Int. J. Networking and Virtual Organisations, Vol. 13, No. 2, 2013
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Challenges of implementing innovation contests to facilitate radical innovation Björn Remneland Wikhamn School of Business, Economics and Law, University of Gothenburg, Box 610, SE-405 30 Gothenburg, Sweden E-mail:
[email protected] Abstract: Innovation processes have become increasingly decentralised and distributed to meet the rapidly changing and knowledge intensive markets. Innovation contests are often pointed out as tools for generating radical innovation and to aid organisations in adopting to open innovation practices. These contests cut across established organisational structures and do therefore not automatically fit into the everyday corporate processes. This paper analyses through a case study some of the difficulties that innovation contests meet when being introduced to an established, large organisation. Certain challenges are pointed out for innovation contests to act as vehicles in building dynamic capabilities for the firm. Keywords: innovation contests; ideation; crowdsourcing; dynamic capabilities; radical innovation; open innovation. Reference to this paper should be made as follows: Wikhamn, B.R. (2013) ‘Challenges of implementing innovation contests to facilitate radical innovation’, Int. J. Networking and Virtual Organisations, Vol. 13, No. 2, pp.129–145. Biographical notes: Björn Remneland Wikhamn is a Researcher and Senior Lecturer in Organisational Theory at the School of Business, Economics and Law, University of Gothenburg. His research interests include innovation practices and network organising.
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Introduction
Innovation is often pointed out as crucial for companies to stay ahead in the competitive and rapidly changing market (e.g., Teece et al., 1997). The innovation work has traditionally been mainly centred to internal R&D departments (Rothwell, 1992) following structured state-gate systems (Cooper, 1990) and built up by sequential value chains (Porter, 1985). As the innovation process involves increasingly complex knowledge and escalating development costs while the product life cycles become shorter, it stresses firms to innovate also their innovation processes per se. More open (Chesbrough, 2003) and distributed (von Hippel, 2005) processes are getting attention as new ways of increasing value creation and value capture for companies and in society at large – formed around the notion of open innovation (cf. Gassmann et al., 2010; Enkel
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et al., 2009; Huizingh, 2011; Dahlander and Gann, 2010; Hrastinski et al., 2012). These extended collaborations have at the same time a tendency to blur the internal as well as external organisational boundaries and challenge the hierarchical structures of the firm (Benkler, 2006; Powell, 1990). An increasingly popular approach for spurring open and distributed innovation is through the application of innovation contests, which are (often web-based and virtual) competitions among innovators who use their skills, experience and creativity to generate solutions for certain challenges defined by the organiser (Piller and Walcher, 2006; Bullinger et al., 2010). While academic interest have started to emerge in understanding the potential and use of innovation contests, there is still not much empirical research on how established firms work in practice to implementing such distributed innovation activities, and what challenges they face when doing so. Furthermore, there are not many critical accounts raised about the difficulties facing managers who aim to incorporate these principles into their corporations. Instead, there is a tendency to highlight ex post success stories from which normative answers are drawn. Positive benefits of utilising innovation contests in established organisations have been suggested, as for instance to providing venues for marginalised actors to be part of problem-solving (Jeppesen and Lakhani, 2010), giving new diverse perspectives (Page, 2007; Terwiesch and Xu, 2008) and challenging the rooted beliefs in firms and industries (Colarelli O’Connor, 2006). At the same time, these contests cut across established organisational structures and do therefore not automatically fit into the everyday corporate processes. Network organising for innovation thus requires other mechanisms than hierarchical control (Kuschel et al., 2011), where incentives are derived from a different mixture of intrinsic and extrinsic motivators (Benkler, 2006; Brabham, 2010) and where it exists a healthy balance between competition and collaboration (Bullinger et al., 2010). This raises interesting questions about how innovation contests are implemented in traditional firms and what implications this have on the firms’ ability to generate radical and disruptive innovations. The purpose of this paper is to analyse the organisational aspects of innovation contests in relation to the firm’s regular innovation process. It will do so by reporting an in-depth study of how a large manufacturing firm over a period of several years worked with innovation contests to strengthen their innovation capabilities. The overall research question for the paper is; “What challenges do a multinational firm face when implementing innovation contests in practice”. This paper addresses how innovation contests are aligned (or misaligned) to the already established innovation processes and activities within the firm, and theoretically it links the innovation contest literature with the theories of dynamic capabilities (Teece et al., 1997) and absorptive capacity (Cohen and Levinthal, 1990). The study suggests that it takes a lot more than just introducing innovation contests in order to make the firm more innovative in the short turn, as established firms inevitably face big organisational as well as cultural obstacles. However, when implementing these new forms of innovation activities, it stresses the firm to make organisational and cultural changes which in the long run could lead to increased absorptive capacity. This paper is structured accordingly; a literature review related to research on innovation contests is followed by a short method section. Then, an empirical case will be introduced and analysed, illustrating the issues and challenges involved in its use of innovation contests. The paper ends with a discussion and conclusion.
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Literature review
The use of innovation contests is an increasingly endorsed approach to facilitating distributed ideation work in practice (Bullinger et al., 2010; Terwiesch and Xu, 2008; Blohm et al, 2011). Ideation can be defined as “the generation and development of ideas that can be converted into innovations” (Björk et al., 2010) and is often considered as a crucial part of the initial stages of innovation. Related notions to innovation contests are for instance ‘research tournaments’ (Taylor, 1995), ‘idea contests’ (Piller and Walcher, 2006), ‘idea competitions’ (Leimeister et al., 2009), ‘design contests’ (Brabham, 2010) and ‘innovation jams’ (Bjelland and Wood, 2008). Bullinger et al. (2010) suggest ten key design elements for differencing various types of innovation contests. The media environment can be online, offline or as a mixture. The organisers can be firms, public organisations, non-profit organisations or individuals. The target group can be specified or unspecified and the participants can be individuals, teams or both. The contests can have high or low task specificity and various degrees of elaboration (idea, sketch, concept, prototype, solution, evolving). The contest time can vary from short term to long term. The rewards for participation can have monetary, non-monetary or mixed elements and the functionalities for supporting community building can be given or not-given. Finally, the assessment of contributions can be based on jury evaluations, peer-review, self-assessment or mixed. In the innovation management literature, there is an increased attention on how sources outside of the organisational boundaries can contribute to innovation work (e.g., Huizingh, 2011; Pippel, forthcoming), particularly in the initial, exploratory phases of the innovation process (Love et al., 2011). Since innovation contests invite participants outside of the R&D unit to be involved with ideation, it directly links to the research on open innovation (Chesbrough, 2003; Gassmann et al., 2010; Huizingh, 2011). This paradigm argues for the economic benefits of opening up for inflow and outflow of knowledge across borders to accelerate innovation and to generate new income streams. Gassmann (2006) points to three core open innovation process archetypes: 1
the outside-in process, bringing in new knowledge into the firm
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the inside-out process, earning profit to the firm by transferring knowledge to the outside environment
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the coupled process, connecting the outside-in and inside-out by working through ongoing relations with outside actors.
From this distinction, innovation contests cut between the outside-in and the coupled process, since they aim to feed in new ideas and knowledge to the organisation but also to couple them with already established know-how. Several strong arguments have been raised for turning to actors outside of the R&D department for ideas and solutions to the firm’s innovation challenges. It can help generating increased internal efficiency in terms of “given enough eyeballs, all bugs are shallow” (Raymond, 1999) and through cost reduction (Jeppesen and Frederiksen, 2006) since firms do not need to invest their R&D budget on risky problems that others already have an answer to. It is furthermore considered to generate more creative and radical ideas because marginalised actors and distant field of expertise can be included in the process (Jeppesen and Lakhani, 2010), and participants can collaborate in creating
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solutions (Blohm et al., 2011; Remneland-Wikhamn et al., 2011). Surowiecki (2004) coined the notion ‘wisdom of crowds’, arguing that the aggregation of information in large groups poses a rich source for wise decision-making. Page (2007) suggests that the crowd’s diversity leads to that it even trumps the experts’ ability to provide well-balanced solutions. It can also provide more customised solutions if the actual users are invited to participate with tailored contributions to their own needs (von Hippel, 2005). Innovation contests can be approached through open calls or they can be more or less organised in communities. This can for instance be done through ‘broadcast search’ (Jeppesen and Lakhani, 2010) in so called ‘crowdsourcing activities’ (Brabham, 2010; Howe, 2008) where firms outsource strategic tasks to external broad groups or audiences. The process can be facilitated by the firm itself based on innovation platforms (Boudreau and Lakhani, 2009) or through external intermediaries (Sieg et al., 2010). In all cases, the ideation work is to a large extent coordinated beyond the organisation’s hierarchical control, why other forms of influence are needed (Dahlander and Wallin, 2006; Schall, forthcoming). This has opened up for a large amount of research about the motivation to contribute in collaborative, distributed endeavours (cf. Boudreau et al., 2011; Chen et al., 2013). Similarities are found in the voluntary participation of open source initiatives, where motivation is linked to the opportunities of gaining knowledge, contacts and reputation (Lerner and Tirole, 2002), as well as in structural conditions such as culture, leadership, policies, rewards, rules and norms (Hertel et al., 2003). Also how the value creation process is architecturally designed has been highlighted as an important factor for how they evolve (West and O’Mahony, 2008; Ghazawneh, 2011). Participatory architecture “guides interactions and exchange in a community through the social, legal and technical capabilities offered to community members” (West and O’Mahony, 2008) and includes the design parameters of: 1
the organisation of production (i.e., the way that the community conducts production processes)
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community governance (i.e., the process by which decisions are made within the community)
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intellectual property (i.e., the allocation of rights to use the community’s output).
West and O’Mahony (2008) also differentiate between two types of ‘openness’ in participatory design; transparency (i.e., allowing outsiders to understand what is happening and why), and accessibility (i.e., allowing external participants to directly influence the direction of the community). From these parameters, decisions are made in order to balance the tension between control and external voluntary participation. Research on innovation contests have so far mainly been focused on the events themselves; for instance, how they are designed, who is allowed to contribute, what incentives exist, how to solve the issue of intellectual property (e.g., Björk et al., 2010; Bullinger et al., 2010; Jeppesen and Lakhani, 2010; Terwiesch and Xu, 2008). It has not as much been highlighted how the ideation events are related to firms’ ordinary innovation activities, such as to their stage-gate process of innovation (Cooper, 1990), despite that the innovation management literature often point out problems for incumbent firms to handle organisational challenges when facing radical (Chandy and Tellis, 2000) and disruptive (Christensen, 1997) threats. Partly, established firms’ lack of innovativeness has been explained by an unwillingness among organisational members to appreciate ideas coming outside of the project group (Katz and Allen, 1982), but it has
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also been suggested that there are structural, processual and cultural challenges for established firms to adopt to big changes (Teece, 2007; Remneland-Wikhamn, 2011; Chen and Kong, 2013). It has therefore been pointed out that firms need to develop visionary leadership (Tellis, 2006) as well as certain dynamic capabilities (Teece et al., 1997) in order to build and maintain competitive strength. Teece (2007) argues that a firm’s dynamic capabilities can be divided into activities of sensing (i.e., exploring new opportunities across technologies and markets), seizing (i.e., developing ideas into innovations) and transforming (i.e., to renew the organisation to face radical threats from the environment). In similar vein, absorptive capacity (Cohen and Levinthal, 1990) is a widely used theoretical concept to discuss how firms build up capabilities of utilising external knowledge inside the firm boundaries. The literature review suggests that innovation contests can be directed toward participants external to the R&D unit, with the purpose to cut across otherwise established boundaries and perceptions. As such, they have a potential to strengthen the firm’s creativity and innovativeness by enhancing its absorptive capacity and dynamic capabilities through the ability of sensing, seizing and transforming radical and disruptive ideas (Björk et al., 2010). This could be particularly true for large multinational corporations, spanning over several geographical areas and knowledge disciplines, where much unused knowledge resources in this way are being invited to participate in the innovation process. The research on innovation contests is a promising, but young research field, and it needs further empirical and theoretical contributions and critical examinations on how companies implement innovation contests in practice and what specific challenges it involves. More specifically, in the theorising of innovation contests, there is a need to more fully understand how these new distributed ideation activities are being related to firms’ ordinary innovation activities and whether they fulfil their promise to produce radical and disruptive innovations to the firm.
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Method
A single case study approach (Yin, 1994) is employed to discuss innovation contest implementation. To preserve its anonymity, the company will be referred to as ManuCo. Also the names and job titles of the interviewees have been altered. The firm is a well-suited case for this paper since it has utilised innovation contest activities for a while and is starting to see their results. The innovation contests run parallel to the company’s rather successful technology-focused stage-gate process, why it is also possible to lift up the perceived challenges in linking the two innovation processes. A case study is particularly well suited to generating new and empirically valid insights in early stages of theory building (Eisenhardt and Graebner, 2007). Kept in mind that case studies do not allow for statistical generalisation, they still have the possibility to provide analytical generalisation in the translation of empirical data to theory, rather than to population (Yin, 1994). The ManuCo case study is based on qualitative empirical data gathered through interviews, documents and observation in different units and levels of the corporation. In total, more than 60 interviews with managers and employees have been conducted between 2009 and 2011. Most of the encounters are recorded, resulting in over 60 hours of tape. Many of these recordings have been transcribed. Field notes have been
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continuously written by the researchers. The work of innovation contests in ManuCo is one of several activities which have being followed by the research project. For information about the specific innovation contest sessions, 22 interviews have been held with the innovation contest team, facilitators and with active contest participants. Various forms of documents have been collected and the research group has been involved in several seminars and workshops related to innovation management within the corporation. The transcribed texts have been analysed with the help of a QDA-software, to establish chains of evidences and meaningful events (Yin, 1994) and to look for patterns of reoccurring themes (Eisenhardt, 1989). The case story has been authored in iteration with the research team and with selected representatives from the case company.
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The case of ManuCo
ManuCo is a world-leading engineering corporation with manufacturing units in around 20 countries and sales units in almost 200 countries. The organisation is decentralised with individual business areas driving their own sales and market positions. The corporation’s overall innovation process is, however, integrated in terms of several business units supporting all the different business areas. This makes up a matrix-organisation with complex internal relations. Below are two voices on how the organisational structure (negatively) impacts the knowledge sharing process across internal boundaries: “Previously at [the vehicle manufacturer] we started R&D activities with those parts that were supposed to be located in the vehicle, such as mobile phone, GPS, embedded software, etc. But we realised the problem of how the backend system should work […]. That’s where we identified our business case, to provide a sort of middleware and act as service provider […]. We saw [WirelessCar] as bridging the gap between the vehicle and telecommunication industry” (CEO of the spin-off, interview 2008-12-01) “It is a strong competition among our brands and that can be a problem, since it is then also an internal competition for the development resources. Each unit need to show that they are better than the others, so why help each other in driving innovation? ‘What’s in it for me?’, that is probably how many feel.” (John, employee in a business unit) “Different internal brands have their own development, and suddenly you should collaborate. This starts political battles, because it indirectly affects where the innovation budgets will be allocated, where the R&D departments will be located and in the end it affects or own work opportunities.” (Josh, member of the innovation contest team)
The corporation currently follows a rather traditional stage-gate model (Cooper, 1990) which could be portrayed as a closed innovation process in Chesbrough’s (2003) terms. The company has a strong engineering culture and a product-centred, technology push orientation. The culture has been seen as a valuable asset over the years, stimulating advanced technology development and quality as well as building strong brands and customer loyalty, but in recent years it is also often lifted up as a hinder for innovation. As the manufacturing business starts to add services and third-party add-ons to the offerings, new kind of innovation processes are required. For the firm’s core products, the
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development time can last from 5 to 10 years, but when it comes to digital features and applications, the pace of innovation needs to go much faster. The so called ‘not-invented-here’ syndrome (Katz and Allen, 1982) is also said to be present by several of the interviewees – both in relation to outside actors and between business units and companies within the corporation. “This old culture is deep-rooted in the corporation. When you come in to the room, people are sitting with grim expressions and act as ‘this is my territory, I will protect it and I will shoot down hostile things’”. This is how we impress each other. (John, employee in a business unit)
As shown by the quotes, despite its strong current market position and stage-gate innovation process, people in ManuCo point to a need for a strategic change for the firm. Critiques are being raised on the way in which knowledge and ideas are developed and shared across organisational divisions and how the organisational culture is set to support the crucial development of new service innovations.
4.1 The introduction of innovation contests in ManuCo The initiatives of utilising innovation contests started in one of the business units working with technology development. The purpose was to address strategic challenges linked to innovation (more specifically to generate more radical and disruptive innovations) and to the shifting of cultural mindsets. One person involved with the initial implementation even describes it as initially mainly an activity to change the internal company image; “At first, this was a pure image thing, as our business unit no longer was seen as being proactive. The primary, short-term aim [with the innovation contest] was to build internal reputation. But as we work with it, we noticed that ideas started to flow and we realized that expectations for a more stimulating environment emerged among the employees.” (Josh, member of the innovation contest team)
The contests were carried out three times in 2009 within that specific business unit, generating over 500 ideas and about 30 innovation projects. It has then been used also in other business units, facilitated by the core team from the technology business unit. In 2010, it was run in the whole corporation, across business areas and business units. This global activity was established as a ‘skunk work’ below the radar of the top management. “We did not turn to the Headquarter when we organized the event. We believed that they eventually would not stop us if we did it in a first-class way by ourselves. Deliberately we chose not to follow the company rules for how this should be set up and internally marketed. Cause then we would have been forced to adopt the policy documents and layout standards, what colors to use and everything, and suddenly there would be no radical change at all.” (Josh, member of the innovation contest team)
Just before the launch of the event, the headquarter was contacted. The team wanted them to communicate the instructions for the participants in order to avoid any possible power struggles with other business units regarding who is in control over the innovation process. “This is for the good of the whole corporation and therefore it should be sent from top management and not from any single business unit”, as one of the interviewee said. It required a bit of convincing before the brand management at the headquarter accepted the material, but eventually it was sent out as planned. When being completed,
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the global innovation contest had collected 350 ideas and around 1,500 comments from participants. It eventually led to nine funded projects.
4.2 The innovation contest process The innovation contest sessions are administrated on the corporation’s internal software platform, using an already existing tool to share documents and information throughout the global organisation. A specific configuration of the platform was developed by internal programmers to support the contest process, providing possibilities for employees to add ideas and comment on others’ contributions through their employee login profile. All comments are logged and stored, but there are no possibilities for the participants to evaluate or grade the ideas themselves. “We have developed the software ourselves, based on our collaboration platform. Extremely simple. I know that other companies talk about the expensive IT-solutions needed for these kinds of activities, but I think that is crap. You can make it much more uncomplicated.” (Patrick, manager of the innovation contest team in ManuCo)
The IT-system supporting the innovation contests is, hence, not very sophisticated and does not have functionalities such as sorting, bookmarking or individual voting systems (e.g., ‘like’ and ‘dislike’). The positive aspect of this choice is the low development and maintenance costs as well as the ease of implementation. All employees in the whole global corporation are already used to the IT-environment, have individual accounts set up, and can effortlessly participate in the sessions without extra administration. The downside is that the system is perhaps not so inviting for participation due to the lack of user friendliness in terms of the large amount of unsorted data feeds that overwhelm the potential contributors. Inspired by IBM’s innovation jams and other firms’ similar approaches, ManuCo’s version is based on five steps; injection – capture – selection – exploration – pre-commercial/transfer. The injection phase is highlighted by the innovation contest team as a key activity to create interest and commitment to participate. Normally, it starts weeks before the specific session, with teasers by e-mail to potential participants with links to inspirational material such as documents, movie clips and websites. Here, it is also revealed which subtopics the contests will cover. “When we initially ran the contests without the inspiration material, we started the sessions with quite low energy among the participants. It took several of hours for people to lower their guards and dare to give ideas and comments. Then the energy explodes and in the end there is so much energy that nobody want to stop. With the injection phase, we can try to make the participants more prepared when entering the contest.” (Charles, participants of an innovation contest)
The specific ideation sessions normally run over a 48 hour period. The employees do not get any salary for participating and contributing, because they should feel that they do it out of own free will. The innovation contest team has however assigned a handful of facilitators who normally charge their time. The facilitator’s role is to enhance the discussions, give directions and guidance, but foremost provide a positive, encouraging atmosphere in the event. They also have the task of providing their own top-ten list of ideas after the contest is over. The facilitators are selected based on their diverse knowledge skills but also their legitimacy within the participating organisational units.
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The next step is the selection-phase, where the innovation contest team is gathered to start to evaluate and grade the different ideas. Depending on how many ideas have been posted, this can be a very heavy and difficult job. Some help is received from the facilitators’ top lists, but there is still a very intricate filtering process needed to be carried out. The selection process is done steps-wise, where the criteria for continuation is set to; the degree of innovation height, business potential and feasibility. “This portfolio should be as balanced as possible, so that it includes several subtopics and global focus areas. It should also have a balance in risk, including both incremental and radical innovations. And we go a lot on gut feeling, too. The portfolio thinking starts when the filtering process is perhaps down to around 30 ideas left. Our goal has been to fund about ten projects from each contest.” (Peter, member of the innovation contest team)
There were initial thoughts about allowing for the participants to vote on the ideas and thus to be part of the selection process, but it was cancelled and instead two persons from the innovation contest team make the final assessments. A budget of 20,000 Euro is allocated for each winning idea to cover the work hours in an assigned project to further refining the innovation. The staffing of the projects is based on personal interest, availability and knowledge skills. If possible, the initial idea provider is asked to be part of the project. The projects also get active coaching from the innovation contest team during the exploration process. “We have tried to create a rather slim and non-bureaucratic gate-process. It starts with that they write a project plan, but we have been careful to point out that it does not need to be detailed. We have a midterm review and it ends with a presentation of some kind.” (Kevin, member of the innovation contest team)
In the final presentations, the ambition is to involve potential receivers of the project results, e.g., from the business areas in the corporation or other internal or external stakeholders. The goal is that the project has investigated the business potential so well so that a decision can be made whether there is an interest in continuing to fund the development. “Already from the beginning we talk very much about transfer. That is, to make the idea pass to the next phase. It is a problem if you have not defined who the receiver is. Then the risk is that it will end up as a report that nobody reads. If we know who the receiver is, we can integrate that person early in the project, as a member of the steering committee or something. Then the chances increase that the idea will get rooted in the organization.” (Patrick, manager of the innovation contest team)
The stage of pre-commercialisation or transfer does however not necessarily need to lead to a total buy-in and takeover of the development costs by the business areas. There are also possibilities for continuing funding from various company funds for early innovations, but in all cases it is necessary for the project to show the business potential and to align it to the overall strategy of the corporation. Since the budget for each individual project only covers approximately 200–250 man-hours, there is strong pressure to quickly prove the concept and to create a buy-in from potential receivers. From the dichotomy suggested earlier by Bullinger et al. (2010), ManuCo’s version of innovation contest is, hence, organised by a firm and directed to specific target groups (employees) on an individual level. The contests have a medium to high task specificity and the contests has a rather short term focus with possibilities to move from idea
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elaboration to prototypes or even solutions. The rewards for participation are based on a mixture of monetary and non-monetary rewards, but the functionalities of supporting community building are rather limited. The assessments of the contributions are based on expert jury evaluations. When being introduced, the innovation contest had two purposes for ManuCo; to generate new radical and disruptive innovations and to act as a vehicle for changing the innovation culture in the organisation. There is no question that the latter aim has to a great deal been supported. The process opens up new venues for employees to meet and to discuss ideas across organisational units and hierarchical levels – it builds up a lot of individual joy and engagement within the firm. “We can see that it has generated a lot of energy among our co-workers. This is a really good way to create energy. You get surprised about what effects it brings to the climate.” (Patrick, manager of the innovation contest team)
After the global event, another member in the innovation contest team put it like this: “We had difficulties to end the session. It just spurred, and it came in so many ideas and comments that we were afraid that everything would freak out. People were so active that we thought it would be impossible to administrate it afterwards.” (Peter, member of the innovation contest team)
The innovation contest methodology has been highlighted as a successful activity both internally inside the organisation and in public presentations to external audiences. And to be fair, hundreds of ideas have so far been generated, leading to more than 50 funded projects which all have delivered their business plans and presented the results for potential stakeholders. In this sense, the contest-technique has succeeded to act as a vehicle for inspiration and the nurturing of an innovative mind among employees in ManuCo. The superior goal of producing radical and disruptive innovations, however, has however so far been more challenging. “What has been a bit missing in this process is the generation of the ideas that takes more bold steps; the more radical ideas. We have perhaps not received the real break-through innovations yet, although a few of them are surprisingly good.” (Patrick, manager of the innovation contest team)
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Discussion
For ManuCo, the innovation contest approach has been put forward as a successful vehicle for driving innovation and change in the organisation. News articles have been written about it in internal corporate magazines and newsletters, and managers have used it as illustrating examples of promising activities to spur creativity and cultural change. The results of the contests in terms of radical innovation output are probably a bit too early to evaluate since many of the funded projects are still in the making. However, the interviews with facilitators and participators of the innovation contests indicate certain difficulties and obstacles, as several organisational challenges are being put forward. These have been structured into five partly overlapping areas, all of which pose limitations for innovation contests to act radical and disruptive for the ManuCo innovation process. They consist of:
Challenges of implementing innovation contests 1
an idea selection challenge
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a self-censoring challenge
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a timing challenge
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a shallowness challenge
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an implementation challenge.
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First, there is a selection challenge in the sense that radical and disruptive ideas can be very difficult to trace ex ante (Danneels, 2004). This is also due to the fact that there is information overload in the system when many participants are active, leading to a heavy load of administration for the jury which limits the possibilities for strategic, visionary leadership (Tellis, 2006). Partly this could be explained by the limitations in the IT-system being used, but the evaluation challenge is something occurring in any type of innovation contest setup. And although the evaluators are actively looking for a ‘balanced portfolio’ of incremental and radical innovations, there can also be a judgement error bias where people in big corporations are blind to disruptive ideas (Christensen, 1997). Participants in the innovation contests might also self-censor their contributions, and by doing so they weed out too radical ideas from the contests. Among the facilitators, several reasons for this occurrence were brought forward. It could for instance be a fear of saying something wrong or stupid in public. Employees might be anxious about what their boss will say afterwards; why they spent their time on this activity or would evaluate their performance in various ways. It could also be linked to the roles, positions and expectations that certain individuals have in the organisation, or as one of the respondents said: “The higher up in the organization, the more they might feel that they represent their unit or company. If a very senior manager participates in the contest, his or her posts might be seen as the business unit’s answer to a question or a discussion thread. We have noticed the difficulty of getting participants from certain levels of the hierarchy.” (Josh, member of the innovation contest team)
The self-censoring is also related to that people might not want to contribute to other competing business units or domains. This problem was more evident in the global contest which incorporated many business units and business areas, and even more obvious in sessions incorporating also external actors, such as suppliers and even competitors. Interviewees from ManuCo also put forward that the selection process (i.e., which ideas were chosen as winners) provided a signalling for future contributions in the sense that the participants learned what type of ideas were appreciated by the firm. This even affected their overall willingness to participate at all. Partly, the self-censoring challenge can be explained by the participants’ lack of ‘creative self-efficacy’ (Tierney and Farmer, 2002) which is said to be influenced by aspects such as job tenure, supervisor behaviour and job complexity. Closely linked to this aspect is how the corporate culture and organisational climate is supporting or inhibiting new ideas (Katz and Allen, 1982), as well as what forms of rewards for sharing exists (Boudreau et al., 2011). Another reason why innovation contests have not produced much radical ideas so far can be related to a matter of the timing of creativity. In ManuCo, most employees are preoccupied with tight deadlines and loads of work, why it is perhaps difficult to find time and energy to think outside of the narrowly defined tasks that currently are on the
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agenda. The timing issue is also linked to how the innovation contest process is organised as an intensive 48 hour shared session. This structure allows for ideas to be generated and refined in a collaborative manner but the brainstorming process is also locked to a specific time and place. Comments among the participants were raised that it is difficult to develop radical ideas ‘on order’, since the break-through thoughts often emerge when being least expected. As one interviewee explained: “People get creative ideas when they are picking mushrooms in the woods or stand in the shower. Will we really be able to tap off these ideas in the contests? Many of us are indoctrinated to believe that these ideas are not of interest for the company, and after a while they are forgotten.” (Lucas, participant in the innovation contests)
As many traditional manufacturing firms, ManuCo are still influenced by management ideas such as lean production and just-in-time. This has led to organisational processes focusing on efficiency rather than creativity, while research suggesting that for idea exploration employees need to feel that they have some autonomy over how their time is allocated (Amabile, 1998). For sure, extreme time pressure can instil ingenuity (Amabile et al., 2002) but only when a sense of meaningful urgency and focus is linked to the work activities. The format of the online process also brings with it other limitations in supporting radical innovations. Since the IT-system is text-based, it reduces the opportunities to explain in depth the ideas and their contributions, as well as for others to comment on possible challenges and solutions. Hence, there might be a shallowness challenge in text-based idea competitions. As one of the participants in the innovation contest explains: “You have a relatively short time, and you need to write down things in a way so that you start a conversation. A too complicated idea is difficult to explain. If we on the other hand will sit and talk, we can have a discussion on a much deeper theoretical level. The same is with the evaluation process. Say that you have put down a lot of efforts in presenting your complicated idea, but then the jury does not understand its full potential. They do not meet you in person, and a good idea can fail to be selected just because of language issues. This can lead to that you do not even consider posting these ideas, as the structure does not invite you to do it.” (Robert, participant in the innovation contests)
All the published texts also, as explained earlier, overwhelm the participants, and in the overload of information they become selective in what to read and what to discard. This leads to that simpler (yet possibly creative) ideas have a tendency to get more attention from the crowd than ideas which need high level of specific knowledge. New features and modifications of existing technology are therefore overrepresented in the contest sessions. Complexity can be a hinder in the idea competition because if you are one of the few experts in the area, other people would not understand your point of views. Also, the more complex innovations linked to the stage-gate innovation process normally have other paths for research and development than through the innovation contests (Cooper, 1990). The interdependencies of various technological elements, as well as decisions made about for instance standards, interfaces and design, strongly limit the everyday people’s possibilities to generate new pathways for innovation (Cohen and Levinthal, 1990). For less complex innovations, it is easier for people to contribute with ideas to other domains (cf. Brabham, 2010; Howe, 2008), but the likelihood that these types of
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‘feature’ innovations will become radical and disruptive innovations are considerably lower. Finally, there are specific implementation challenges for the winning ideas in the contest, which can have negative effects on the end results’ level of radicalness. The length of the projects makes it difficult to realise or visualise their potentials under the short time they get funding. For radical ideas more time is often required to develop, refine and test them, as well as to support the argumentation for why they are needed in the first place. The biggest challenge is then to make radical or even disruptive innovations become embraced by the organisation after the project has ended. In ManuCo, the facilitators of the innovation contests do not have any strategic mandate over the other business units or areas. A member of the innovation contest team explains it further: “A big problem is to make sure that the projects survive after our short-term funding has ended. They must then land somewhere in the organization. But where? Do they land in a business unit strongly connected to the rules and norms of the mother ship, or a less restricted but also less central unit? They need to land somewhere where the energy and motivation can be maintained. Otherwise we risk a situation where people feel that this is just a fun event where everything ends up in the trashcan.” (Josh, member of the innovation contest team)
The ‘not invented here’ syndrome (Katz and Allen, 1982) makes it difficult for outside ideas to gain acceptance in the decentralised organisational units. The more disruptive the innovations are, the more obstacles they tend to meet in convincing the potential in-house customers. This has to do with that they threaten the established practices and power positions within that unit. There is also a potential risk for the receiver of the innovation to take over (and fund) projects which later turns out to be failures. Radical and disruptive innovations often highlight the need for knowledge which is not yet established within the unit. It might force them to question areas where big investments have already been made, where employees have gained expertise and feel motivated to work in, and where processes and relations have been rooted. Hence, radical innovations have a tough time finding grounds in ManuCo’s decentralised business units, despite the ‘successful’ implementation of innovation contests per se.
6
Conclusions
The case study of ManuCo’s implementation of innovation contests aims to contribute to the theorising of how traditional firms work in practice when incorporating (internal) innovation contest initiatives. It shows the often exaggerated expectations on these types of activities and highlights potential organisational challenges by problematising the ease of their implementations. More specifically, it points to the difficulties for established firms to use these innovation contests as a shortcut for building dynamic capabilities in enforcing radical and disruptive innovation. From the dynamic capability perspective (Teece et al., 1997; Teece, 2007), innovation contests are explicitly focused on aiding the firm’s sensing capabilities (Björk et al., 2010). Several of the challenges mentioned above show different hinders for these activities to help the firm to discover and reveal radical ideas. It has to do with the difficulties of singling out the breakthrough ideas from all other ‘normal’ ideas early in
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the development process (a selection challenge), especially when it is an overload of data in the system. It has also to do with the possibility that participants either do not have time to commit fully to the contest sessions (a timing challenge), or do not for various reasons choose to reveal their boldest suggestions (a self-censoring challenge). Finally, the format of the innovation contest facilitated through text-based IT-system limits the opportunities to disclose complex ideas based on in-depth and specific knowledge (a shallowness challenge). Instead, it tends to promote less advanced (and thus less radical) ideas which a broader audience can both understand and appreciate. For seizing capabilities (i.e., developing ideas to innovations) there are clear implementation challenges in ManuCo, similar to what Teece (2007) describes as; “committee decision-making structures almost always tend toward balancing and compromise. But innovation is often ill served by such structures, as the new and the radical will almost always appear threatening to some constituents. Strong leaders can frequently overcome such tendencies, but such leaders are not always present”. This poses a serious risk that even if radical ideas nevertheless succeed to pass through the selection process, they then face the threat of becoming neglected or marginalised when being introduced to the decentralised units. For sure there are strong visionary leaders in ManuCo (such as the manager who initiated and developed the innovation contests), but the engagement and commitment for radical ideas need to be transmitted to all organisational units that the innovations pass through. This is problematic especially for people who feel that these innovations have potential to become competence-destroying (Tushman and Anderson, 1986) or even cannibalising (Chandy and Tellis, 1998) on their current product portfolios. One commonly suggested solution, which also has been raised in ManuCo, is then to build up incubators located outside of the main organisational structures (Christensen, 1997). Although this approach can buy some valuable time for the ideas to grow and materialise, radical ideas eventually need to find a place in the main organisation to make a strategic impact. Other options are to spin or license them out, but in all these ‘inside-out’ approaches they will have very limited transformational influence on the corporation. The study of ManuCo shows that the introduction of innovation contests does not singlehandedly transform the organisation to an agile and innovative firm. To work as such, it also needs supportive structures, culture and processes that advocate the employee engagement and commitment in delivering and appreciating radical thoughts. For sure, innovation contests can have a positive effect on the organisational climate for radical and disruptive innovation in the short run, but to make this effect durable, these changes possibly need to be materialised into supporting structures and procedures – such as in decision power, reward systems, and communication paths. This suggests that managers need to take a holistic view on the company when introducing innovation contests to understand how it links to the already established innovation paths. How these activities interrelate to the ordinary innovation process determines whether positive or negative feedback-loops of transformative capacity will emerge. As mentioned in the method section, a single case study is not aiming to generate generalisations to population, but rather to evoke interest in theory development. Further research – both quantitative and qualitative – on how innovation contests can be implemented is urged in order to enrich the understanding of how contests can act as a vehicle for (radical) innovation. This paper has pointed out several organisational challenges that established multinational firms may face, and empirical studies on how other firms work to overcome these and other challenges are needed. Also research in
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different contexts (e.g., certain industries, SMEs, public sector, etc.) would be interesting for comparison and elaboration.
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