Step 3: Invest more in a bottom-up approach for your innovation agenda

When developing your innovation agenda, bear in mind that employees deal with inefficiencies in your company daily, often having diverse and powerful ideas related to organisational processes and products. They also have opinions and insights concerning the areas and processes in which it could make more sense to cut or to invest.

Top-down approaches sometimes bring your initiatives from micro level to macro level, relying on transformational opportunities to reduce costs. Yet they do it without looking at the whole picture, unable to identify the real inefficiencies, unable to create a sustained way to drive costs and to change inefficient spending behaviours.

You can save time and money by having your employees contribute ideas for the cost-cutting strategy, as well as cost-optimisation ideas that can transform and impact the company positively.

Any ‘reductions’ or ‘cuts’ should aim at building a more robust organisation, in search of innovative ways to redefine itself. There are limitless options according to your reality. Have a look at some sample results from customers who incorporated a cost-cutting strategy in their innovation agenda:

  • By selling obsolete stock items to employees interested in buying them, an organisation generated a new revenue source and freed storage space, allowing a much more rational use of space;
  • A client was able to streamline its customer support call centre efficiently, improving service quality and vastly reducing the number of calls received by the customer service department, simply by adopting different colours for cables, routers and set-top boxes;
  • They also saved €2M with a new, eco-friendlier packaging system;
  • Another client embraced distribution of administrative documents by bike, a cool and eco-friendly idea with significant results: by replacing 30% of the motorcycles with bike couriers, distribution costs were reduced and almost a ton of CO2 emissions was saved in just seven months.

STEP 3 advises you to invest more on a bottom-up approach, calling on people’s knowledge and experience to help you separate the wheat from the chaff and find concrete and innovative solutions, mainly at micro level.

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

You can access the full paper here


How to pick useful and feasible ‘fights’ for innovation challenges

Here’s a simple but essential tip when establishing your innovation challenges: pick ‘fights’ that are useful and bring attainable value to your organisation. This means you need to guarantee your programme is relevant both to your people and company, namely:

• Make sure challenges have business relevance: Don’t solve problems you don’t have. Key business challenges make the most relevant innovation challenges.

• Also, remember to have problem sponsors: International idea management programmes have triumphed by negotiating innovation challenges with particular business unit leaders. Take leaders’ challenges and label them innovation challenges. This way, you’ll have your own champions. Understand, as well, what your champions’ motives are for solving the problem, since this builds you a stronger base from which to negotiate.

• Engage fully your C-level and innovation team: Prioritise those challenges that are useful to your C-level and make sure these leaders approve and support your initiatives. Leadership’s active involvement is key for programme success. Also, make sure that your innovation team is truly dedicated, embracing the tasks at hand.

• Identify key problems that need solving and can be solved: Look for discrete barriers to progress or opportunities within your innovation portfolio of projects. These can be articulated in a way that others, even those from diverse areas of expertise, have a chance to make important contributions to your progress. Also, be sure that your problems can be realistically solved. You need to raise the stakes, but you can’t afford to misuse resources.


‘Sponsorship’s impact is enormous, and we can clearly see this in the number of average market users. In years with higher sponsorship from the CEO and space in internal communication, as well as more attractive prizes, we have many more active users.

‘A staff of committed people must be present in the back-office. No leader can do things alone.’

‘The feasibility of an idea is mostly a function of one’s capability of elaborating, processing and developing it. Newborn ideas are neither good nor bad. They are just ideas (usually very raw). As a matter of fact, the final implementation is always very different from the original idea. Instead, good problem setting is very relevant.’


  • How relevant is this problem? How urgent?
  • Whose problem is this?
  • Who can sponsor and promote it?
  • Can this problem be solved?

Diana Neves de Carvalho, Exago’s CEO/
Francisco Bernardes, Exago’s head of Innovation Services/

How to mobilise the right audiences for innovation challenges

Your ultimate innovation challenge – what works and what doesn’t

A step-by-step guide to defining your innovation challenges

Based on our experience with clients and an analysis of 164 challenges they implemented over the past years, we have identified some trends on how to pick a successful set of challenges. But how exactly can you establish and structure them? We give you a hand.

Having signaled some best practices and understanding what works and what doesnt’, we now share samples of our Idea System Launch – a step-by-step procedure to help you set up your own challenges and enhance overall initiative effectiveness.

At a strategic level, this system supports you in aligning initiative and company goals, an overall purpose that needs to be considered and clearly stated. At a more operational level, it helps you ensure usefulness and attainability, learn how to target the right audiences and then focus needs and determine specific challenges, within a time period.

This is its mainframe:

ultimate innovation challenge

We will next see it in more detail.


Diana Neves de Carvalho, Exago’s CEO/
Francisco Bernardes, Exago’s head of Innovation Services/

First, ask what your innovation purpose is

Your ultimate innovation challenge – what works and what doesn’t

More mistaken beliefs about innovation…

In our previous post we focused on the first of the five mistaken beliefs business leaders have about innovation, as listed by Professor Freek Vermeulen from LBS here.

Even though the five mistakes are very interesting we will only focus on one more:
“[Business leaders believe] that because everybody had always done it this way, it is the best way of doing things.”

The definition of innovation as “the implementation of ideas that meet new requirements, needs, or adapting market desires,” contradicts the tendency to act like everyone else or align to precedent. Curiously, the vast majority of business leaders – 84% according to a McKinsey Global Survey – recognize innovation as being very important to their companies’ growth strategy but cannot apply innovation into their own activities.

To innovate is to break tradition and viewing the world from another angle requires openness to new insights or points of view. This is very clear in business model innovation (low cost airlines, Cirque du Soleil, iTunes, etc.) but also applies in product or service innovation. Even in sports we can find several examples of innovative behaviors that revolutionized performance like the high-jump Fosbury Flop technique (1968), Tiger Woods’ change in his golf swing or José Mourinho’s motivational and confrontational team-building techniques.

As Mr. Vermeulen points out, the greatest innovation often comes from challenging industry convention.

Unfortunately, the fact that business leaders are not open to new perspectives is often resultant from two other behaviors: risk aversion and inability to listen to other people. We have already explored the danger of risk aversion when concerning innovation efforts in another post so let’s have a look at the inability to listen to others regarding innovation.

The idea here is not to force business leaders to do whatever comes to anyone else’s mind. After all, the last mistake pointed out by Frank Vermeulen is believing the customer, which highlights the risk that stems from listening to people who do not know what they need or want and require others to tell them what to consume. As an example, does anyone believe consumers would have said they wanted a car when asked how to improve the horse drawn carriage in the late XIX century? They would probably say they wanted faster horses and more comfortable seats but they could never imagine a car (at least the way we see it now).

This in mind, business leaders should listen to input from their closest colleagues (typically C-Level executives). However these individuals are not owners of the truth and are prey to their own biases.

It is therefore a good idea to allow others to contribute to the discussion and decision-making process. How many examples of great innovation have come from front-line employees, middle managers and suppliers? Countless. It is this diversity of backgrounds, knowledge and experience in large communities of stakeholders that brings value to the process of innovating.

The power of collective intelligence allows organizations to find new solutions and alternative possibilities. At Exago we have been working for years to bring everyone to the epicenter of the innovation processes, making them feel listened to and valuable. Our model has proven to change behaviors, engage communities, and improve bottom-line results.

Mistaken beliefs about Innovation

London Business School released a slideshare with five mistaken beliefs business leaders have about innovation.

The five mistakes pointed out by LBS are:

  • Believing the numbers;
  • Believing success has been attained;
  • Believing they know the competition;
  • Believing that because everybody had always done it this way, it is the best way of doing things;
  • Believing the customer.

Each and every one of these topics provides much “food for thought” and written analysis. On this blog post we will only analyze the first, believing the numbers.

On this blog we have already briefly analyzed the obsession companies have with short-term activities and results. Business leaders tend to focus on the short-run, thinking and acting tactically (and reactively) instead of thinking strategically for the long-run. This might ensure average or even good results on the short term but it certainly comes at a high cost: a loss of competitiveness and even risk of survival in the long-run.

This happens, among other reasons, because of the highly aggressive social-economical-cultural business environment. We see negative consequences of this behavior everywhere, from bonuses (in stock options or other financial assets) to top-management that urges risky decisions and creates misalignment between short/ long-run objectives and resource allocation, to populist politicians that tend to invest in projects with short-term results and visibility (good for their popularity) but long-term costs (bad for tax-payers and newcomer politicians).

London Business School’s criticism stems from, “Insisting too much and too soon on seeing the numbers,” (market size, payback time, ROI, etc.) and how that insistency can kill a project even before it really starts. IBM’s president Thomas Watson’s statement about computers in 1943 also shows how deadly a focus on a number can be. “It’s fair to say that few people ever wanted one of those (computers), regardless of the size of their desk,” he said. Obviously IBM rethought and reanalyzed its view (and eventually became the largest PC provider in the world).

The same focus on numbers can kill a recently launched project if the return is not as fast or as high as intended at the beginning, which is often the case with innovation. If innovation is “a new idea, device, or method” and “the act or process of introducing new ideas, devices, or methods,” then results might not come in the short-run, especially when talking about ideas or the fuzzy front-end of innovation. If the project is shut down at the first bad number there will never be positive ROI. Furthermore, this policy can even create a downward spiral as it pollutes other innovative projects within the organization. If people feel projects have a high risk of never launching or of being quickly abandoned the motivation to pursue such an endeavor becomes close to zero.

Consequently, when beginning an innovation project it is necessary to think strategically and for the long run. This is even truer if the project involves a large community of people. In this case the need for a cultural shift is frequent and, before reaching tangible results, it is mandatory to get people on board by stimulating participation and a willingness to contribute.

Therefore be sure to “fail fast, fail cheap and fail often” but remember you can only conclude you have failed after giving the project a chance to succeed.