White Paper on Innovation Processes

Janet Rabin & Ben Turner

1. Overview
The study of innovation is on the rise: all fields, from the public sector to big business, from
engineering to international development, are seeking to capture innovation and weave it into their
planning and operations. Innovation research was originally confined to the sciences, but then
progressed to spheres of the private sector, especially in efficiency and product design. Recently it
has also expanded to the social sciences and the public sector; more and more organizations are
seeking to implement systems and processes into their management structure which will
consistently produce innovative solutions to problems in their field.

In order to come to a precise definition of innovation, we must distinguish between the concepts
of an innovation and the innovation process. It might help to explain this distinction within the
context of a cycle: invention, innovation, and diffusion. Invention is the development of a new
product or idea. Innovation is the successful conversion of that product or idea into a process that
adapts itself to multiple contexts reliably and consistently. Diffusion is the commoditization of
innovation as it spreads and becomes a standard, accepted idea.

Our goal in this white paper is to examine and explain the processes that promote this cycle and
lead to the adoption of innovations -- that is, to identify reproducible, transferable techniques that
can be implemented across a variety of projects and practices. First we will give a brief literature
review covering fundamental works on innovation from the sciences, the private sector, and
international development. We will then consider the commonalities and common principles that
arise from these different perspectives. Finally we will draw together theory and practice and
forecast future trends for increasing innovation and its diffusion within a development consulting
organization.

1.A. Academic Theories of Innovation

1.A.i. SCHUMPETER'S CREATIVE DESTRUCTION

Joseph Schumpeter, father of "creative destruction" and oft-referenced scholar of

entrepreneurship, defines economic innovation in The Theory of Economic Development:

1. The introduction of a new good — that is, one with which consumers are not yet familiar
 — or of a new quality of a good.
2. The introduction of a new method of production, which need by no means be founded
upon a scientifically new discovery, and can also exist in a new way of handling a
commodity commercially.
3. The opening of a new market, that is a market into which the particular branch of
manufacture of the country in question has not previously entered, whether or not this
market has existed before.
4. The conquest of a new source of supply of raw materials or half-manufactured goods,
again irrespective of whether this source already exists or whether it has first to be
created.
5. The carrying out of the new organization of any industry, like the creation of a monopoly
position (for example through trustification) or the breaking up of a monopoly position.1

Not a mathematician by practice, Schumpeter was an economist who used behaviors to theorize
about business and economies. This was in contrast to his peers, who tended to rely on
mathematical models. In particular, Schumpeter envisioned a series of business cycles and circular
flow in most firms, recycling the same ideas and products within an enclosed circle. Only through
entrepreneurship were external inputs and outputs introduced into this cycle or flow. From
entrepreneurs, Schumpeter believed, came economic development.

One of Schumpeter's key insights was promoting "creative destruction," the process of new ideas
breaking down old ideas and replacing them continuously, ensuring an innovative, generative path
of development. He wrote at length about capitalism and socialism, saying that capitalism
eventually gives way to corporatism, as entrenched old interests set an agenda to protect against
entrepreneurs, whose ideas are inherently targeted to destroy the entrenched interests.
Schumpeter sought to ensure that the ability to destructively create would continue to exist so that
healthy capitalism and innovation could continue. This can be extended to a firm level, where
established ways of doing things dominate and those who execute those ways well get promoted,
making them biased against new or different upcoming ideas. Thus, Schumpeter believed this
continual process of replacing and upgrading was normal, necessary, and, contrary to popular
belief, far more stabilizing for the internal health of a government or firm.

1 Wikipedia.org. "Innovation", Wikipedia.org. http://en.wikipedia.org/wiki/Innovation

1.A.ii. TRIZ

TRIZ is named for its Russian acronym, Teoriya Resheniya Izobreatatelskikh Zadatch, which
roughly translates to “Theory of Inventive Problem Solving.” TRIZ was created by Genrich
Altshuller, (1926 – 1998), who used the Soviet Union’s open patent database to compare over
200,000 inventions in his quest to find common factors that lead to innovation. He was later sent
to a prison camp in Siberia for criticizing Stalin; however Altshuller used this time to interview the
many scientists, intellectuals, and artists who were also imprisoned there, and so continued his
work on the process of innovation.

TRIZ has multiple layers of analysis and can become very

technical; many of the examples used are drawn from
engineering. However the basic principle is one that can be
applied across numerous fields. TRIZ defines an inventive
problem as an unresolved contradiction. An innovation
transcends the limits that create the contradiction. A very
simple illustration would be a travel coffee mug: it solves the problem of needing coffee to be hot
enough to enjoy when drinking, but cool enough to hold in your hands. The insulated mug allows
the coffee to be simultaneously hot (inside) and cool (outside).

The TRIZ method maintains that if an analogous problem that has already been solved can be
identified, then an analogous solution can be applied. Altshuller created various tools to facilitate
the process of finding and overcoming contradictions. The first is his 40 Principles of Invention,
which are the principles Altshuller determined to be the most frequently-employed in the creation
the successful innovations he studied. For example, the Principle of Segmentation calls for dividing
an object or a concept into multiple parts. This could be implemented by replacing a too-large truck
with a truck and trailer, or using a work breakdown structure to manage a particularly unwieldy
project. Ellen Domb, editor of the TRIZ Journal, provides this and other examples for each of the
40 Principles in an article available on the publication's website: http://www.triz-
journal.com/archives/1997/07/b/index.html

Another tool is The Contradiction Matrix, which visually displays the most common types of
contradictions, matched up with the principles that are most suited to resolving the contradiction.
The rows of the matrix contain 39 characteristics a would-be innovator wants to improve, such as
strength, speed, or ease of repair; the columns display the trade-offs that would normally have to be
made to in order achieve the improvement, such as loss of speed or decreased stability of an object.
At the intersection of the feature you want to improve and the feature you don't want to worsen are
numbers which represent which of the 40 Principles could be used to achieve the improvement
without the degradation. An Excel file of the entire matrix can be downloaded free of charge from
the TRIZ journal website: http://www.triz-journal.com/archives/contradiction_matrix/

Altshuller’s work has been continued since his death, both in countries of the former Soviet
Union and more recently in the U.S. Some of his disciples have formed branded versions of the
TRIZ method, which they sell to companies. It has also been incorporated into business innovation
models, including Six Sigma. Some have debated how far TRIZ principles can go in the social
sciences; recent research in the TRIZ journal has explored the application of TRIZ in subjects as
far-reaching as Public Health, Finance, and Education. Case studies range from Singapore’s
management of the SARS outbreak to a new type of mascara with a vibrating wand-applicator.

1.A.iii. CLUSTERING

Michael Porter, of the Harvard Business School, has written extensively on clusters as incubators
of innovation. Porter defines clusters as a series of related industries, a set of horizontally-
connected co-dependent firms and institutions. A cluster may contain private firms, academic
institutions, and standard-setting bodies. The most vivid example is Silicon Valley, the home of
venture capital for technology, bioscience, nanotechnology, and product design. Stanford
University, geared towards engineering, has given birth to both Yahoo! and Google, both of which
were founded later in nearby cities in the San Francisco/Palo Alto areas. Web-based companies
and start-ups have also swarmed to the area, and now San Francisco and Silicon Valley have a
cultural support system for the eccentricities of these businesspeople, the capital to fund new
business, and the relationship with Stanford, Berkeley, and other schools to attract the brightest
new minds to their operations. One driver for innovation in a cluster is the competition inherent in
so many similar firms operating close together. The physical proximity also facilitates rapid
diffusion of best practices and encourages experimentation and new business formation. Porter
describes clusters as an "open" model of innovation, contrasting it with the more traditional model,
where only one part of the structure -- the R&D department for example -- focuses on innovating.

1.A.iv. EXPERIMENTATION

Stefan Thomke, a Harvard MBA professor and former McKinsey employee, lists six ways to
inspire innovation in his book Experimentation Matters:

1. Anticipate and Exploit Early Information Through ‘Front-Loaded’ Innovation Processes.

2. Experiment Frequently but Do Not Overload Your Organization.
3. Integrate New and Traditional Technologies to Unlock Performance.
 4. Organize for Rapid Experimentation.
5. Fail Early and Often but Avoid ‘Mistakes’.
6. Manage Projects as Experiments.

Thomke emphasizes experimentation, implying a loose organization that allows for failures and
risk, especially early on. Innovative processes should change throughout the development stages in
order to adapt to information access, scalability, and feedback from results.

1.B. Private Sector Approaches

1.B.i. TPS AND LEAN

The Toyota Production System was developed between the 1940's and the 1960's in order to
increase efficiency along the factory line through three reduction areas: overburden (muri),
inconsistency (mura) and eliminate waste (muda). Reducing "muda" began to dominate the system
because of the ease of understanding that concept; a trip to the States by a Toyota delegation
contrasted the massive inventory held at Ford's production plants with the inventory held at a
Piggly Wiggly supermarket, and then returned home to apply principles we have come to associate
with Just-In-Time production. While reducing inventory and creating more of a demand-based
system where components were delivered only after known orders were received, the TPS also
required "autonomation," a way to reduce human interference in production by requiring humans
only if a machine reports a deficiency on the line. As a result of this process of reducing
inefficiencies, defects, and stresses, as well as in ensuring continuity of production, Toyota has
become famous for its reliability and quality.

Lean manufacturing is focused on process flow and is heavily based on the TPS, emphasizing
that any component of a product that does not contribute to increased value must be removed.
This has implications not only in production but also within design, for many problems that occur
later on in a product cycle come through poor planning and system engineering. In order to reduce
later waste, it is therefore important to nurture institutional capacity so that an organization's
leaders and employees share the Lean philosophy and are capable of understanding different
aspects of the product cycle; if they are cross-trained, they can anticipate errors later on in the
process. It is also important under Lean to challenge partners and suppliers to share the same
philosophy of reducing waste, and to involve all levels of the organization in institutional learning
processes.

While TPS and Lean seek to reduce waste, they also seek to accomplish this through less
specialization in institutional capacity, not more. Womack and Jones, the authors of Lean Thinking
contend that the Fordian model has been overused, and that firms need to think beyond their role
in the "value stream," to consider the entire product and process the consumer wants to experience.
When they describe people as wanting "personal mobility," rather than cars, they almost sound as if
they could be discussing capabilities à la Amartya Sen, rather than consumables.

1.B.ii. SIX SIGMA

A business management philosophy developed by Motorola in 1986, its main task is to remove
defects in a process to an incredibly low level for the sake of reliability. Its two methodologies
(DMAIC and DMADV) emphasize quantitative measurement of problems before seeking to
improve them; DMAIC stands for Define, Measure, Analyze, Improve, Control. DMADV stands for
Define, Measure, Analyze, Design, Verify.

DMAIC tends to be used for streamlining existing business processes, whereas DMADV is used
for creating completely new products or processes that require major new design evaluation.

DMAIC, therefore, would be more significant to look at in the development consultancy and
project management context. Created by Edwards Deming to reduce defects in processes, the
process involves first identifying and defining a problem for a development project and for the
consultant's practice. Once that problem is defined, it must be measured within its environment
and then later analyzed to see the full extent of the problem. At that point, with recommendations
made to fix the problem, the process can be improved to the desirable level, and then needs to be
maintained or controlled from that point forward.

Within the arena of controlling the process to maintain success, Six Sigma endorses incentive
and reward structures so that those who help to facilitate solving the problem are recognized while
others are not. By linking rewards to performance, a company can ensure that its desired practices
are advanced. Six Sigma also endorses promoting local project champions to provide role models
to other projects.

The implication of Six Sigma is that it introduces quality management into all levels of an
organization, so that all employees start to follow Six Sigma processes. Negative complaints
towards Six Sigma say that it stifles innovation (because of a rigid, data-driven approach) instead of
encouraging fresh, no-boundaries thinking. Perhaps a more balanced view would emphasize Six
Sigma's recommendation of collaborative sharing as a sixth letter, "S", after DMAIC, the underlying
concept of which is described in depth below as a way to promote knowledge management for
Chemonics International projects and internal processes.
 The "S" symbolizes synergy, emphasized because this sharing creates a learning organization,
said to be key in any innovative firm. It was determined in a recent study that:

"Looking at data from 759 firms across 17 countries the researchers found that location is not the
determining factor in the degree to which any given firm is innovative; but rather, the innovative firms
themselves share key internal cultural traits. Innovation appears to be a function of the degree to which
a company fosters a supportive internal structure headed by product champions and bolstered by
incentives and the extent to which that organization is able to change quickly, keeping an eye on the
markets of the future." (ScienceDaily, 2008)

1.B.iii. CONSTRUCTION CULTURE, INNOVATION, AND MANAGEMENT (CCIM)

Much of the available literature on this topic comes out of three institutions: The British
University in Dubai, the Centre for Innovative and Collaborative Engineering (CICE) at
Loughborough University, and the International Council for Research and Innovation in Building
and Construction (CIB). In 2006 the three organized an international conference in which research
was presented on the topic of “Sustainable Development through Culture and Innovation.”
Recommendations for increasing innovation within the construction field included nurturing
relationships with cutting-edge clients (Manley, 2005) and identifying how to best communicate
within a firm’s particular sub-culture (Harkink and Tijhuis, 2005).

One study, based on case studies of innovation in the Australian construction industry,
demonstrated that firms benefited not only from innovation within, but also from "adoptive" or
"incremental" innovation -i.e. adapting and using others' innovations (Manley, Blase and McFallan,
2005). The study also found that developing organizational skills within a firm was most important
when supporting incremental innovation, whereas developing technical skills was a key factor in
"radical" or original innovation.

Slaughter describes these two types of innovation, as well as three others (modular, architectural
and system innovation), in "Models of Construction Innovation" (1998). Slaughter seeks to
transpose models of innovation from the manufacturing industry, where they originated, to the
construction industry. Slaughter places incremental innovation on the low end of the change
spectrum (small change), radical innovation on the high end (major change), and situates modular,
architectural, and system innovations in between.

A modular innovation is an improvement of one part or component of a system. It may be a

major change, but it does not directly affect neighboring components or the way they are linked
together. An architectural innovation may be small in scale, but changes the way in which the parts
of a whole interact. System innovation not only affects more than one part of a given system, but
requires that "multiple independent innovations ...work together to perform new functions or
improve the facility performance as a whole" (Slaughter, 228). System innovation requires
coordination between each changed component for the innovation as a whole to work. Slaughter
gives industry-specific examples of each kind of innovation and calls attention to where conditions
specific to construction require adjusting the models.

The definitions of incremental and radical innovation Slaughter employs are based on a 1969
article by Donald G. Marquis. Marquis argues that adaptive innovation, sometimes called mere
imitation, is vital to the growth of an industry, and should not be downplayed. Likewise everyday
"nuts and bolts" innovation -- small changes a firm makes within its operations to maintain its
competitiveness -- is championed as just as important as radical technological breakthroughs.
Marquis advises firms to focus rather on how to use an innovation, whatever its source. His model
of the process of innovation includes six steps:

1. Recognition - identifying a new technical advance or a potential demand for something

new.
2. Idea Formulation - combining a recognized demand and a recognized advance into a
design or method.
3. Problem Solving - testing the design or method.
4. Solution - through invention or adoption.
5. Development - innovation is scaled up and introduced to the marketplace. According to
Marquis, this is when innovation is truly achieved.
6. Utilization and Diffusion

Marquis drew his recommendations from observing how existent successful innovations were
created and disseminated. He concludes that the training and experience of a firm's staff are key: it
is, after all, those who are working in the field every day who are most likely to notice instances of
and opportunities for innovation.

1.C. Innovation in International Development

1.C.i. "MACGYVER" INNOVATION

Ethan Zuckerman, a fellow at the Harvard Law School Berkman Center for Internet and Society,
a former Fulbright Scholar in Ghana as well as an Africa blogger, lists seven developing world
innovation rules:
 • Innovation (often) comes from constraint (If you’ve got very few resources, you’re forced
to be very creative in using and reusing them.)
• Don’t fight culture (If people cook by stirring their stews, they’re not going to use a solar
oven, no matter what you do to market it. Make them a better stove instead.)
• Embrace market mechanisms (Giving stuff away rarely works as well as selling it).
• Innovate on existing platforms (We’ve got bicycles and mobile phones in Africa, plus lots
of metal to weld. Innovate using that stuff, rather than bringing in completely new tech.)
• Problems are not always obvious from afar (You really have to live for a while in a society
where no one has currency larger than a $1 bill to understand the importance of money
via mobile phones.)
• What you have matters more than what you lack (If you’ve got a bicycle, consider what
you can build based on that, rather than worrying about not having a car, a truck, a metal
shop.)
• Infrastructure can beget infrastructure (By building mobile phone infrastructure, we may
be building power infrastructure for Africa - see my writings on incremental
infrastructure.) (Zuckerman, 2008)

Zuckerman values less blue-sky thinking and more working with the resources available. This is
reminiscent of elements from Lean thinking, revising processes and unlocking value constrained in
existing models instead of creating entirely new processes. Zuckerman's rules imply an innovative
pressure that builds up within projects; what's most important is to understand the project well and
then be able to recognize those pressures as they develop, then exploit them.

1.C.ii. "PROMOTING INNOVATION, PRODUCTIVITY, AND INDUSTRIAL GROWTH

AND REDUCING POVERTY”

"Promoting Innovation, Productivity and Industrial Growth and Reducing Poverty" is a set of
papers developed from presentations at an international workshop held at the Open University in
London’s Innovation, Knowledge, and Development Research Centre in 2005. The papers and case
studies emphasize the importance of promoting and managing innovation in international
development projects. Several authors contend that innovation is needed not solely in the technical
arena, but also in social policy. A dramatic example is the case of pharmaceuticals in India:
remarkable innovation has been achieved in producing new drugs for worldwide export; however
over 50% of Indians do not have access to these drugs themselves (Chaudhuri, 2005).

An interesting case study of an innovative approach to poverty alleviation is the use of value-
chain lending in Mozambique. Value Chain Analysis is also attributed to Michael Porter. His 1980s
books Competitive Strategy and Competitive Advantage describe how to analyze the discrete
activities of a firm so as to identify where and how much value is created.

This idea has been expanded to go beyond the boundaries of one single firm, to include the
entire supply chain of a product, or the whole process of a service, and is used extensively in the
Lean approach. It was also recently employed to reinvigorate the cashew nut industry in
Mozambique. GAPI, a Mozambican non-bank financial institution, began the project by partnering
with Technoserve to finance and improve cashew nut processing plants. It quickly became apparent
that the cashew nut farmers needed to be supported as well to ensure a steady supply of input
material. GAPI and Technoserve then went on to work with firms in marketing and international
distribution to expand the market for the final product. By considering the entire supply chain of
the cashew industry, GAPI was able to correct coordination failures that could have undermined
the original venture.

1.C.iii. AGRICULTURAL INNOVATION SYSTEMS (AIS)

The AIS approach came out of a World Bank report released in 2006 called "Enhancing
Agricultural Innovation", and then was formalized during a presentation at a World Bank
conference in 2007 in Washington, DC.

Through consensus, the AIS findings agreed that research and development were not the
primary drivers of innovation, but only part of a larger system involving stimulating innovation
capacity. Said the report:

"Besides nurturing individuals who act as change agents within organizations, the case studies
highlight the power of: collective action within and among organizations; flexibility (to allow self-
organization); building self-confidence and trust; fostering preparedness for change; stimulating
creativity; and the enabling environment, particularly the policy and funding incentives that permit
these characteristics to develop." (“Agricultural Innovation Systems”, World Bank, p. xxi)

AIS presents a large-scale, multi-lateral perspective of innovation management. In particular, it

sees the enabling environment as being free of as many barriers to innovation as possible. For the
World Bank, which now characterizes itself as a learning organization, it is necessary to devote
significant energy towards knowledge management since it generates so much research and so
many reports.

But it also recognizes that within a large organization, processes quickly become circular,
accepting no external inputs, rewarding those who reinforce the cycle instead of breaking out of it,
to use Schumpeter's metaphor. Therefore the World Bank, through the AIS process, has
emphasized enabling and championing "change agents" and spurring individual initiative and
rewarding flexibility. The World Bank hopes to flash a green light within its organization and for
agricultural projects on the ground to seek solutions without worrying about boundaries.

The World Bank continues:

"The primary emphasis of extension should shift away from technology transfer and toward
creating connections to outlets, institutions, and people. Extension needs to perform a wider range of
services and provide a wider range of support to a diverse clientele to improve their capacity to access,
adapt, and use knowledge, inputs, and services. Extension agents should see their main role as being
intermediaries and knowledge brokers. [...] Because the AIS approach is essentially multisectoral, it is
essential to promote the cooperation of different ministries, departments, and units and cooperation
among various stakeholders. A system to facilitate collaboration and synergies among the agencies,
ministries, and stakeholders is needed." (“Agricultural innovation systems”, World Bank, p. xiv)

Thus the World Bank understands that innovation requires fresh ideas outside the normal circle
of information dissemination. The more departments and minds from more diverse backgrounds,
the better. This displays the innovation characteristic of the "wisdom of crowds", later explained in
reference to Jim Surowiecki's book of the same name.

Key goals include:

• Developing local capacities to innovate, experiment, access market opportunities, and

manage resources in a more sustainable manner.
• Integrating Farmer Participatory Research and Participatory Market Research
approaches to build the agricultural assets of rural women and the poor.
• Integrating equity and gender considerations to improve the distribution of benefits.
• Applying the Resources-to-Consumption System: Forward and Backward linkages
between production, marketing and investment in NRM.

The description of this process emphasizes the importance in increasing the number of links
within organizations and their partner networks substantially throughout all levels in order to allow
for more collaboration and communication. It also makes the organization more resilient to
employee and project turnover, as channels for communication will still continue even after
personal friendship links are cut off as people rotate out of the organization.

The World Bank describes a process approach to innovation as "capacity building":

 "To enhance innovation capacity, it is necessary to invest in learning and capacity building, provide
incentives that allow actors to put new skills into use, and also nurture new attitudes and practices.
Programs that encourage greater openness in organizations to collaborating with diverse formal and
informal actors, introduce organizational and managerial innovations within organizations, or
strengthen individual and organizational incentives to develop innovative capacity, should be
considered. The organizational or collective innovative capabilities, however, reside in individuals, in
the information and technology used by an organization, and in an organization’s structure, routines,
and coordination methods. Besides nurturing individuals who act as change agents within
organizations, the case studies highlight the power of: collective action within and among
organizations; flexibility (to allow self-organization); building self-confidence and trust; fostering
preparedness for change; stimulating creativity; and the enabling environment, particularly the policy
and funding incentives that permit these characteristics to develop. Policy capacity thus needs to be
strengthened to build innovation capacity." (“Agricultural innovation systems”, World Bank, p. xii)

The World Bank's report emphasizes that there must be increased innovative capacity within an
organization, primarily gained through increasing incentives and lowering barriers for
communication across departments and divisions. What is implied but not explicitly said is that
networking tools could be implemented in order to increase information flow whether it involves
departments or different agricultural projects on the ground sharing information quickly about
what techniques will work best or what is happening in the news. The report emphasizes funding
an infrastructure for clustering scientists and accommodating outside sources, endorsing an
amorphous cloud of knowledge to operate naturally and organically.

2. Synthesis
2.A. Common Principles Among Different Innovation Processes

Within the context of applying innovation to organizations, we also identified some common
qualities of innovation processes:

• Systematically test the parameters of a given situation and figure out which constraints
might be lifted through quantitative measurement and evaluation.
• Reduce waste, inefficiency, and defects.
• Link together different organizations so that they share knowledge more creatively and
willingly. (Zuckerman's rule: don't fight culture)
• Tight relationship between governmental and educational research organizations and
businesses (DARPA & the Internet, Stanford and Yahoo and Google).
 • Evaluate the value chain: look for abundances and low transaction costs that can
translate into large increases in productivity.
• Split something big into smaller pieces (e.g. micro-enterprise development, just-in-time
supply chains).
• Combine small insufficient parts to create a larger whole (e.g. micro-credit and mobile-
phone banking).
• Use an abundant technology to improve a scarce or inaccessible one (mobile phones
building infrastructure (Zuckerman) or mobile-phone banking).
• Encourage clustering and networks for innovation (Silicon Valley).
• Organizational learning through documentation, diversity ("wisdom of crowds" implying
diversity, not homogeneity), and consensus-based decision-making.
• Tolerance for high-risk, high-reward research and experimentation.
• Capable, cross-trained leadership able to adapt quickly to different approaches and train
their employees to do the same.
• Different types of environments are required for different stages of innovation: a)
creative, free environment for generating new ideas; b) methodical application of
techniques to reduce waste and become more efficient and effective.

2.B. Overarching Themes

After comparing the various innovation processes and looking at the substance within the above
commonalities, we found strong recurring traits.

2.B.i. Inside and Outside the Circle

The main trait behind innovation processes refers back to Schumpeter's model of entrepreneurs
being destructively creative inputs into an otherwise closed business system; we can characterize
certain innovation processes as being either inside or outside of the "circle." Six Sigma DMAIC,
CCIM, value chain analysis, and TPS/Lean are examples of incremental improvements to an
already-existing process. These refine a process to be more productive by reducing defects and
creating more marketable products. But they are not innovative in the entrepreneurial sense.

Schumpeter lauded the entrepreneur for breaking the closed circle within firms to introduce
newer, more efficient and productive techniques for processes.

Processes such as TRIZ, Six Sigma DMADV, and Porter's clustering models are specifically
intended to introduce radical, new ideas and methods to within the circle. They seek to break the
assumptions of previous models and propose new ways of developing a product. Thomke's
emphasis on experimenting introduces the idea that not all attempts at innovation will be
successful, but allowing for failure and freedom to experiment may yield unexpectedly beneficial
results, and not necessarily at a high cost. This is not unlike the intent behind Six Sigma's DMADV
approach of iterative improvement and testing.

2.B.ii. Productivity

Professor Porter talks at length about productivity, which he sees as the major factor behind
innovation.

"For Porter, the only meaningful concept of competitiveness at the national level is the national
productivity with which a nation's resources are employed. Sustained productivity growth requires that
an economy continually upgrade itself. A nation's firms must relentlessly improve productivity in
existing industries by raising product quality, adding desirable features (differentiated products),
improving product technology, boosting production efficiency or improving the quality of factors of
production through technological progress. Firms musty also develop a capability to compete in even
more sophisticated and new industry segments, where productivity is generally higher. This also
absorbs human resources freed up in the process of improving productivity in existing fields, say, with
the introduction of automation." (Mahmood, 1998)

The same principle of "creative destruction" is prominent in Porter's thinking; relentless

improvement and using capital and labor more efficiently constitutes innovation both inside and
outside the circle: value chain enhancement and Six Sigma DMAIC methods for within, and Six
Sigma DMADV and TRIZ and clustering for without. In these cases, seeking added value and
increasing productivity are the core goals of any innovative, competitive process.

2.B.iii. Knowledge Availability

A strong current running through the innovation processes, in particular with Six Sigma as a
whole and with the World Bank's AIS, is the idea that organizations need to be flattened so that
even the lowest worker on the organizational totem pole has as easy access to the firm's knowledge
as the executives at the top. Six Sigma explicitly commands its senior "belts" to share their
knowledge with others within their organization, while the AIS method emphasizes that different
stakeholders from different backgrounds must be able to collaborate from different perspectives in
order to produce the ideal opinion.

We will argue that creating an innovation information commons within a company promotes a
culture of innovation. This culture can be introduced through advocacy, incentive and reward
systems (recommended in Six Sigma), and measurement and evaluation (as in the AIMS
assessments). Giving employees and stakeholders knowledge management tools will allow them to
organize and innovate in the way that works best for them.

2.C. Gaps Identified for Further Research

While there is some crossover of innovation models, more systematic comparison is needed. A
review of the literature shows that there is much literature specific to an industry: innovation in
construction, innovation in technology, product innovation etc., but not much unifying theory.
It is possible that organizations do not take advantage of the internal organic networks created by
employees. Company-wide standards for processes may conflict with how employees actually
obtain and disseminate information. Supporting research to document this contradiction would
help further the idea that adaptability and analysis of actual work flow within an organization are
highly desirable for innovation, as there would be less internal conflict for the organization.

There is also more formal research to be done within the American start-up culture, mainly
clustered in Silicon Valley, San Francisco, and Boston. Heavily borrowing from Michael Porter's
theoretical work and intense creative destruction of employees, ideas, and money within the web
community, there are principles and lessons learned emerging from this sector that must be
constantly studied, with a grain of salt, since it is evolving so quickly.

3. Conclusions: Freedom to Adapt a Good

Idea is Innovation
From our literature review and case studies we have seen that there are different methods of
innovation, with each method having its own particular stages. When considered on a firm-wide
scale, most organizations are employing multiple innovation strategies, with different projects
using different approaches at different stages in their individual project cycles. How then could
Chemonics capitalize on the innovation processes its projects are already using? Increased use of
knowledge-sharing tools could increase in turn the rate and scale of the diffusion of good ideas.
Chemonics teams indicated that they arrived at most innovative solutions by adapting ideas or
techniques that had succeeded in the past experience of a team member or a consultant. Going back
to the literature on innovation processes, Marquis emphasizes the key role played by employees'
training and experience. He presents a study in which he finds that most of his respondents cited
co-workers and colleagues as their main source of new ideas, rather than technical literature.
Therefore, if what works at the level of a project team – sharing of previously successful strategies,
employment of outside technical experts with transferrable experience –could be incorporated into
a knowledge-base that was accessible to all projects throughout the company, the level of
innovation could be expected to increase. The level of efficiency should increase by learning from
others’ relevant experiences, and the adoption of new ideas should occur more quickly.

3.A. Using Knowledge-Sharing Tools as Accelerators and Conductors of

Innovation

3.A.i. News Feeds

Implementing knowledge-sharing tools into daily IT operations has the potential for long-term
positive effects at a low price, if properly integrated into peoples' daily routines. A good example of
how this might be done would be to look at Facebook's front page that displays a feed of all the
news of the user's friends and organizations. Google offers iGoogle, and Yahoo! has My Yahoo!,
both of which are customizable web pages that include "panes" for e-mail, weather, and any other
gadget the user wants. Having a front page like this creates an opportunity for innovation in terms
of knowledge-sharing within the company. Passively viewing updates about other parts of the
company requires a negligible time investment, but it might spur more awareness of what is going
on throughout the organization and could lead to surprisingly useful linkages between vastly
different projects. One team interviewed noted that the current shared databases at Chemonics are
useful for learning about what worked in previous projects; however there is no consistent way to
for transfer knowledge between projects that are going on simultaneously. A news feed or
lifestreaming application would allow employees to be kept abreast of current innovations within
the organization.

There are limits on the benefits of increased ability to communicate. But certainly any
organization that facilitates discussion between the highest levels, lowest levels, and different
departments will benefit from a flattened hierarchy and better information dissemination. The best
example of this has been Facebook's news feed. At first the news feed was highly disputed because
peoples' actions were now being broadcast to all their friends' news feeds passively. The
information was public before, in that one could actively click on his friend's profile to read what he
was up to, but now it was being put on other peoples' news feeds as they logged in. They didn't
have to go looking for an update on their friend's page, it was delivered right to them.
 In a business context, the social content of a Facebook news feed-like system could be replaced
with relevant professional items of interest. For example, someone working on an innovation and
competitiveness project in Ghana might receive an update on a similar project in Bolivia. Sarah in
Ghana might log on to her SharePoint homepage and see on her newsfeed, "Charles published a
report on innovation in Bolivia, keywords: Bolivia, innovation, agriculture, value chains". While
the Ghana project has no "interest" in Bolivia, this random update within the organization might
catch the Ghana project's interest because they are related projects. So a news feed can be used to
expand one's awareness of intra-organization projects. Tools could be employed to allow for
passive news feeds (randomized news updates) to active updates (subscribing to keywords through
RSS feeds so that any update involving the keyword "innovation" would show up in your RSS feed).

3.A.ii. Lifestreaming

Lifestreaming, one of the rising trends in the web start-up community, is only beginning to be
extended to enterprise-level business tools. Booz Allen Hamilton, a government contractor in the
Washington, DC area, has added a social media team to advocate for the usage of social media
within corporate organizations. This runs counter to the prevailing philosophy of firewalling
intranets so that virtually only e-mail can be used. The latest winner of the TechCrunch 50, an
annual event which invites 50 start-ups to pitch their ideas to a panel of seasoned entrepreneurs,
was Yammer, a Twitter-like (Twitter is a service that lets you send short messages or "tweets" to
anyone who chooses to "follow" your feed) network that segregates users by e-mail address, so that,
for example, anyone within the chemonics.com domain would be able to communicate with each
other after taking only a minute to sign up. LinkedIn, the most common social networking site for
business and professional users, has adopted a Facebook-like news feed for business-related status
updates.

The concept of lifestreaming is implemented in the Facebook news feed, RSS updates, and
Twitter tweets. Instead of active communications dialogues between two parties, such as what
happens through e-mail, now you can "tune in" to an individual's updates so you see what they are
doing without being obligated to respond to them in order to receive more information. When you
e-mail someone, it implies a burden of them replying back, which can be overwhelming if a party is
too swamped to respond. The information flow stops there. (Thompson, 2008)
Now you can subscribe or "follow" someone on something like Twitter, and they "tweet" on what
they are working on or thinking about. When you log in to Twitter, you see a list of all the short
updates (each tweet can only be 140 characters long) from the people you are following. This
allows you to passively follow what everyone you're interested in is doing. If something does catch
your interest, you can respond to the author of the tweet for more information.
Within an organization, this extends the idea of flattening the operational levels. You might be
involved in an Africa project but are interested in good governance issues that certain people within
your organization are working on. You can follow those people to see if what they're doing might
apply to your project.

This lifestreaming commonality is extremely easy to implement using a free, open-source

framework called laconi.ca (http://laconi.ca/). But it would benefit from some degree of
automation too; if a user were to upload a white paper to a knowledge base, for example, that
should be updated under the person's account. If a user is giving a talk and has slides, those should
be automatically shared and disseminated. Not only should people’s work be automatically
updated for the rest of the company to see, but the process should be made as easy to participate in
as possible and integrated into employees’ e-mail clients so they see it when they read their e-mail.

Since this might not be easy to implement under Microsoft Outlook, a "homepage" might be set
as default which has internal company news feeds. What's most important is that lifestreaming is
implemented directly into peoples' existing computer patterns. No one is going to go out of their
way to view what's going on, but if they see it alongside something they always do (like e-mail), they
will be far more aware of it and participatory in it. (Miller, 2008) It is important to visualize
employees' time as already filled up to the maximum, so anything "new" must either be vastly more
efficient than the prior process, or it must be incorporated into existing cultural norms within the
organization in order for it to be adopted.

3.A.iii. Crowdsourcing

In his book "The Wisdom of Crowds," James Surowiecki talks about how many different people
often produce a best solution better than an individual or even a group of experts can. He argues
that it is the heterogeneity of people that brings this about, bringing different experiences and areas
of expertise together (but not necessarily values) to build consensus, which contradicts other
theories that usually posit that many experts together produce the superior solution. Surowiecki
breaks down the successful decisions into three areas: cognition (faster and more reliable than
experts, similar to market-based solutions), coordination (commonalities of purpose and values),
and cooperation (networks of trust). He lists the successful traits that lead to those areas as:
diversity of opinion, independence, decentralization, and aggregation. In essence, Surowiecki is
describing the traits of entrepreneurial, innovative knowledge communities.

A colorful example of the "wisdom of crowds", or crowdsourcing, is based on a Canadian gold

mining company, Goldcorp (Wikipedia, “Crowdsourcing”). The company was not succeeding in
finding new gold deposits, so it decided to release its highly-proprietary data onto the internet to
allow people to compete for a cash reward in order to locate potential new sources of gold. The
result was that crowdsourcing produced highly successful mining projects because amateur
geologists, mineral experts, geographers, and other random professions contributed actively
towards finding gold, and it worked!

In the context of a firm, crowdsourcing can serve as another method of facilitating innovation
through knowledge-sharing. An example would be a problem-solving bulletin board/e-forum to
discuss specific problems that anyone in the company might have had experience working with.
Dell utilizes this technique through IdeaStorm, which allows customers to vote up their biggest
gripes or problems with Dell's products and customer relations with a system similar to Digg, a web
site that lets people post stories, vote them up or down, and comment on them. The end result is
that the most burning issues and priorities float to the top, and people are empowered to discuss
them.

3.A.iv. Create New Ways to Collaborate

Wikis and Working Groups are two activities that can increase the horizontal transfer of
information in an organization and encourage sharing of technical knowledge. A wiki (from the
Hawaiian word for "fast") is a collaborative web page that allows all members of the community to
add to and edit. The best-known example is Wikipedia, a vast collection of encyclopedic wiki
articles; however the more general concept is gaining in popularity as a way for organizations to
share knowledge among its members. A drawback to this knowledge-sharing approach is the
considerable initial time investment and requirement of a critical mass of users; if not enough
people use the wiki, then it never gets updated, corrected, or added to. The advantages include
increased participation and a sense of ownership among staff contributors.

Working groups were recommended both within Chemonics interviews and by Professor
Michael Nelson, a professor at Georgetown University and former director of internet strategy at
IBM, as well as former science advisor for, at first, Senator Al Gore, and then Vice President Gore.
Working groups could take people from different areas of the business and have them evaluate all
the other areas of the business to see how they operate and then report back on the differences and
potential commonalities between them all. Working groups are widely used in business and can be
proposed for any specific problem or for general evaluation, being disbanded when no longer
applicable. This technique was used at IBM, according to Professor Nelson, and helped to establish
working groups into the company as a consistent practice of innovation, not as an added chore or
responsibility. Working groups can become a rotating presence within an organization, pulling out
employees periodically and giving them a set time to conduct company-wide research and
assessments. Innovation is often the result of bringing together two separate ideas and finding how
they might improve each other, so pulling together as many different parts of the organization as
possible would be conducive to an innovating environment.

Perhaps the main idea behind the working group concept is that a process be indoctrinated into
the company for the sake of its employee base's collaborative energies and sharing of information,
instead of treating innovation as an afterthought or an extra task. In other words, it is an active
step towards promoting and facilitating a learning organization that values and rewards innovation
while not interfering with regular work responsibilities. Encouraging an organizational philosophy
that values learning as part of one's job goes a long way toward making an organization more
competitive, adaptive, and versatile for innovation.

3.A.v. Expand the Use of Private Sector Productivity and Marketing Techniques

International development programs that use business and economic models - i.e. financial
services and private sector development projects - already make use of many of the innovation
processes discussed here as part of their technical work. They help clients to examine the value
chain, eliminate waste, improve productivity, and increase competitiveness. Perhaps the expertise
and experiences of the staff in these practices could be better leveraged to help Chemonics as a
whole.

How could more people within Chemonics - those who are working in an apparently unrelated
practice such as Agriculture or Health - learn about the private sector techniques used by their
colleagues? With the rise of social marketing and public-private partnerships, tools like advertising
and production incentives are no longer consider anathema to the arena of public works.
Transferring and adapting these methods to different fields may prove to be the new frontier in
development work.

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