Innovation and competitive differentiation using idea management systems

This research report delves into how Microsoft used a grassroots idea management system to encourage individuals who do not routinely participate in “formal” product development processes to contribute their ideas to new product development initiatives. Out of 1,491 users, 315 ideas were generated, 100 prototypes produced, with six ideas absorbed into product teams.

Microsoft approached this process in four phases: pose a challenging business problem (Microsoft posed challenges on Peer2Peer advertising, identity-based systems services, and social computing), foster community ideation, filter/refine the best ideas, and launch/integrate qualified ideas into designated product pathways. Once an idea is submitted, community participants had a chance to vote, comment, and extrapolate on those ideas. Not so surprising was the fact that development and sales/marketing personnel participated the most. Nevertheless, the researchers cited several instances where other types of participants valued the exercise because it allowed them to informally break out of their silos and contribute to an overall corporate goal.

Despite the success of the system, the researchers recommended several areas for Microsoft to improve:

  • Foster meaningful participation across the broader corporate community by offering incentives that would allow individuals to justify deviating from their normal job functions
  • Use business relevant criteria in the voting process, not “popularity” voting
  • Measure and appreciate outcomes beyond revenue (the authors cite improved workforce ideation skills, cross-functional cooperation and pollination of ideas, and breaking down silos)
  • Structure the idea submitting phase so that it cuts off at some point; some ideas that were submitted towards the end of the process were not seen or voted on
  • Great ideas center around challenge problems (i.e., focus ideas around business critical issues to resolve)
  • Have ideas meet some minimum threshold so as to weed out truly frivolous ideas
  • Encourage product developers to review relevant ideas in the system that previously had not been acted upon; this ameliorates the perception that the system is an “idea graveyard”
  • Clearly label each phase of the innovation system/process so it enables users to fully understand their contributions within each phase
  • Create a support system for users whose ideas were not selected but nevertheless want to further develop them; some people are simply passionate about their idea and are willing to spend their own time developing such, and the idea management system should have a template for them to follow

A idea management system can operate as a competitive advantage for firms. By internalizing and facilitating an idea groundswell not only are firms harnessing internal talent but they’re creating valuable intellectual property assets that can potentially deliver a huge competitive advantage.

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