FreshNetworks Blog

Innovation is a common topic of debate and strategies in most businesses (be they new or well established). In the current economic climate, and with the huge potential of the likes of social media data, brands are increasingly looking at innovation (large and small) as a way to beat the competition.

But innovation is often misunderstood. After a recent event debating the topic at the Open University Business School, I left with some insights into what the attendees thought that innovation was, and some misconceptions about what it has to be (but doesn’t):

Five things that innovation is

1. Innovation and growth are inextricably linked, according to the BBC’s Evan Davis. He surmised that innovation hasn’t come to a standstill in 2012, although we do have a growth problem which innovation itself will be crucial to solving.
2. Delicate. It’s important to nurture it gently so as not to kill it off too quickly, but also carefully contain and manage it to prevent any huge financial, market, or reputational fires.
3. More prevalent during recessions. The atmosphere of fear engendered by recession is often the trigger required to force organisations to adapt and survive (as opposed to ending up at the decline end of the sigmoid curve, such as Kodak), as well as being ideal for start-ups. Recessions tend to shake out the worst performers, and those simply coasting along with the status quo.
4. Often within your team already. Any business is likely to have great ideas and innovators already within the team. An open and creative organisational culture and office space is crucial to finding, developing, and encouraging these employees, who will always move to another company (possibly a competitor) to innovate if they can’t do so where they are.
5. Often the victim of resistance and sabotage. Some tactics to look out for and actively surface and manage include Peter Keen’s “lay low”, and “keep the project complex, hard to coordinate, and vaguely defined”. Plus also the wonderfully expressed “Say yes! But do nothing”.

Five things that innovation doesn’t have to be

1. Big or complex. Sometimes the best innovation can come through a series of incremental steps which ultimately amounts to something quite large, impactful and radical. Such gradual change can often be more palatable in businesses.
2. Hugely expensive or driven forward by companies. As demonstrated by the user-led innovations of the maker movement, and also Jugaad Innovation’s more flexible, frugal, and bottom-up approach.
3. A risky business. At least not to the innovators – who have complete faith in their idea. It’s the financial backers who are taking the risks. However, if we’re taking an incremental approach, perhaps that can help reduce the overall risk by breaking innovation up into more manageable and less intimidating or costly chunks.
4. A driver to cut costs. As it’s enabling many companies to retain their current cost bases but stretch those resources further into more countries and ventures.
5. About technology. Thinking and process innovations show it’s not just about technology (e.g. queuing), and service innovations prove it’s not only about products either. Nevertheless, technology is certainly vital, and SAP UK’s CTO Adrian Simpson explored how innovation is being shaped by greater mobility (e.g. increase in mobile devices), social media and networks, the cloud, and huge data sets (including social data).

Ultimately, innovation seems to depend on persistence, belief, adaptability, and relevance to customers and the market. While its success relies on people, behaviour and skills, and spotting and pursuing the opportunity before it’s too late. Undoubtedly money and resources help, but perhaps more of a barrier exists in the minds of employees and cultures of organisations?

I was the expert blogger in this week’s edition of Management Today on innovation in business. Having written about the Nielsen Global Faces and Networked Places report earlier this week, I decided to build on this post about how social networks and online communities are more popular than email.

The report from Nielsen clearly highlights the growth in consumer use of social media – it is now visited more regularly than email with one out of eleven minutes worldwide (one in every six minutes in the UK) spent on these sites. This is for structural and behavioural reasons – people using different sites for different purposes, and people using social networks and online communities to find and connect with people rather than just sending mail – but what can business learn from this change in consumer behaviour. Well, probably a lot. As I write in the Management Today article:

When I speak at marketing conferences, I like to ask the audience whether they spend more on email marketing or on social media. The answer is almost always email, and this is a shame. Not only are social networks and online communities increasingly part of everyday life, they can also be a better way of engaging customers. Email is very much in the ‘push’ marketing category, while online communities and social networks engage people. Most importantly, they encourage peer-to-peer marketing, which we know people trust more than messages from any brand.

In the current economic climate, businesses should innovate to stay ahead of their competition. This is a great time for trying new things and an even better time for adapting and changing the way we behave to better meet what our customers want and what our customers do. They are using social media more than email and doing thanks to both changes in technology and changes in their own behaviour. We should adapt our own approach to marketing to and engaging with customers to capitalise on this change

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Some more reading

• Twitter’s spectacular growth is being driven by unexpected uses (freshnetworks.com)
• Social Networking Surpasses Email Popularity (marketingpilgrim.com)
• Social Networking and Blogs Surpass Email in Popularity (searchenginewatch.com)
• Social Networking – No Longer Just For The Kids (collaboratemarketing.com)
• The global reach of member communities (social media) (thisisherd.com)

Something I discuss a lot with clients is whether online communities are more suited to some people than others; are some people more likely to join them and take part actively. One issue I’ve discussed a number of times is whether a C-suite audience is more or less likely than more junior employees to want to take part in a B2B community. There are theoretical arguments on both sides but it’s more useful to look for and examine examples of senior-level communities.

When I talk to people they often cite LinkedIn as a good example, but I would think of this as much more of a social network than a community. It’s more about ‘me’ than it is about ‘us’. I know of a couple of other examples of closed online research communities for business travel and credit card firms. But I’m still looking for great examples of online communities that show how they work and allow us to compare what makes them work with  what makes communities for other audiences a success.

One example that I do know of is the Chairman’s Network, a Europe-wide network and community of C-level members in the high technology sectors. The community is both a networking, advice and information resource and a place for these people to share ideas with each other. The networks appears to have grown out of work identifying the (lack of?) networking and advice resources for Board-level people in this industry and as such an online community filled a real gap. They currently have just over 1,000 members and from what I can establish the community is quite active.

Of course, you could argue that building a community in the TMT sector is probably easier than in other sectors. However, this isn’t our experience at FreshNetworks for more junior community members, so I’m not convinced that sector is the main reason this community works. It is probably more that the community is meeting a specific need for the members (the lack of a place to meet, share and collaborate on ideas in their industry). For the target audience letting them do this at a time that fits into their busy schedule and without having to travel to meetings should be perfect. And it seems to work.

Do you know any other examples of c-level online communities?

Some more reading

• Will Your Business Opt In?
• The new employee connection: Social networking behind the firewall
• Explaining OpenSocial to your Executives
• KPIs and Metrics – More on Online Community Measurement
• Is defamation in online communities slander or libel?

An article in the current edition of the McKinsey Quarterly looks at Open Innovation, the way that some companies conduct their innovation externally, rather than it being a proprietary and internal process.

The article highlights two trends in innovation across firms that mirror trends that we see with our clients:

1. A move to get suppliers and partners to do much of the innovation for a firm. Getting them to help cocreate products down the supply chain. This has the benefit that products are developed that a firm can easily produce and you bring your suppliers and partners into a closer and more permanent relationship.
2. A trend in customer-innovation. Getting customers to help cocreate products. Working with each other, or with a mix of experts and employees to develop new products, services, processes or marketing. This trend is being witnessed more and more, and not just in the FMCG firms where this kind of innovation has been common for some time.

The McKinsey article talks a lot about this second kind of innovation, highlighting how companies are using customers either as an addition to or an integral part of the firm’s business model (citing LEGO as an example of the former and Threadless of the latter)

Increasing numbers of organizations are now taking that approach: distributed cocreation, to use its technical name. LEGO, for instance, famously invited customers to suggest new models interactively and then financially rewarded the people whose ideas proved marketable. The shirt retailer Threadless sells merchandise online-and now in a physical store, in Chicago-that is designed interactively with the company’s customer base.

I see a much broader range of firms engaging in customer innovation, often trying things at a small level or in a certain area first. We’re working with a large telecommunications firm at the moment, for example, getting customers to help innovate in a particular product area. Seeking their input to product design and positioning and also helping them to differentiate their offering from those of their competitors.

These developments are possible mainly because of the growth of community behaviours online. The McKinsey report shows that around 25% of Europe’s internet users now post comments online. This is a significant proportion, and shows that people want to discuss and be involved online. Another strong indicator of this activity is that whilst traditional sites are seeing growth in number of visitors of 20%-30% each year, growth on sites with UGC are growing at more than 100% each year.

People are more willing to share their thoughts and opinions online. Companies can really take advantage of this by putting all of this activity to good use. Taking the growing number of people who contribute online and using their enthusiasm and ideas to help brands with their own innovation.

The greatest brains don’t work for your company. The are online though and may be willing to talk to you and talk about you. Putting this to use can be a force-multiplier for your innovation. And that’s where online communities can help.

Jonathan Kestenbaum, NESTA‘s Chief Executive, opens the day at the Innovation Edge conference in London with a review of what he has learnt about how innovation can flourish. Kestenbaum sees three broad elements that lead to success in innovation:

1. It’s all about risk – you’re at your best when you take risks, do things differently and experiment. You need risk-takers for innovation to flourish – pushing the boundaries of imagination and flare.
2. The power of collaboration – some may be unexpected but in these partnerships lies real innovation. When you combine disciplines you can get something really new and different.
3. The appetite for change – there’s a huge appetite for change and for doing things differently. It’s there ready to be harnessed.

This makes objective sense – to really innovate you need to have the appetite for change, be prepared to take the risk and also have the ability to identify people who can help you with your ambition, even if they come from outside your sector or discipline.