Inside Cisco's Search for the Next Big Idea

September 2009 by Guido Jouret

Harnessing the wisdom of crowds involves much more than turning on a website and putting up a reward, as Cisco recently found out.

In the fall of 2007, Cisco Systems announced an external innovation competition called the I-Prize. Our goal was to find an idea that would spawn a new billion-dollar Cisco business. As basic criteria, the idea had to fit into the company's strategy and take advantage of our leadership position in internet technology. We believed that by opening ourselves to the wider world we could harvest ideas that had so far escaped our notice and in the process break free from company-centric ways of looking at technologies, markets, and ourselves.

In the end, more than 2,500 innovators from 104 countries submitted some 1,200 distinct ideas. After a challenging process of winnowing and evaluation, we chose as the winner an idea for a sensor-enabled smart-electricity grid. It's an endeavor with long-term prospects that will certainly stretch us, but it's also a perfect fit for our strategy and competencies.

This was not our first experience with crowdsourcing. We had been running an internal innovation competition for several years, so it was a natural next step to extend participation beyond our walls. And Cisco is no stranger to bringing aboard new technology from outside—we have a strong track record of investing in start-ups or acquiring them outright. But there is quite a difference between shopping for the most promising developed technologies and prospecting among pure ideas.

The evaluation process was far more labor-intensive than we'd anticipated; significant investments of time, energy, patience, and imagination are required to discern the gems hidden within rough stones. Anyone attempting to do innovation on the cheap should look elsewhere.

Indeed, the I-Prize competition was not undertaken as a money-saving activity, in the sense of using crowdsourcing to generate an influx of "free" intellectual property. We were looking for a novel innovation in which Cisco would make a significant long-term investment—and for which the idea owner would win a $250,000 prize. Here's how we did it.

Calling All Innovators
The world is a far more complicated environment than a large company. Many routine arrangements with employees (involving, among other things, ownership of intellectual property and work products) do not apply. Negotiations must be handled efficiently and with the least possible friction when forging temporary but potentially entangling relationships with outsiders.

We tackled this problem of complexity from a couple of different angles. Good technology and processes were part of the solution. At a minimum, we would have to register thousands of participants and offer them a user-friendly way to present their ideas. And since we were, in effect, convening a community of innovators, we also wanted to give participants the opportunity to interact with one another about their ideas. Both of these technology problems turned out to be relatively easy to address. We chose a hosted idea-management platform from a company called Brightidea, whose tool allowed people to sign up, contribute ideas, and comment and vote on everyone else's submissions.

Developing a sensible legal framework that addressed intellectual property issues proved more challenging. Who would own what and under what circumstances? Our lawyers regaled us with tales of absolutely everything that could go wrong—such as the possibility that somebody would submit ideas that belonged to someone else. We needed to make sure that participants attested to ownership of the IP. By submitting an idea, you were pledging that, to the best of your knowledge, it was your own and not someone else's. We also needed to protect the company in cases where participants submitted ideas that Cisco was already working on, to avoid claims that we had stolen them; as a further precaution, only the small team of Cisco judges had access to the ideas.

Copyright © 2009 Harvard Business School Publishing Corporation. All rights reserved.

Original article.

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