea trans-fer does not result in re-use after experimenta-tion, but rather in wholesale adoption, followedby minor tweaking. During alliances, brokers canincrease collegiality between parties and garnerbuy-in for new ideas that initially appear strange(Hagel & Brown, 2005).

At Hewlett-Packard (HP) Laboratories, in orderto diffuse a new internal focus on innovationthroughout the company, top management startedby asking questions. Employees gave feedback onHP’s status as a world-class research and laboratoryorganization and suggested ways to evaluate theorganization. In this instance, diffusion could thenbe matched to employee priorities and expecta-tions for evaluation. Dialogue with managementcontinued when employees were asked how theirparticular positions would allow them to con-tribute to making HP one of the best researchinstitutions in the world (Albert, 2006). Thus, HPLaboratories involved all employees in a discussionof standards and desired goals. Individual meetingsthen assisted the translation of goals from theorganizational level to the individual level. Diffu-sion of the idea of organizational improvementwas the first step, while subsequent individualemployee dialogues allowed for the implementa-tion of specific individual goals and metrics.

One approach is to actively engage membersof an organization in the stages of idea creationand idea commercialization. For example, IBMconducts innovation jams (InnovationJam – Intro-duction, n.d.) which are open to all its employees,clients, business partners, and even employees’families. By involving these stakeholders and giv-ing them a sense of ownership, IBM also ensuresthat the innovations that are developed are dif-fused effectively within and outside IBM.

For product or service innovations, the final

stage of the innovation process requires market-ing to consumers. This is a specialized subset ofinnovation diffusion. The use of customer dataand careful attention to customer desires and per-ceptions assists this part of the process. Forinstance, after September 11, 2001, KLM Air-lines reinvented its image, emphasizing customerservice and friendliness in order to market itselfas an airline that knows customers and their pref-erences. KLM’s strategy for marketing was toemphasize knowledge of frequent fliers and maketheir trips more comfortable and friendly, thusimproving the airline’s image with the peoplewho were most likely to discuss and conveyimpressions of airlines. To do this, KLM had todramatically improve its Customer KnowledgeManagement (CKM) systems, so that every inter-action with a KLM representative was trackedand recorded, and so that the representative knewthe flier’s preferences and could offer the best cus-tomer service (Viaene & Cumps, 2005). Cus-tomer Knowledge Management may lead to thegeneration of new ideas as well, but during thisstage of the innovation process, CKM allows anorganization to assess market openings and iden-tify marketing strategies. The literature containssome strategies for using CKM for both market-ing and generation of ideas (Gibbert, Leibold, &Probst, 2002; Smith & McKeen, 2005). Thisreveals that the innovation process can be cyclic ifcustomer knowledge sparks new ideas.

Acceptance of an innovation and demonstrat-ed use or application of the innovation should beaccomplished by the end of this stage. Tweakingof the innovation may occur throughout, andbrief returns to experimentation phases mayoccur, particularly if experimentation was out-sourced initially. However, by the end of thisstage an innovation has been accepted and imple-mented, and older, duplicative processes are even-tually eliminated.

An advertising campaign or successful sales isthe most desirable output of marketing. The keycritical ingredient for success is knowledge ofcustomers, as well as the capacity to make use of

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that knowledge. Finally, an organization mustexecute implementation of an innovation into aservice or product. As the final stage of the inno-vation process, marketing lends itself to evalua-tion of innovations as business success, sales orstock growth. However, successful marketingimplies that all stages of the innovation processhave been completed.

The diffusion process requires an open cultureand/or strong advocacy throughout the organiza-tion. The benefits of the innovation must bereadily apparent, and detractors must be con-vinced or removed from the community.Resources and unlearning are the two critical fac-tors required in implementation. Resources,whether in the form of time, money, equipmentor materials, must be available for the newprocess, product, service or strategy to be imple-mented. Unlearning and deprogramming requireeliminating behavioral or mechanical processesthat duplicate the new strategy or process. Forexample, if a new enterprise portal is introducedin a company, the older software must beremoved from computers, and information mustbe transferred into the new portal. In addition,employees must unlearn old habits of findingknowledge and learn to use the new portal.

SSuucccceessss iinnddiiccaattoorrssEither great caution must be exercised to diffuseideas, or the organizational culture must beaccepting of failures or missteps. Because morepeople have exposure to the innovation at thisstage, feedback mechanisms can provide invalu-able data but may give employees a false sense ofcontrol. The innovation must be perceived byemployees as inevitable and beneficial for diffu-sion and acceptance to occur, which will thenminimize the costs of implementation. An openculture may be difficult to create. HP’s strategy,discussed previously, was to involve all employeesin setting priorities and goals for the organizationas well as individually.

Robust organizations know how to enablechange. If a change in culture is desired, the

organization needs not only new archetypes forbusiness, but the kind of gossip that will spreadinfectiously. Stories that emphasize the core of abusiness (whether that be scientists, social changeor light bulbs), while simultaneously emphasizingthat change and new ideas fit within the profitmargins, are keys to making organizationschange. Who tells the stories, and how the storiesare told, changes the rate and type of change.Higgins and McAllaster suggest that stories andtangible cultural artifacts are the ways to effectcultural organizational change through easilyunderstood, significant symbols (Higgins &McAllaster, 2002). Storytelling isn’t the first steptowards organizational change. First, the strategicplan, objectives, resources and hiring need to bealigned with new organizational goals (Higgins &McAllaster, 2002).

The story of 3M and Post-it® notes providesone example here. The employee who inventedPost-it® notes, Arthur Fry, originally developedthe sticky notes for use in his church hymnal.Market research showed no interest in this prod-uct, but Fry distributed them to secretaries untilthey were hooked. Eventually, Fry’s innovationwas developed into a new product line. In thisexample, diffusion was not standardized nororganizationally supported, but the process ofdemonstrating market value and persistence witha novel idea, despite organizational inertia, isclearly demonstrated. This story emphasizes thatin 3M, buy-in and diffusion of ideas happenswhen innovators believe in their ideas and advo-cate for them. Higgins and McAllaster break thisstory into the values supported by 3M: persever-ance; openness to ideas; advocacy for one’s ownideas; rewarding of success; and the use of storiesto promote corporate values (Higgins &McAllaster, 2002). The values identified in Fry’s3M story illustrate a clear value placed on uncon-ventional innovation and long-term belief ininnovation. Obviously, 3M has thousands ofinventions. Any single story could have been toldto demonstrate the successful innovation process-es at 3M. This particular story, however, high-

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lights and encourages a specific culture of innova-tion and values. Upper management at anyorganization would do well to consider whichstories are told in their offices and how that willexpedite or impede innovation diffusion. Robustorganizations do this on a regular basis.

Another example of the use of stories to effectorganizational change comes from Yokogawa Elec-tric Corporation and its use of the bullet trainmetaphor. When a new corporate strategy wasneeded for the electricity corporation, its CEOused the metaphor of the new, high speed bullettrains to emphasize that a quantum leap in strate-gy would require new technology, new modes ofthinking, and new ways of laying the groundwork.Just as a bullet train requires straight, wide tracks,a different kind of engine than a traditional train,and a new design, corporate strategy changerequires that the groundwork, engine and designof the company change together.

Higgins and McAllaster emphasize that Yoko-gawa succeeds with this metaphor because a new‘richness’ is added that ‘transcends the wordsthemselves’ (Higgins & McAllaster, 2002). Theimage and the story told about the image providea clear map of organizational values and the needfor dramatic change. This story helps to generatebuy-in and ease diffusion of innovations by creat-ing a framework in which employees and stake-holders can understand the need for and actualityof change. Diffusion of ideas requires just suchvisionary calls to arms so that traditional, stable,familiar processes can be upset and uprooted.Robust organizations utilize such tools.

This internal diffusion of ideas differs dramati-cally from the need to market ideas to consumers.The art of marketing has been described in vari-ous literatures, and little consensus has emergedon how to properly market. The marketing ofideas also constitutes progress through the inno-vation process, but this final stage of executingideas into a marketplace requires understandingthe target consumer and launching another, dif-ferent effort towards a further level of buy-in andinnovation diffusion.

During the diffusion and implementationprocess, robust organizations are likely to turnback to the social networks developed during ear-lier phases of innovation. For instance, duringearlier stages of the innovation process, compa-nies may involve business partners, academia,customers and suppliers. Within each of thosegroups, robust organizations have strong socialnetworks that can help to diffuse new ideasthroughout other organizations. If customersshare ideas with friends and family, for instance,marketing campaigns may be greatly enhanced.Some companies, such as Personiva, are builtaround this idea. Personiva lets consumers createpersonalized advertisements so they can star intheir own commercials. The personalized ads canthen be emailed to friends and family. Organiza-tions like Hewlett-Packard and Levi’s havealready chosen to work with Personiva to harnessthe marketing power of social networks.

Robust organizations are also likely to havealready established customer segmentation poli-cies that helped drive the earlier screening andprototyping stages. Strong relationships with leadusers and key customer segments are present inrobust organizations, and are leveraged duringthe marketing process. For example, lead usersmay be beta testers who spread the word aboutsuccessful products; at the same time, the compa-ny benefits from the patches, behaviors, andrepairs of lead users. Google Labs releases earlyversions of products in the prototyping andexperimentation phases, and then allows leadusers to promote successful innovations simply bydiscussing them with friends, co-workers andfamily.

Robust organizations use technologies toenable the diffusion and implementation process.There is a growing interest in the concept of edgetechnologies, which help organizations connectwith customers and drive innovations in theorganization, for the purposes of implementingand diffusing innovations (Mui, 2006). Forexample, General Motors (GM) sends a monthlyreport to its customers via OnStar, which allows

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GM to monitor the performance, status, andlocations of vehicles using sensors on the vehiclesand cellular connections. The monthly reportscontain information such as the condition ofvehicles, possible problems, and reminders ofmaintenance checks. The report is generatedbased on the analysis of more than 1,000 prob-lem records. Traditionally, GM interacted withcustomers only before purchase, via mass adver-tisement, and at purchase. Now GM maintainsthe relationship with customers even after pur-chase by being helpful to consumers.

Edge technologies have brought tremendousbenefits to GM. First, they have improved GM’scustomer relationships. The OnStar system hasreceived 15,000 emergency service calls, 23,000roadside-assistance calls, 29,000 diagnostic calls,and 380,000 direction requests. Second, the real-time observations of vehicles in various condi-tions provide knowledge to GM for improvingvehicle designs. Third, the technologies provideGM with new income sources. For example,GMAC Insurance offers different services for cus-tomers based on car mileage. Customers whohave lower-mileage vehicles can qualify for lowerpremiums.

Edge technologies promise benefits to anorganization; however, there are drawbacks, too.First, they may increase the problem of informa-tion overload. Nowadays, organizations havemore data than they can analyze. Appropriatelyanalyzing data and applying it to the right situa-tions is important for the successful implementa-tion of edge technologies.

Amazon.com has a successful platform thatrecords all transactions and product-evaluationhistories of active customers. Amazon analyzesthe data and improves customer’s shopping expe-riences through sophisticated data mining tech-nologies. As a result, Amazon maintains a recordof high customer satisfaction. Hartford FinancialServices also has a platform that records all tele-phone calls between customers and service repre-sentatives. Details of conversations, such as talktime, hold time, outcome, and snapshots, are

recorded and are available for learning exercisesby service representatives and supervisors.

Implementing edge technologies requires bigchanges in an organization. CIOs must designinformation systems architecture that can appre-ciate emergent knowledge. The change mustoccur at the organizational level, not at an appli-cation or a departmental or functional level.Implementing edge technologies at an applica-tion level can lead to disasters, such as inconsis-tent data and incompatibility of differentsystems. To use IT as an edge technology, CIOsmust be aware of the following five trends. First,organizations must connect themselves withtheir external entities, such as customers, busi-ness partners, competitors, and suppliers. Sec-ond, the connectivity must be established notonly by infrastructure, such as networks, butalso by software, such as Web services. Third, toreach customers, pervasive devices such asPDAs, mobile technologies, cameras, handsets,and electronic wallets are important. Fourth,data mining capabilities need to be furtherdeveloped in terms of storage expenses andintelligence analysis. Fifth, deriving knowledgefrom the collected data is important, since suchknowledge, which includes customer identity,location, preference, health, and evaluations ofthe quality of service, was previously unavailablein decision making. However, this knowledgeneeds to be treated carefully, since issues of pri-vacy and security are involved.

Finally, the implementation and diffusionprocess is an opportunity for robust organizationsto identify the next set of needs for customers.Unsuccessful diffusion informs an organization oftrue user needs, often delivered in the form ofcomplaints and angry customer voices. Successfuldiffusion may elicit wistful comments (particular-ly from lead users) that hint at unsatisfied needs,and thus at potential customer needs that thecompany can strive to satisfy. Thus, feeding cus-tomer input back into the organization facilitatesand stimulates the innovation process to beginagain. This is particularly true when the organiza-

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tion looks for larger trends in the marketplace(for example by looking across products that sat-isfy a particular need) and uses that knowledge torefine its innovation processes.

CCOONNCCLLUUSSIIOONNThe innovation process can be cyclic. All ideasmust go through the entire innovation process,but any single organization may not participatein all of the stages. Identifying competencies (anddeficiencies) in the innovation process can helporganizations improve their overall success withinnovation. For instance, if outputs tied to a spe-cific stage of the innovation process are weak, anorganization has an area upon which to focus orto consider outsourcing.

The innovation process outlined in this papercan provide a guideline for structuring internalanalyses and dialogues around innovation (seeTable 1). Organizations need a common languagearound which to discuss and analyze innovation.Establishing goals for specific stages of the inno-vation process will be more effective than simplyurging employees to innovate. Rather than rely-ing upon serendipity, organizations can structureinitiatives around the innovation process for max-imum benefit. Furthermore, companies canadvance each of the stages, for example by infus-ing them with activities that will leverage knowl-edge assets or by introducing contemporary ITsupport, for even better performance. The paceand scale of innovation and organizationalchanges pose a huge amount of challenges. Man-agers need to be aware of these challenges andtake a set of systematic approaches.

First, managers must constantly pay attentionto the operational details of innovation projects.Because market conditions shift swiftly, managersalways have to know how well their projects aredoing. Rapid technological advances do not maketheir jobs any easier. In order to ease the burdenof constant changes and monitoring, managersneed to establish a learning-focused environment.In this environment, individual employees areempowered to explore and generate new ideas. To

make this approach work, managers need to bal-ance between loose and tightly controlled ideageneration. Far too many organizations neglect tocombine these two mechanisms. For successfulidea generation, managers need to take the fol-lowing steps:• Recognize employees when they have done

something innovative.• Encourage individual employees to identify

both mechanisms of idea generation and applyany one of these two as they see suitable.

• Ask employees to explore and evaluate ideasfrom a wide array of sources.

• Support employees’ efforts to organize, con-nect, and focus ideas in a meaningful manner.

• Designate people, teams, or units to beresponsible for the activities mentioned above.

Second, managers need to be clear about howthe ideas are evaluated and selected. One distinc-tive feature of robust organizations is the exis-tence of clear-cut protocols for the evaluation andscreening of ideas. These protocols help managerskeep their attention on the processes of robustinnovation. And, their continuous attention isrequired to assess any new idea’s relevance to thecurrent operational needs and its potential long-term impact.

Managers are the ones that actively recognizethe difficulties and the risky nature of idea advo-cacy, and provide rewards to those who advocatefor ideas in addition to rewards and recognitionfor idea generators. For every new idea, it is nec-essary that managers ask the following questions:• What do we know about immediate costs and

benefits, as well as long-term investment andreturn on that investment?

• Do we know the difficulties and the riskynature of idea advocacy?

• Do we have dedicated resources (e.g. teams) inplace that examine the potential of ideas andthen advocate and screen for them?

• Are there transparent avenues through whichemployees can advocate for and get feedbackon their ideas?

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• What might be the consequences of ideaadvocacy?

• Do we provide rewards to those who advocatefor ideas in addition to rewards and recogni-tion for idea generators?

Third, managers must be quick to respond toexternal constituents and provide their opinionsfor experimentation purposes. Such prompt andopen approach makes innovative experimentationparticularly effective and relevant. Questionsmanagers must ask are:• What is our process by which a prototype is

constructed, tested, evaluated, refined, andimproved upon?

• Is that process clear and well known to theemployees?

• What are the costs and benefits of varioustypes of experimentation and commercializa-tion?

• What do we learn from our failures?• How is the technology used to capture and

share tacit knowledge gained from experimen-tation and commercialization?

Last, managers must pay careful and continu-ous attention to customer desires and percep-tions. Stories and tangible cultural artifacts bringorganizational changes in an easily understoodmanner. They not only provide a clear map ofchanges, but also establish strong relationshipswith key customer segments. Creative use oftechnology is also important. For example, datamining and pervasive computing infrastructureplay a critical role in connecting organizationswith their customers and business partners. Thisconnection will channel customer input backinto the organization and stimulate the innova-tion process all over again.

The framework described in this paper is tohelp managers identify what they need to focuson and commit their resources to at any giventime in the innovation process. The frameworkinforms managers about the areas of focus, fac-tors to give close attention, and the directions

they need to choose. Establishing an organiza-tional process for innovation is a worthwhileeffort. The innovation process of the organizationis the backbone against which innovative effortscan take shape; it is the context around whichideas are mobilized from thought to action. Anorganizational process for innovation displayscommitment and direction for all stakeholderstowards innovation. In many cases, just having asanctioned and organization-wide framework forinnovating may be a strategic competitive differ-entiator.

Both practitioners and academics recognizethat sustained, non-disruptive innovation is cru-cial for success in industry. Having a sound inno-vation process is critical to achieving sustainedinnovation. As one interviewee put it:

‘If I have to go into an organization and meas-ure the innovation competency or capability[of the organization], the first thing that Iwould do is see if the organization has aprocess for innovation. Do employees knowtheir role in this process? Does the organiza-tion have metrics around this process? Doesthe organization have methods for improvingthe process on a continuous basis? Without adefined process, there can be no managementof innovation as you do not know what youare managing [and] as you have not defined oreven articulated the process. You may get luckyon occasion…the absence of a process willeven prevent the organization from exploitingthe lucky breakthroughs.’– CEO, InformationTechnology Organization

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Received 18 December 2008Accepted 6 February 2009

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