Quantifying innovation as a key corporate value

Innovation - how often have we all heard it? "Innovation is a key corporate value." "Innovation is the key to our success." "Innovation is vital to corporate success in the global marketplace."

But what does that mean, really, to the operations of companies? In many cases it seems to mean little more than moving the company suggestion box onto the corporate e-mail system, or at most regular brainstorming sessions by a select group of executives, that never involves the vast majority of employees, followed by a haphazard, and often hidden, development process that remains unmanaged and opaque to senior management. For public companies and those going public in particular, this is a major business problem. Investors are often motivated more by their view of a company's future prospects for growth than its present performance, but if the organization cannot provide a lucid summary of the value of its innovation pipeline, investors have to guess. That usually results in the market undervaluing highly innovative companies.

Experian (http://www.experian.com/), was a typical case in point just two years ago. Although it is self-described as "the world's largest information services company" with global headquarters in Dublin, Ireland, $3.8 B in annual sales, approximately 15,500 employees worldwide, and 30,000 mostly business clients in 65 countries, its main tools for managing the innovation on which it depended for a large proportion of its growth were e-mail and spreadsheets.

A century-old company, Experian is best known for its customer-oriented financial services, such as its subscription service in the United States providing individuals with an ongoing watch on their credit rating with the three big North American credit reporting companies. It is also the parent of PriceGrabber.com, which helps consumers find the best price for items they wish to purchase.

However, says Laura DeSoto, senior vice president of synergy and innovation for the America's division (including North, Central and South America), it is mostly a business-to-business service provider. "We help businesses find, keep and develop relationships with their clients. So for example in financial services we often support companies as they try to find new customers and then will support them as they go to extend loans. So we have a series of analytical solutions, scoring models, software systems and credit data to help, for instance, financial institutions better determine what kinds of rates they should give to consumers on loans."

Besides the financial vertical, Experian works in retail, publishing, the Internet, and technology and other industries, helping clients manage their portfolios of customers over time and with cross selling and upselling other services.

In the last two years, Experian has gone through a major transition, from being a subsidiary of a larger organization, to becoming an independent enterprise, publicly traded on the London Stock Exchange. "We had an exciting story to tell investors," says DeSoto, and much of that had to do with constant innovation. But to tell that story the company needed to centralize information that was mostly scattered among its multiple subsidiaries (16 business units in 20 different locations in the United States alone) and hidden in spreadsheets and other desktop tools not designed for easy sharing across the organization. To maximize the value of those efforts, it realized it also needed central management to ensure that corporate resources were being invested where they had the most potential ROI, to avoid duplication of effort among different subsidiaries working on similar projects, and to allow projects in one subsidiary to tap capabilities in another or share results of a development effort with another that might also derive business benefit. To inform investors, they needed a way to make those efforts visible and to estimate their potential ROI.

The problem, senior management determined, was how to implement a system for managing innovation across such a large, diverse organization, and furthermore, how to implement that solution quickly enough to make a difference for the October 2006 target date for going public, at the time less than 6 months away. For a start, the organization created the Office of Synergy and Innovation - in whichDeSoto has a leading role - and created an Innovation Council, consisting of senior managers from each of its divisions, charged with cultivating innovation in their divisions. But this still did not reach the vast majority of Experian's employees, many of whom could make valuable contributions either in terms of ideas for new products or improved internal business methods or comments and improvements to ideas already in development, if they only had access to the process.

Management found the solution already in use in one of the U.S. divisions. It was a Software-as-a-Service (SaaS) company named Brightidea.com (http://www.brightidea.com/), which provides a way to capture, disseminate, evaluate, manage, and estimate the financial value of innovative ideas across an organization. The trial had gone on for a year when management decided to roll it out across Experian Americas. Rather than being put off by the quasi-experimental nature of SaaS services or Brightidea.com's small size as a vendor, Experian saw these as part of the unique attraction.

"We have grown by acquisition in addition to our internal growth," says DeSoto. "We 16 different divisions or companies just in the U.S. Because we would need to work through firewalls and other security issues, bringing the software in house ourselves would have elongated the whole process. So we were delighted that Brightidea.com had the capability that anybody could get to through the Internet, and we didn't have to work through some of the technology issues that might have been the case otherwise."

And the small size of Brightidea.com meant that Experian gets individual attention. "We just really liked the people," DeSoto says. "They treated us as a partner, meaning we have direct access to their team. [Brightidea.com CEO] Matt Greeley has been personally involved in how we designed our innovation program and spoke with our leadership. We really appreciated that personal attention."

The internal response has been very favorable. "We really are trying to stimulate innovation in the business and have all our employees see themselves as contributing to the future growth of the business. So now with this tool, anybody at any location no matter where they are or what time of day it is can enter their ideas into the system that captures their thoughts." The people with the ideas like it also because they can stay involved, watching it progress through the process of evaluation, see what comments others contribute and how the original idea evolves, and what it leads to. "What we are really trying to do is use some of the Web 2.0 social elements of collaboration and participation to keep our employees engaged and coming back and submitting ideas, and using collaboration and commenting on other people's ideas," DeSoto says.

Senior management also likes it because of the tool's strong idea management capabilities. Management can view the estimated the revenue potential for each idea, prioritize the most valuable ones, and track their development (and how that impacts the ROI) over time. Brightidea.com makes the entire innovation process visible to senior management at all levels of the organization.

And it is producing results. Experian Americas expects to launch more than 100 products this fiscal year. For example, about 10 months ago, an Innovation Council member suggested a new service offering that would allow financial institutions to identify attractive prospects who have little to no credit history. The council prioritized this idea, put it into the Brightidea.com pipeline, and proceeded to develop the new product with collaboration across multiple business units. That product, ChoiceScore, launched last month," DeSoto says.

Overall, Experian is so pleased with Brightidea.com that it has given the service its ultimate compliment - it is rolling it out internationally next year.