18:30-19:30, 22nd November 2011, Imperial College Business School
Blog by Richard Foulsham
The world has changed. A company like Ericsson cannot rely on developing its current technology to generate income in the future. That was the message that Magnus Karlsson, Director, New Business Development & Innovation at Ericsson left us with when he came to deliver a distinguished guest lecture at Imperial College Business School. We are moving towards a networked society. It is becoming cheaper and cheaper to connect ‘things’ to the internet and along with this diversity of things come a far wider number of participants and a consequent breakdown of traditional industry boundaries. To work in this world requires openness, partnerships, knowing your organisations place in the value chain and, seemingly most important, a more market and user centred approach to innovation.
Innovating in the networked world
So how does a company like Ericsson, with its distinguished track record in networks and systems, adapt to this new environment? Traditional R&D departments are no longer the sole answer as they cannot hope to cover all the areas where opportunities may lie. The answer that Magnus described was to introduce a diffuse culture of innovation throughout the organisation. This was designed to be a combination of both top down – a new CEO took the opportunity to introduce a new mission statement – and bottom up initiatives that aimed to get people within the organisation thinking about what might be “the next big thing”, and importantly also to capture those ideas for Ericsson when they occurred.
The top down process involved the development of a number of scenarios based around what a customer might need in 2020. These provided a strategic focus for the entire enterprise. Interestingly these scenarios were not only analysed through good old-fashioned SWOT analyses, but they were also illustrated using narratives and games to provide insight into the user requirements and broaden the scenarios impact.
The bottom up process captured ideas for innovation at all levels of the organisation through an “ideas funnel”. This was a multi-party entity tasked with receiving, analysing and, potentially, developing ideas from all sources. An important way that the sources of ideas were diversified was through the introduction of ‘ideas boxes’. These boxes provided categories for innovative ideas. Each box has a manager whose job is to capture and champion innovative thinking. Once captured, the idea is examined by the members of the ideas funnel and, if judged to be worth investigating, the originator of the idea is given the time and “a small amount of money” to develop the idea. Not all ideas become operational and a transparent feedback mechanism providing reasons why ideas are not selected, or indeed if they had already been attempted and failed, is an important part of the innovation process.
People always have ideas, but Magnus identified the creation of a culture of innovation within the organisation as one of the most difficult aspects to instigate. The new CEO helped as already mentioned, but there were other mechanisms. A source of tools and information – the Ericsson Academy – was developed. Identification and education of a leadership community who appreciated the value of innovation to the organisation, and who know what to do when they see it, was an important part of Ericsson’s approach. These activities had the additional advantage of creating a common language of innovation which allowed ideas to move around the company and reach people who were able to assess them and assist in their development.
And the result? Magnus said that the scenarios generated resulted in a number of new partnerships, and more generally, around 1 in 40 new ideas were eventually implemented. The diversified ideas base had not resulted in a great change in the origin of innovative ideas. The sources of ideas were still dominated by already existing networks and contacts, with further innovations coming from other companies. The ultimate test will be whether Ericsson continues to be a force to reckoned with in the new, networked world.