How leading tech companies decide which ideas make the cut

Generating new ideas is what keeps companies – particularly those in the technology field – humming.

“We understand that tomorrow’s profits will not come from today’s products,” said Luke Mansfield, the director of Samsung Electronics’ innovation team in Europe.

With ideas flowing, how do leaders in innovation such as Samsung and IBM decide which new concepts are worth investing in?

Samsung is on the lookout for two key ingredients, Mansfield said.

The first ingredient: “Something that feels a little bit enchanted, magical; people love that,” he said.

The second ingredient: “Something that is genuinely useful.”

“If you have those two,” Mansfield said, “you have got a good product.”

Samsung spends a lot of time observing how its customers go about their day-to-day lives, which provides a keen sense of the kinds of products they would like, he said. 

Mansfield’s comments came during a session on innovation at London Business School’s Global Leadership Summit last month.

He was joined by Rashik Parmar, president of IBM’s Academy of Technology; Costas Markides, professor of strategy and entrepreneurship at London Business School; and Tom Hulme, design director at IDEO. Among the subjects discussed were the impact of radical disruptive innovations, the pros and cons of crowdsourcing, and ways to prevent ideas from getting lost in translation.

Early testing is crucial and increasingly easy

At IBM, the criteria used to select ideas with potential are “the client value, the do-ability of it, and ultimately what’s the potential value for us,” Parmar said.

The experts agreed that it is crucial to test out ideas as early as possible, whether through a controlled experiment or building a prototype, and observed that this is becoming easier as technology continues to reduce the cost of bringing ideas to life.

In this development and testing phase, it’s vital that concepts are given an adequate level of support and that decision-makers allow fair competition between ideas rather than protecting an existing technology or position at the expense of a future one.

IDEO, a design consultancy, encourages teams to challenge one another’s assumptions and develop a concept, Hulme said. When a group coalesces around an idea, it’s a great sign, whereas bad ideas often create inertia in the organisation and filter themselves out. The process is made more objective when ideas are not made proprietary or attached to an individual’s self-esteem, Hulme added.

Larger, less agile corporations may not be able to compete with start-ups in terms of speed of innovation, but there is still a role for them to play in disruptive innovations. Discovery and scaling up are both important parts of the process, Markides said, and while many such discoveries are made by small start-ups, they are less able to achieve scale than larger firms, so a partnership may be of mutual benefit.

—Samantha White (swhite@aicpa.org) is a CGMA Magazine senior editor.