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“Silicon Valley-Style” - Spreading Grassroots Silicon Valley-style Innovation in an Established Company with Ericsson Innova
Ericsson Innova exports Silicon Valley-style innovation to enable 20,000 people in 10 countries. Inspired by the Venture Capital model, employees are able to submit ideas and get funding to turn their ideas into products. Design thinking methods are used to achieve repeatable innovation.
Ericsson is headquartered in Sweden and has 100,000 employees in 180 countries. The company is rooted in the telecom industry with over 100 years of history. Ericsson provides networks that enable fixed and mobile internet to operators across the world.
The IP and Broadband development unit, responsible for starting Ericsson Innova, is headquartered in Silicon Valley and has 6,000 people across North America, Europe and Asia.
Ericsson has been an innovative company pioneering technologies such as mobile telephony with GSM, and mobile broadband with 3G and more recently LTE. In 2010 the telecom industry was undergoing a revolution. Products such as the iPhone and later the Android shook up and changed the industry forever. What had become a relatively stable field in the era of voice communication was transformed overnight with the explosion of the mobile internet. This new union of telecommunication and the internet represented a merge of technologies and a collision of cultures with a hot-spot in Silicon Valley. The speed of the internet industry with emerging new applications and services demanded that the telecom industry, and Ericsson in particular, reconsider ways of working to be more responsive, faster paced, and more innovative across the board.
I would like to share my personal story of joining Ericsson and starting the Ericsson Innova program.
In March 2010 I joined Ericsson as Head of Innovation for the Development Unit IP and Broadband headquartered in Silicon Valley. After having held jobs in engineering and managing businesses, this was a new, and a very welcomed challenge. The division head made her goals and objectives very clear in one welcoming sentence: “Please make 6,000 people across the world more innovative,” so that quickly became my job description.
After extensive reading, research, discussing with the team of people who would later become the Innova Core Team, staring at the wall, and talking to people inside and outside the company, the main idea emerged: Silicon Valley is very innovative. What makes that possible? Well, it’s a place where two people can set up shop in a garage and receive a bit of financing to work on their idea. If things progress well, they may be able to secure more funding and continue on. Many people don’t make it, but a few come up with the next big thing. Those who don’t make it, seem to still walk tall through the streets of Silicon Valley thinking about what to do next (it is not seen as a failure, rather people are seen as entrepreneurs.)
Culturally and procedurally, there were several things we liked about this: a culture that encourages innovation and risk taking, failure as part of the process, fast iteration and evolution of ideas. Also, to a certain degree, people understand what Silicon Valley, VC’s and startups are, so it appeared to be a model people could relate to.
So our idea was: “Let’s bring Silicon Valley-style Innovation inside Ericsson”. If an individual or a team has an idea, they are able to pitch it, or submit it, and the VC Panel will decide which ideas to fund. We standardized the first round of funding as “You will receive one week of time to work on your project during business hours and a VISA card with $500 to spend on whatever you need for your project.” For the second round of funding, we estimated the budget to support six months to work on their project plus equipment.
In May 2010, we were ready to go back to the division head to propose our plan to make 6,000 people across the world more innovative. Our internal VC funding model would cost less than 1% of the department’s budget. Having considered Google’s 20%, or other alternatives, we felt confident about pitching a “1%” cost. At this meeting the plan was approved. We also had a healthy, and good to have, discussion about how serious we were and whether we were willing to spend 1% on this initiative.
With the basics agreed upon, we decided to launch the innovation initiative in September 2010. It was a crazy and aggressive deadline, but it became a great forcing function which focused the team on getting things in place. We launched Ericsson Innova on September 8, 2010 in Silicon Valley. We had the minimum in place: a website explaining the process to submit ideas and how people could get funding, the Ericsson IdeaBox tool for idea submission and getting comments on your ideas, the Innova Core Team to review the ideas and make funding decisions, a communications plan, and the willingness to go on a roadshow and pitch innovation in Sweden, Italy and China during the month of October. During the roadshow we indicated that “this is a starting point for innovation” and “expect things will change”, which set a good tone. Overall, we believe it was a good decision to launch the program when we did and we learned a lot along the way and continued to evolve the program as we ran the initiative.
In November 2010, two guys in Milan, Italy received the first VISA card and worked on their experimentation week. Everybody in the Milan office was positively surprised and paying attention (people actually working on their idea was the best way to advertise and raise awareness for the program).
By December 2010, three months after the launch, we had about 100 ideas submitted and 15 funded for the first round.
In April 2011 we celebrated our first Innova Awards recognizing ideas and people who model the behaviors that encourage innovation. People came to Silicon Valley and were recognized by the division head and the company CTO. The Innova Awards have become a yearly tradition.
2011 was a year of growth for Innova. The number of ideas grew significantly to 1,000 per year, we added a program manager, and delegated first round of funding to local teams lead by Innova Core Team members, while the core team moved to focus on second round funding and beyond. The initiative continued to evolve, but the spirit of our initial principles in 2010 has been maintained by the Innova Core Team.
During 2011 two other divisions of Ericsson approached us to implement Innova in their groups. We offered them our tools and templates, which they were able to use and start running in three months. Each division has now its own team of people managing its Innova funnel of ideas and making funding decisions independently while they all use the same tools and methods to enable innovation. As a result, Ericsson Innova runs now in three divisions, reaching 20,000 people in ten countries across the company.
Throughout 2011, happy with the progress but not willing to sit still, we decided to explore ways to better enable our teams and also tackle areas of directed innovation. Motivated by the book “Change by Design” by Tim Brown, we visited IDEO and learned how their method, Design Thinking, was being applied to projects ranging from kitchen utensils to hotel experiences. We engaged in two projects with them, which not only yielded results directly, but gave us the sense that applying Design Thinking for consistent innovation was feasible.
In September 2011 we launched Innova 2.0. Since then the Innova Program has two parts:
1) The Innova VC Funding model which enables individuals across the company to innovate
2) The Innova Squad, a team that tackles directed innovation opportunities using design thinking methods, and spreads these methods across the organization.
Our experience with Design Thinking and the Innova Squad after just one year has been positive and well received across the company. We now have teams in Silicon Valley, Sweden and Italy. After a year, the Innova Squad has tackled innovation in five product areas, and touched 5% of our people with their methods and tools. We have learned a lot about this emerging discipline and continue to consult across the organization. The method has provided us with a deeper connection with customers, the ability to understand the true customer needs and the meaningful problems to solve, and we have engaged in an iterative path of development through fast prototyping for accelerated learning.
We would like to share the following two success stories since the launch of Ericsson Innova
The story of Stefano and Paolo – From Early Failure to Breakthrough Results
Stefano and Paolo, two developers in Milan, Italy, found themselves blocked in their development work due to hardware simulations that took too long to complete. Faced with this challenge, they proposed their idea to accelerate system simulations by a factor of 10. They received first round funding from Innova and actively spent the week to test their hypothesis.
During that week they obtained the software tools they needed and were able to run simulations. To their disappointment, Stefano and Paolo only achieved 2x performance improvement instead of the expected 10x figure. From a purely practical point of view, their idea was a failure.
But to their surprise, Stefano and Paolo were given the Innova Award for “Best Experimentation Week” for what they had learned and achieved. After being recognized on stage in Silicon Valley by the head of the division, and the company CTO, the two developers went back to Italy with a mix of shame and pride, but lots of enthusiasm. They quickly proposed a new plan for second round of funding to Innova.
After three months of working with their idea, Stefano and Paolo achieved, and in some cases exceeded, their initial target. A simulation that used to take 40 days to complete could now be done overnight. After their initial failure, Stefano and Paolo’s breakthrough result allowed reducing the overall hardware development time by 20%, and their idea became an internal product used for hardware simulation at Ericsson.
The Story of Hans – From Innova Idea to Product Shipping to Customers
Hans, Systems Manager in Gothenburg, Sweden learned that our customers were preoccupied with the fact that they would have to replace their microwave hardware in order to support the new mobile 4G LTE standard. This motivated Hans to start thinking about possible ways of supporting LTE on existing hardware. During a discussion over coffee, Hans came up with an idea to implement the needed support in software, and offer a software upgrade to be applied to existing customer’s equipment. But the idea was risky, and the group was already down a path of providing this support in hardware, which made it hard to tackle in the normal course of business. Hans found the support he needed in the Innova program. With Innova funding, Hans was able to test his assumptions, de-risk and evolve the idea, and work with teams in China and Hungary to do development and testing. In December 2012 Hans’ idea became a product that ships to customers. Ericsson plans to sell 30,000 copies a year of this software upgrade.
Legitimize Innovation - One of the first challenges to overcome in a big company is to make innovation legitimate, otherwise people feel they have to hide to innovate. We achieved that by obtaining clear management support, a budget, and by creating a project number for people to bill their innovation time to. From the company point of view, we are a valid project. Within this context we are able to hand out VISA cards to people overnight. In a very real sense, we have given people permission to innovate.
Don’t Try to Change the Whole Company - One of the good things we did was not to challenge the status quo directly, as that can be a trigger for “company antibodies”. By creating a separate structure with different rules for innovation we basically said “99% of our effort is working great”, now we just want to encourage innovation with 1% for which we have a different set of rules. This has allowed us to encourage a different set of behaviors: understanding the right problems to go solve through customer empathy, rapid prototyping, failing early to learn sooner, course correcting, collaborating. People seem to accept that we have a different set of rules to encourage innovation for 1% of the collective effort.
Pick your Battles – Many things we tried to do set off corporate alarms, and each time we needed to weigh which battles to fight: VISA cards for idea creators did not go well with accounting but we got it done. That simple metaphor was important to us. Email addresses have a given structure, but we were able to get the one we wanted: email@example.com. The same is true with internal URLs; we wanted internal.ericsson.com/innova and we got it. We chose to fight those battles. On the other hand, we proposed the use of Yammer as a social networking tool, but unfortunately it sits outside the firewall and therefore makes security and IT nervous, so we eventually de-emphasized it.
After two years of running Ericsson Innova VC Funding, the initiative has gotten traction. We have received more than 2,000 ideas, have funded more than 200 in the first round, more than 20 for multiple rounds, and the first four are on the way to becoming products or have become products. The value of the first three ideas becoming products we estimate at $20 million in software revenue and productivity improvements representing a greater than 5 ROI. We also have a good flow of ideas in the pipeline.
Outside these tangible returns, Innova has resulted in an improved innovation environment, and has even become a recruiting and retention tool. I have received emails from people in India saying they have joined Ericsson because of Innova, and have had a similar experience with our team in China.
The Innova Squad, the team that spreads and applies design thinking methods to innovation opportunities, is only a year old, but already is stewarding one of its projects through its initial pilot stage, and is preparing two for pilot in the new year.
Innova has given us the opportunity to encourage new behaviors. Engineers often approach us with an idea and only a single long path to implementation. We are able to propose new ways of thinking about the problem, to get customer input, to fast prototype early solutions, to experiment, to fail early and therefore to increase the chances of success.
1. Just Start – We could have chosen to do much more planning and start the initiative much later. The reality is that it took many ideas to come in, and many funding decisions, to be able to develop general guidelines for funding. We think it’s best to develop guidelines and processes out of generalizing the individual cases we work on.
2. Don’t Corner Yourself – It’s important to model the behavior we ask the innovators to adopt. When we launched the initiative we acknowledged the fact that it may change. It’s best to present things as “not final”. Use words such as “pilot” or “experiment” to give you the freedom to modify the initiative as you learn. That gives the innovators permission to do the same when they participate.
3. Expect to be Surprised – We thought we were catering to the needs of our Silicon Valley team by creating a VC model. Two years later, 90% of the ideas funded come from outside Silicon Valley. In reality we exported Silicon Valley-style innovation to the rest of Ericsson.
4. Tell Stories – Numbers alone don’t do it. Tell the stories of innovation to the teams. These will inspire them to be “part of the movement.”
5. Push the Boundaries (Slightly) – Each organization is different. What works for one organization may not work for your organization. Like a beginning skier who may be ready to go to just the next gradient of slope, push your organization gently based on where they are today. One size won’t fit all.
6. Communications is Key – Starting an innovation initiative is similar to introducing a product to market. You need to evangelize, advertise, generate demand, and continue to do that constantly. You also have to keep it changing and fresh. This is a big challenge.
7. Appeal to People’s Intrinsic Motivators – It was our choice not to offer “a pot of money.” This has therefore attracted people who want to innovate because they are passionate about their ideas and want to see them through. We are happy with that choice.
8. It’s a Marathon, not a Sprint – If you are considering launching an innovation initiative, be prepared for the long haul. The launch will bring a lot of excitement, but there will be lots of hard work ahead, and getting traction and getting results will have ups and downs.
The Innova Core team with 12 people from the US, Canada, Sweden, Italy, India and China, who supported us part time in addition to their day job, have tirelessly worked to make this possible. Each of them have led a local team of people who represented the frontline of support for the innovators, and since the second year they were directly involved in first round of funding decisions. The Innova Squad, a team of 8 people in Silicon Valley, Sweden and Italy, has embarked in the challenge of applying Design Thinking at Ericsson, and it’s blazing the trail for the rest of the team to follow. A number of people have actively participated in the Innova program giving it its own life and character. Some of them get recognized through our annual Innova Awards program that recognizes the people who bring the ideas and behaviors we want to see more of.
IdeaBoxes, the tool we use for idea submission, has been developed by the Ericsson corporate innovation group under the leadership of Magnus Karlsson.
I would like to acknowledge my manager Niklas Carlheim-Muller and our division head Maya Strelar-Migotti. Niklas has challenged my thinking every step of the way in our many discussions for the past two years. His understanding of how to get traction in a company like Ericsson has been an invaluable element in the program. Maya has been our leader with the courage and vision to request, sponsor, and continuously support this initiative. Without their support and sponsorship Ericsson Innova would not have happened.