Wiring Innovation Into Your Company’s DNA Is a Grassroots Process

Prof. Stefan Stremersch at IESE Munich on crowdsourcing your employees

12/04/2016 Munich

Stefan Stremersch

Stefan Stremersch: “In the age of disruption, innovation needs to be embedded in your company’s DNA” / Photo: Vogel

Innovation used to be driven by R&D people in labs. Today, innovation disrupts established business models at an unparalleled pace and scope. And companies need to react.

So says IESE Professor Stefan Stremersch addressing an audience of alumni and friends at the IESE campus in Munich last week. Stremersch pointed to the example of online rental marketplace Airbnb to illustrate his point.

“One in five accommodations in Brussels alone is booked through Airbnb,” said Stremersch. “Its market value is 25.5 billion dollars – making it a real threat to established chains like the InterContinental Hotel Group – worth only 10.5 billion dollars.”

So how can incumbents compete in the new digital order?

“In the age of disruption, innovation needs to be embedded in your company’s DNA,” says Stremersch.

And to do this, he advocates taking a “grassroots approach” to innovation.

From the Bottom up

The sales team, positioned at the bottom of most companies’ hierarchy, is most exposed to customers’ pain points, needs and objectives. Accordingly, these employees have the most valuable insights into which products or services the company could sell in the future. It’s here at the grassroots that innovation should be flourishing.

“Your sales people are the ones who best understand what your customer wants,” says Stremersch.

Grassroots innovation is a pan-organizational approach, leveraging the totality of your talent to crowd source creativity.

As a concept it departs radically from the “old school” or top-down management approach – an approach, says Stremersch that often engenders disengagement, low motivation and what he describes as a “class of followers that does not foster innovation and indeed, encourages your creative people to leave.”

And the advantages of inclusive innovation go far beyond harnessing creativity.

Grassroot Benefits

“It pays to let employees act more freely in their daily decision-making,” says Stremersch.

“Starbucks’policy of allowing employees to decide when and where to give out free coffee to customers is a win-win. Greater autonomy enhances the employees’ customer orientation just as much as his or her self-awareness. The result is increased autonomy and responsibility among staff.”

Then there’s the power of the crowd.

“The crowd is smart: what’s impossible for one is achievable for many. The crowd supplies a diversity of ideas and perspectives that drives quality.”

“Thinking as a crowd means that there are fewer restraints, with everyone freer to explore and express ideas.”

Today’s employees are increasingly looking for meaning in their work. Grassroots innovation is a powerful means of building engagement and a culture of personal involvement in organizations, says Stremersch.

“The team who created the video game, Angry Birds, went through a host of failures before they came up with their global hit. This success stems from a ‘band of brother’s approach and a sense of shared mission that binds co-workers around goals.”

Innovating at the grassroots is, nonetheless, built on process and structure.

Sowing the Seeds to Harvest Value

“You can’t harvest ideas without sowing the seeds and nurturing them first,” says Stremersch.

“And that means step-by-step process to maximize creativity, innovation and implementation.”

Stremersch advises using an IT platform to start your ideation phase to collect as many ideas as possible. Then moving to the maturation phase, which takes the best of the ideas and develops them while training and coaching involved employees. Once the ideas have been honed, the very best ones go to incubation. This is when the board decides which ones to implement.

“Many companies die due to overinvesting in too many projects. Selection is essential,” advises Stremersch.

Examples come from companies like Michelin, who have adopted relatively unorthodox tactics such as “innovation match-making” across their employee base.

In 2015 the German science and technology company Merck won the German Innovation Award for its innovative HR concepts. The jury honored “how innovation is experienced as a bottom-up initiative in the company”.

“Expertise,” warns Stremersch, “can kill innovation.” He advises boards, C-suite and senior executives to “trust your employees to be the change you need to survive disruption.”