How Organizations can Spawn Innovative Ideas and Create Business Value

Why do people organize themselves into social networks? Although social media networks are a recent phenomena, social networks have been around since the beginning of human society. Scientists continue to debate whether social networking is nature or nurture; but, one basic belief holds true, people join social networks because the benefits of joining outweigh the risks.

Perhaps individuals benefit from social networks, because social networks satisfy a basic human need.  Abraham Maslow proposed a hierarchy of human needs in his 1943 paper.  His framework is still used as a foundation for human behavior and motivation.  Maslow asserted that after fulfilling basic physical needs (i.e. food, shelter and security) and basic security needs (i.e. safety, health, employment) people seek belonging through friendship, intimacy and family.

Maslow’s Hierarchy of Human Needs

Nicholas Christakis, a sociologist and epidemiologist at Yale University, studies social network structures and properties. His research suggests the connections between individuals, not just the collection of individuals,  give a social network its characteristics.  In other words, how we are connected affects how information, ideas, emotions, behaviors, and norms disseminate through a social network.

Two popular movies, Castaway and The Internship, illustrate social network extremes and Maslow’s hierarchy of human needs.  In Castaway, Tom Hanks plays Chuck Noland, a FedEx executive, who is marooned on a deserted island with only his wits to physically and emotionally survive.  In The Internship, Vince Vaughn and Owen Wilson play Billy and Nick, two unemployed salesmen who use their life experiences to help their team land jobs at Google.

In both movies, the characters seek belonging.  In the absence of human contact, Chuck Noland befriends Wilson, an imaginary friend.  After a rough start, Billy and Nick eventually bond with their teammates Lyle, Neha, Stuart and Yo-Yo.  Since The Internship takes place in a hyper-connected, high tech environment, its story line is able to further explore the connections between the characters and provide insights into Google’s corporate culture.

Google portrays themselves as a company that works towards changing the world through teamwork and creative engagement [Kuntze 2010].  Googlers (the name Google gives its employees) work in a college campus like setting, and are encouraged to connect with other Googlers.  Nooglers (new Googlers) are placed in practice based learning environments with cognitive apprenticeships [Johnson 2010].  The resulting connections provide Googlers diverse social networks, which further accelerates the flow of information, ideas, emotions, behaviors, and norms through their social networks.  Ultimately, these unique connections helped Billy, Nick and their team gain valuable insights and win the internship challenge.

Abraham Maslow’s observed that individuals seek intimacy through friendships, and Nicholas Christakis observed that the social network connections influence the flow of idea, norms and behaviors. Google has integrated these two ideas in their management philosophy and has created a unique environment that fosters collaboration and creativity.

Organizations who emulate Google and encourage, friendly, diverse employee connections, will ultimately spawn more innovative ideas and create more business value.

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References:

Johnson, M. a. (2010). Learning to be a programmer in a complex organization: A case study on practice‐based learning during the onboarding process at Google. Journal of Workplace Learning, 180-194.

Kuntze, R. a. (2010). Google: Searching for Value. Journal of Case Research in Business and Economics , 1-10.

How to Create and Capture Value

What is value? Something has value, if we need it, want it or like it.  But how do you create something people need, want and like?

Companies create value through great products by first asking a simple question; is the product useful? For example, when Google considers a new company acquisition, they ask whether the company’s products pass the “toothbrush test”: (1) Is it something customers use everyday?, (2) Is it part of their routine? and (3) Can it make a difference in their lives? Although different companies may define value in different ways, the toothbrush test eloquently describes the essence of creating value.

Companies also need to generate a return on investments.  Therefore, not only do they need to create value, they also need to capture value; in other words, they need to maximize profits.  Michael Jacobides, Associate Professor of Strategy and Entrepreneurship at London Business School, believes value capture is based on two principles: (1) Relative Differentiability , and (2) Relative Replaceability.

Relative Differentiability

Compared to your competitor’s product, does your product have features or characteristics that compel customers to pay more?  if it does, then your product has relative differentiability.  For example, if your product has outstanding quality, tech support and energy efficiency, and your customers value these characteristics the most, then your company will likely capture more market value.

Relative Replaceability

Is your product easily replaced with a competitor’s product, or is your product irreplaceable? If it is irreplaceable (or customers believe it is irreplaceable), then your company will likely capture more market value. For example, customers believe Apple provides an irreplaceable and irresistible customer experience. As a result, Apple is very profitable.

Next time you and your company are brain storming new product ideas, remember to ask:

• Does this product pass the “toothbrush” test?
• Does it have something(s) that will compel customers to pay more?
• How can you convince customers that it is irreplaceable?

Good luck!  Go create the next big thing!