| BUSINESSWEEK ONLINE : DECEMBER 13, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| BUSINESS WEEK E.BIZ -- MANAGEMENT
Using the Net for Brainstorming Smart companies are exploiting cyberspace to spark innovation At Royal Dutch/Shell Group (RD), a half-dozen teams of six employees apiece meet every week at the Exploration & Production Divisions in Houston and in Rijswijk, Netherlands, to mull over ideas that have been pitched to them by e-mail. So far this year, the teams, known as GameChangers, have rounded up 320 ideas from employees: everything from ways to reduce company paperwork to using laser sensors to discover oil. The result: Of Shell's five top business initiatives in early 1999, four emerged from the GameChanger teams. Now, those projects are bringing in millions of dollars. Shell's new ''Light Touch'' oil-discovery method, for example, helps explorers by sensing hydrocarbon emissions released naturally into the air from underground reserves. The laser technology helped locate some 30 million barrels of oil reserves in Gabon last year. Shell's experience shows that there can be more to the World Wide Web than just cutting costs and speeding up communications. Today, increasing numbers of companies are using the Internet to stimulate and manage innovation--and to put the brightest new ideas into the hands of the people who can turn them into products the most quickly. In management circles, it's called ''knowledge markets.'' The notion is that large companies can harness the Web with small entrepreneurial teams to drive innovation at a rate they've never before experienced. These cadres are akin to nimble Silicon Valley upstarts, except that they live in the bellies of large corporate beasts. Experts say that hundreds of corporations are adopting this approach, from Nortel Networks Inc. (NT) to Procter & Gamble Co. (PG) ''The trend now is to decentralize operations, to build idea factories, or idea markets. This is a way to bring the startup mentality inside,'' says Clayton Christensen, a Harvard Business School professor. So how do knowledge markets work? Rebel bands solicit ideas and pick the most promising of them. In some cases they pass the projects off to the established business units. Other times, they create and fund internal startups that use Web communications and collaboration to deliver new products and services. The payoff for the innovators: bonuses or stock options--much like they would get if they worked at a Silicon Valley startup. In some cases, the people who first put the ideas into the suggestion box also get a cash bonus. The corporate parents can reap rich rewards, too--and not just in the form of new revenues. These entrepreneurial groups push decision-making deep into the organization and cut through layers of bureaucracy. If all goes well, the rebel culture rubs off on the parent organization, and these innovative teams will beget even more innovative teams. That has already happened at Shell, where operating units around the globe have now set up their own GameChanger teams. ''What it says is innovation is everybody's responsibility,'' says Math Kohnen, director of GameChanger Initiatives. Yet creating effective knowledge markets isn't as simple as setting up more traditional skunk works. Knowledge markets are autonomous. The groups are in charge of their own resources, write their own rules, hire their own employees, create their own idea-reward systems, and often report directly to the CEO. By the same token, the boss must be willing to invest money in projects that might not pan out. P&G CEO Durk I. Jager shows no fear. He's desperate to goose along a company that hasn't introduced a new product line since 1983. Two years ago, the Cincinnati packaged goods company formed a knowledge market, called Corporate New Ventures (CNV). With Craig Wynett as its president, it is armed with $250 million in seed money and answers only to the top brass, with the ability to hire its own talent. Ideas bubbling up from P&G's far-flung workforce of 110,000 people are routed to a CNV innovation panel via My Idea, a corporate collaboration network. CNV teams then put the ideas under the microscope--using the Web to analyze markets, demographics, and cost information to make sure a new-product idea is feasible. Once the team decides to go ahead, a project is launched within days. The CNV people have the authority to tap any resources in the company to bring a product to market, including the brainpower of the company's engineers, scattered in 23 sites around the globe. The program already has delivered results. So far, CNV has put 58 products onto the market. One of CNV's first items, a new cleaning product called Swiffer, got pushed out the door early last summer in just 10 months--less than half the usual time. Swiffer, a disposable cleaning cloth that generates electrostatic charges to attract dust and dirt, was dreamed up during a novel collaboration between P&G's paper and cleaning-agent experts. Wynett pulled them together to start talking in person and via the Internet. He challenged them to think more broadly than just about their typical topics: detergent and diapers. ''It was an exercise in speed, in breaking down the company's traditional division-by-division territories to come up with new ideas,'' says Wynett. Compensation is a key factor for making these projects work. At P&G, employees who submit winning ideas are rewarded with stock options. And at Nortel Networks, CEO John A. Roth now allocates what he calls ''phantom stock'' to staff members who volunteer for special, high-risk projects. Nortel agrees to ''buy'' these projects as if they were companies, in a sort of internal initial public offering. Staffers get paid in chits redeemable for cash when a product is finished and again after it has been on the market for about a year. Some 17 products are in development under the program--although for competitive reasons Roth won't say what they are. ''We could create some millionaires,'' he says. Handing out millions of dollars in extra compensation is expensive--but the alternative can be even more costly. These days, companies that don't develop new products quickly are sitting ducks for those that do. To the timid, management consultant Gary Hamel issues a stern warning: ''Out there in some garage is an entrepreneur who's forging a bullet with your company's name on it. You've got one option now--to shoot first. You've got to out-innovate the innovators.'' In the unforgiving world of e-business, that's no hollow threat. By Marcia Stepanek Contributing: Joseph Weber in Toronto _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
RELATED ITEMS Using the Net for Brainstorming TABLE: Knowledge Markets INTERACT E-Mail to Business Week Online | |||
