2014 -- The Year Innovation Finally Funnels into Your Business ?

Lego, the legendary maker of the toy building bricks, has long been a hallmark of children's toys. Yet as the digital revolution took hold, they often struggled with the transition -- once losing over $50 million.
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In the past decade, technology leapt beyond laptop screens onto phones, tablets, clothing and even glasses. Just a four-year span saw the founding of Facebook and Twitter, the launch of the iPhone and Appstore and the unveiling of Android. Because these innovations built upon one another through the shared platform of the Internet, they could leverage communities to create ecosystems on the web -- and the progression from creation, to awareness of what was happening, to widespread disruption was the shortest in human history.

This rate of advancement created unprecedented pressures on expectations for business technologies. Yet, consumer technology's use of communities also revealed an answer. By using communities, businesses can look beyond their four walls to access a global talent pool and drive rates of innovation that rivals consumer technology advancements.

Communities allow businesses to accelerate and scale innovation by widening the funnel of what they can evaluate, by filling in missing skills and talent, and flattening the distance between the idea and successful execution.

1. Widen the funnel

"We have many ideas, but flushing out even the basic parts of them to see the concept in action costs hundreds of thousands of dollars to understand feasibility. So we don't follow up, or just pick one or two to make a bet on." - Fortune 50 Enterprise

In reality, for most companies, innovation starts as a result of high-level brainstorming in the C-suite office and narrows down to a couple of scenarios, normally dictated by the loudest voices and then delegated to someone lower on the totem pole. Compare this method of innovation to the world of venture capitalists -- they have the opportunity to see hundreds of companies before selecting which ones to invest in, and then can continue to fund the most promising of those ventures. Narrowing to a couple of ideas too quickly makes innovation a political activity rather than a process.

An essential part of changing this process is to lower the cost of experimentation, both organizationally and technically. Organizationally, distinguishing communications, incentives and recognition when setting innovation goals (as opposed to executing ideas) creates room for more fluid activity and also sets collective expectations more appropriately. Technically, lowering the cost of prototyping solutions allows business stakeholders to react to a real experience and use it to understand the change in behavior they are hoping for. It also creates a common narrative between business and IT on what is possible with today's technology. Using models like crowdsourcing through communities not only lowers the cost of experimentation but also can provide multiple data points on your idea and an outside-in view of what core elements need to be constructed to take it to production.

2. Fill the funnel

A common saying and reality for most technology companies is "There are amazing and smart people in the world, and most of them do not work at our company." Most of us would say we regularly use consultants to provide outside thinking on our initiatives or bring in skills we don't have. Yet, when examined more carefully, this option can prove to be less diversified and more effort than is apparent. When you hire a firm, you are hoping they do a good job matching a consultant's capabilities, interest, domain knowledge, and availability to your organization. Of course, you could just rely on the same people again and again, but it's highly unlikely they are a great fit for each type of problem your organization may face -- they are generically skilled vs. specifically skilled in what you need. Furthermore, the effort to scour the market for the perfect match is itself a resource intensive exercise.

An attractive alternative for enabling innovation is using crowdsourcing markets to change this dynamic. Marketplaces like Tongal (video), TopCoder (mobile design / code), CrowdFlower (tasks), uTest (testing) and more in nearly every domain take your question or initiative and put it out to a community to work on. Through technology, they put problems in front of scores of people who can provide unique viewpoints and skills. Many of the developers use competition as a motivating factor to increase quality and drive further diversity in ideas. In addition, resourcing can scale up instantly because it accesses a much broader set of talent than any single company. This approach has been used to produce results in areas as diverse as finding gold, building software, better DNA sequencing, and even Super Bowl Ads. While few, if any, companies could afford to hire Google's engineering team, this approach allows organization access to that level of talent to drive the execution of innovative concepts. Ubiquitous connectivity, crowd platforms and social engagement have made this theoretical exercise a reality for businesses looking to innovate faster.

3. Flatten the funnel

Lego, the legendary maker of the toy building bricks, has long been a hallmark of children's toys. Yet as the digital revolution took hold, they often struggled with the transition - once losing over $50M on the launch of a massive multiplayer online game (MMOG). Yet they reversed this trend by embracing, rather than isolating, the community of hackers around Lego. In fact, they changed their own processes to co-create with the community.

In Jeremiah Owyang's excellent piece on the sharing economy, he describes the transition from owning assets to allowing your customers to work with you through platforms. By providing these platforms for engagement, organizations can create more value for themselves and their constituents. In the case of Lego, this approach lowered their time to market and increased the likelihood of product acceptance. Nike is another example of a company that has provided a platform to allow customers to design their own shoe.

In these examples and many more, companies provided content, knowledge, experience and insight -- through a platform -- to allow for expression and co-creation. By enabling this kind of engagement, businesses can accelerate product and service development, and create new channels to engage with their customer communities.

The benefits that come from tapping into a community demand changes to processes that have typically been hallmarks of enterprise innovation cycles. Organizations must provide more external information and transparency to their product pipeline, align functions like product management to be much more open, and ensure better approaches to handling too many ideas and channels of development. Scaling using crowds for increased innovation is about resetting established process and organizational structures for product creation. Nearly any organization can make a marketing spectacle of accessing a community for innovation, but a more systemic approach can create repeatable success and a permanent network of passionate 'workers' and evangelists who are actively working to forward a shared vision.