Generating New RevenueBy John Parkinson | Posted 05-19-2009
The Power of Community
Almost exactly a decade ago, I ran a large-scale "innovation" program. Back then, innovation was a hot topic. Incubators were all the rage, and every management theorist and academic seemed to have a surefire way to make innovation work.
None of the theory seemed very practical, so I went in an entirely different direction: I started at the bottom of the organization with the people who actually did the work, including (or at least inviting) everyone to participate, and built a grassroots network of innovation champions to carry and sustain the message.
Over a period of two years, I got about a 70 percent participation rate from more than 20,000 people, invested about $20 million, generated more than $400 million in operational cost savings and created a nearly $1 billion annualized run rate in new revenues.
So I guess I did something right. Along the way I learned a few interesting things.
Most of the suggestions and ideas from employees were what we came to call "hygiene" issues. Better coffee, cleaner restrooms, more parking spaces--all the little things that irk people at work but that often have no easy form of expression. We could fix most of these quickly and cheaply, so we did, creating a lot of confidence that we were serious about getting ideas from everyone.
About three-quarters of the remaining ideas were about ways to save money. It's clearly easier to save money than make it, at least from the bottom-up view. These savings usually required some investment, and the local organizations generally couldn't get the funding. So we acted as a central banker and let the savings get split between the innovation program and the business units that achieved them. Everyone won, and, once again, the message that participation pays was reinforced.
Generating New Revenue
The hard part was dealing with the ideas for new revenue. Here I needed to be an investment bank--and to teach people with the ideas how to put a business case together. We also had to figure out what to do with good ideas that did not fit our investment criteria. In the end, we reviewed more than 100 ideas, funded about a dozen and had three really big successes. Every idea that got funding at least broke even.
Back in 1999, I had almost no supporting technology. We cobbled together some useful tools, but the majority of the program's management was manual--or at least "analog."
I really wanted a "community participation" platform that would support what I was doing, but there was nothing available beyond e-mail and simple instant messaging. And we got a lot of pushback whenever we tried to impose too much structure on what was essentially a self-directed process.
Today we have social networking tools that can operate within the enterprise, allowing broad, unstructured participation. That's good because we are once again working on a broad innovation agenda to save money on operations and identify new revenue sources.
Once again, I get to shape the program--and, once again, I'm going after the grassroots, broad participation approach. This time, however, I have the tools to do it quickly and let the employees drive the process.
So far, the results look promising. Our pilot social networking efforts, costing well under $100,000, have yielded ideas that will save us more than $2 million in cost avoidance. And we're just getting started.