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11/6/2008
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How Companies Are Using IT To Spot Innovative Ideas

Tools like prediction markets and online voting can't replace internal innovation processes. But they can open a new channel.

BEAUTY CONTESTS VS. MARKETS
Dell's launch of IdeaStorm about 18 months ago was one of several steps the company took to shake its image of not innovating and not understanding fast-changing consumer markets. With IdeaStorm, people submit and vote on new features and options for Dell products in an online forum, and as ideas gain popularity, a moderator forwards them to product managers for consideration. The company has received more than 10,000 ideas, implementing about 200 of them.

Besides the Linux laptop, those ideas include Dell's decision to continue offering Windows XP when Vista was launched and to do a Dell-sponsored small-business makeover show, launched last week on the A&E TV network. Six features in the Latitude Series came through IdeaStorm, including business laptops in different colors, battery life up to 19 hours, and a backlit keyboard. "All were on the radar, but from the 130 ideas these were the ones that resonated the most," Pearson says.

Harrah's Entertainment, the 50-casino chain known for close customer ties via its loyalty cards, rolled out its Innovation Portal, based on Salesforce.com's Ideas software service, to get employee input company-wide. The innovation team seeded the portal with about 60 ideas, and then asked employees for theirs. The portal presents the top 10 vote getters. Next up? Possibly opening it to the public (see story, "Harrah's Innovation Plan: More Pilots, Less PowerPoint").

But voting doesn't provide much insight, since there's no penalty for backing a bad idea, and popularity may not reflect the likelihood of market success. "The incentives for the participants aren't about finding the truth and correcting the market if it's going in the wrong direction," says Chris Hibbert, a consultant and author of Zocalo Open Source Prediction Markets.

That's why a small number of companies are combining beauty contests with prediction markets.

It was 2006, and Ricardo dos Santos, Qualcomm's senior director of business development, was charged with developing a program to encourage and identify innovation within the company. Qualcomm had top-down processes for rewarding innovation but wanted to tap employee ideas that had no outlet.

Santos had a vision for certain elements of what would later become the Qualcomm Innovation Network. He wanted to let innovators shepherd ideas from inception to implementation. The model should be similar to venture capital, with the company funding the best ideas. He wanted to let innovators behind the 10 best ideas pitch them in a high-profile, company-wide event, attended by CEO Paul Jacobs.

But Santos was stumped by one problem: filtering the thousands of ideas that overwhelmed the company suggestion box. "Without any kind of filtering, the list was overwhelming--like Craigslist," he says. Santos came up with a two-tier filtering system. Ideas first face a simple voting process that would cut the thousands of ideas into a manageable 30 or 40 most popular. Those ideas move into a Consensus Point prediction market, where employees could buy and sell shares in them.

The 10 highest-valued ideas are presented to CEO Jacobs at an annual competition, VentureFest. Before the event, presenters get a two-month mini-MBA education on business plan development and selling, and "are even bought a new suit," Santos says.

About 30% of the ideas receive some funding. Santos declined to detail the ideas, other than to say a product Qualcomm will release this fall came from a VentureFest winner--a product manager who got excited about an idea but couldn't interest his bosses.

Like Qualcomm, Motorola was looking for a way to spark innovation. While the company had an online resource for suggesting patents, there was no place to submit product and feature ideas. Rami Levy, a leader on Motorola's open source technologies team, was turned loose to create what became ThinkTank Idea Exchange (TIX), a forum for generating new ideas.

Levy and his team first developed an online suggestion box, and ideas flowed in--by the thousands. Also problematic was that people offering ideas weren't collaborating. So they added a way to vote alongside discussion forums, using an existing collaboration system. That setup provided a glimpse of an idea's popularity, but the team had a hunch it wasn't a good reflection of its market impact. "We might have 10 votes for an idea but like another idea even more," Levy says.

So like Qualcomm, Motorola promoted the most popular ideas to a prediction market, what Levy calls a collective intelligence market, that's also part of TIX. Motorola has generated 15,000 ideas since 2003 from some 5,000 employees, and 1,000 people actively trade. Ideas from the TIX process include a way to reduce bacteria risk on phones, rapid phone book name search, and a toy car controlled by a phone.

Herbert Remidez, a consultant and management professor at the University of Arkansas at Little Rock, argues that these tools address a problem with more rigid innovation efforts. When he was hired by a financial services company to help improve its innovation program, employees across 20 departments picked three ideas, which were vetted by 11 regional committees, each of which brought three ideas to the annual planning meeting. Holding public votes in small regional groups violates Surowiecki's criteria for tapping collective wisdom. Remidez addressed the problem with a prediction market from Inkling Market, letting employees from across the country analyze one another's suggestions. Remidez says it has shortened the innovation process.

Impact Assessment: Collective Decision-Making Tools

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