Ericsson’s Innova System › This is Design Thinking!

How to evoke employee’s entrepreneurial spirit.

We talked with Erik Chang from Ericsson to learn about their multilayer approach to innovation, which they call Innova. Innova aims at setting free an entrepreneurial spirit amongst Ericsson’s employees. Now, after its third year, the Innova platform has 6.000 users. More than 4.000 ideas were submitted to the platform, with more than 450 ideas receiving first round funding and 45 receiving second round funding. We were interested in how design thinking contributes to the Innova system. One of the most interesting things we found was that Innova doesn’t use design thinking as a first step to develop initial ideas. Instead, they apply design thinking to assess existing ideas and turn them into marketable concepts.

Instant messaging (IM) services like Facebook’s “WhatsApp”, Microsoft’s “Skype”, or “WeChat” (market leader in east Asia) grow at rates that were unseen before. In September 2015 WhatsApp registered over 900 million monthly active users. This means they were processing 50% more messages each day than the world’s combined mobile text message traffic. These impressive numbers create turbulence in the market segments of traditional telecom operators and eventually in the entire economy. One of the biggest providers of infrastructure, software and services for telecom operators is Ericsson. Some 40 percent of the global mobile traffic runs through networks provided by the Swedish corporation.

Innova: Ericsson’s Multilayer Innovation System

With these market changes in mind, Ericsson’s CEO Hans Vastberg introduced in 2010 a company wide transformational initiative to enter new market segments in the ICT sector before 2020. Now, after the first half of this initiative, we were interested in the steps Ericsson took, and in particular, if and how their actions are related to design thinking. To find answers, we got the opportunity to speak with Erik Chang. Erik is head of strategy & operational development in Ericsson North East Asia R&D. First, he introduced us to their systemic approach to innovation, which they call Innova, an internal program, which got inspired by the way venture capital investments are run. It essentially functions like a startup incubator within the company. Interestingly, the initiative itself began like a startup.

“It was one unit introducing design thinking in their organizational structure and it became an innovation practice. A practice that they now share with the whole company.”

Erik Chang

Initially, Innova was developed in and for product development units in San Jose. A first test run went well and got buy-in from management, which led to the internal investment the Innova team needed. Today the Innova system consists of several elements, which are:

VC funding model
the innova squad -a team of internal innovation consultants
an incubation process to advance ideas into products
an innovation ecosystem to collaborate with partners and universities
“Innova method”, which is based on design thinking.

Now, after its third year, the platform holds 6.000 users, more than 4.000 ideas were submitted, with more than 450 ideas receiving first round funding and another 45, receiving second round funding. From the 4.000 ideas submitted, five ideas advanced to real products so far.

08 ericsson innovation challenge_2013_06_18_milan_iiba _ italy_chapter_innova_stefano chinnici_xpub from IIBA-IT

How does design thinking contribute to Innova?

Once we learned about Innova, we were interested to learn about the role of design thinking. Due to some initial consulting work they did with IDEO and their focus on customer needs, we can clearly see the influence of design thinking on the Innova system.

First off, the process of the first funding round is short – only 40 hours total – and is all about experimentation and validating the initial assumptions regarding customer behavior. Once the funding is set up, the project gets support from the Innova squad, a team whose methodology explicitly mentions design thinking. This squad supports the people whose ideas were chosen for six to twelve weeks, after the second round of funding. The main goal of the squad is to get ideas on the road. To get to this point, the squad members assemble multidisciplinary teams, establish connections to company partners and customers, and organize workshops. The methodological foundation for the workshops and coaching is their own Innova method, which incorporates design thinking principles and the process model.

Having examined the Innova system, our most surprising insight was that design thinking explicitly comes into play after an idea or a set of ideas has been evaluated as promising. In this case, the Innova method, which is basically derived from design thinking, is applied to amplify already existing ideas and transform them into marketable concepts. For people familiar with design thinking, this might sound counter-intuitive, since the methodology is usually associated with finding the right problem first. However, in this case Ericsson consciously chose to use design thinking to pursue existing ideas. We think that this unusual constellation can be seen as a statement itself. The point of Innova’s incubation process is to take further and realize what employees have formulated so far. Particularly learnings regarding team- and team-coach relations, which stem from design thinking education, are contributing here. Erik also told us that it is difficult for R&D employees to align design thinking with their current idea generation practice. Although design thinking workshops are in general perceived as exciting and insightful, many R&D employees were hesitant when it came to confronting customers with low-definition prototypes. This is another reason, why design thinking activities within the Innova system aim towards idea realization rather than early concept generation.

Our interpretation of this case is that companies apply design thinking different and not as “holistic” as it is taught at (d-)schools. While some aspects (e.g. confronting customers with low-definition prototypes) do not fit into the context in which the company operates, other aspects (e.g. knowledge in the field of team- and team-coach relations) are used to treat a specific part within a bigger innovation process. Although the relation and interplay of different design thinking elements (e.g. Place – Process – People) is recognized by practitioners in companies (the setup of the Innova system reflects that) the term Design thinking leaves enough space for interpretation and selection of standalone “sub-terms”.

This article was co-authored by Shui Linlin (Communication University of China in Beijing, China) and Axel Menning (HPI School of Design Thinking, Potsdam, Germany)

About our Interview-Partner Erik Chang

Erik Chang, Head of Strategy & Operational Development, Ericsson North East Asia R&D

Erik is head of strategy & operational development in Ericsson North East Asia R&D. He is a corporate entrepreneur with solid experience in technological and product innovations, innovation management system, and coach innovation projects in R&D, service and HR organization. He is instructor in Ericsson Academy and senior editor of www.innovationmanagment.se.

His research interests include multi-generation diffusion model, innovation capability and new technology development combing business model innovations.

Erik Chang received his Bachelor of Science degree from TaTung Institute of Technology, and M.B.A. degree from National Chiao Tung University in Taiwan. He is studying his PhD degree in Nankai University in China. He is certified innovation coach inside Ericsson and is also a certified Innovative Thinking System™ (ITS) trainer. Erik comes from Taiwan and currently lives in Beijing, China.