Enterprise 2.0 tools—wikis, tags, Twitter and other microblogs, Google-style searches, and the like—are transforming companies’ innovation processes, according to Andrew P. McAfee, a principal research scientist at the MIT Sloan School’s Center for Digital Business, in Cambridge, Massachusetts, and the author of the forthcoming book Enterprise 2.0: New Collaborative Tools for Your Organization’s Toughest Challenges (Harvard Business Press, 2009). McAfee explains why in a recent conversation with HBR senior editor Anand P. Raman. How do the new social technologies transform innovation efforts? Companies have traditionally been very specific about who’s going to do the innovating: their designers, engineers, scientists…Those people have the credentials—the right combination of education, experience, success, failure, and so on. More recently, companies have allowed major users of their products to participate in the product-development process. Some companies now say: Why stop at lead users? Why not let everyone take a crack at helping us develop a new product, improve an existing one, or solve a vexing problem? They no longer specify who can participate in the innovation process; they welcome all comers. Enterprise 2.0 tools are designed to help with these more open innovation processes. In fact, most new types of innovation, such as open innovation and crowdsourcing, are based on these technologies. Procter & Gamble, which has embraced the open-innovation philosophy, does some smart things on its Connect + Develop website. P&G doesn’t only publicize what it knows and what it can do; it also highlights what it needs. That’s radical; big companies don’t usually display their ignorance. In addition, the company doesn’t restrict itself to product development; it’s looking for new ideas in everything from trademarks, packaging, and marketing models to engineering, business services, and design. Finally, P&G invites everybody to submit ideas—not just prequalified partners. It recently bought the technology for an antimicrobial product from an unknown company that submitted a proposal through the website. Does the use of Enterprise 2.0 technologies yield better ideas? Won’t a company simply drown in bad ideas? Keep two things in mind. One, there’s no guarantee that your next innovation challenge is going to look anything like your last one. It might require a fresh perspective or skills that your existing innovators don’t possess. A company that uses Enterprise 2.0 technologies can publicize the challenge widely and collect responses from many people. Two, the community that forms around the challenge can help sift the ideas. People suggest improvements and vote on one another’s ideas, so the best ones eventually rise to the top. Because of Enterprise 2.0 technologies, good content becomes apparent over time. A good idea isn’t always obvious. For example, Gwabs is a game that lets characters fight one another using the elements on a computer desktop, such as toolbars and icons. It came out of a crowdsourcing start-up, Cambrian House, which solicited ideas from a large community and let them vote. It then had the top vote getters face off in a tournament. The company’s executives thought Gwabs was a pretty dumb idea, but it won the tournament. In fact, investors are now funding the game’s development. Does a company have to choose between traditional and 2.0 approaches to innovation? The two modes reinforce each other. The shoe maker John Fluevog, for example, has professional designers, but it also lets people submit ideas over the web. People can vote for the ones they like, but the final decision rests with the professionals. I see experts and crowds working together on innovations in several industries, including clothing, industrial R&D, medical equipment, and cookware. A recent McKinsey survey found that 20% of companies have opened up their innovation processes to employees and customers and they report a 20% rise in the number of innovations, on average. What should companies watch out for while using Enterprise 2.0 technologies for innovation? There are few risks. The technologies are cheap. A company can always remove any counterproductive contributions from the website. Quite honestly, the bigger risk is that a company will turn its back on a proven source of great ideas: its people. McAfee’s blog is at andrewmcafee.org/blog and his Twitter ID is @amcafee.
