...on the Netflix Prize

Here's a great article from Rick Wartzman in Business Week regarding the Netflix prize.  Rick praises Netflix for going outside the company for innovation.  And then a Peter Drucker quote that really caught my attention:

"For whether your business is online or not, Drucker's maxim holds true: Outside "is where the results are. Inside an organization, there are only cost centers." Which brings us to the third principle showcased by Netflix: a bold willingness to open up in general to the outside."

Not to take Drucker or Wartzman out of context, but I think the key phrase is "open up."  Imaginatik's customers have found that when they implement a strategy to listen to a broad group of informed employees, customers and partners, some very good thinking comes out.  And when, like CSC, they focus a select group of informed, empowered employees on a single goal, they can have massive results.

In the Netflix case, they really wanted a highly complex algorithm to solve a specific business challenge -- to improve recommendations and thereby improve customer satisfaction, maintain loyalty etc.  Netflix wisely determined that they did not have enough high-end computing talent inside to focus on the big challenge they were trying to solve.

So, are challenges good?  Yes.  Are big prizes good ways to motivate the development of new thinking?  Of course.  More importantly, opening up to new thinking is the greatest good.   Corporations, Government groups and NGOs have fantastic intellectual capital available inside and outside of their organizations.  The question innovative leaders need to ask themselves is, which tool from my innovation management toolkit should I reach for to solve which problem?

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