危 wēi  danger

Shell, the multinational petroleum company, was listed as the world’s largest corporation by Fortune in 2009.  Its revenues and profit in 2008 were $458bn and $26bn respectively, making it one of the most profitable companies in the world.  However, Shell is highly aware that its business is being disrupted by new energy sources and its leadership recognizes the need to innovate.  Shell’s challenge has been identifying the right ideas – in part because of its success the company is highly risk-averse and slow to change.  The Head of R&D for the Exploration and Research division wanted to devote 10% of his budget to projects with ‘game-changing potential’ but was conscious that he and his senior team were not best placed to select the ‘right’ ideas, how could he ensure that his organization didn’t revert to business as usual?

机 jī opportunity

Instead of relying on senior management, Shell harnessed some of its more creative thinkers from lower down the ranks. Shell brought together a small but eclectic group of mid-level employees who were known to be creative.  That team helped design a clear process to fund opportunities that the senior management might have rejected for being too disruptive.  Firstly, the team peer reviewed potential projects – successful ideas were then sent to an “innovation lab” where teams helped each other build out their ideas. Projects that survived the innovation lab moved into the “action lab” in which the goal was not to evaluate idea but to design an experiment to test the idea in a risk-controlled, real-world setting.   Once an approach to test the hypotheses was designed the project received seed funding, subject to results subsequent rounds of funding were available. Since the programme’s creation, about 150 ideas from a total of 1,500 have turned into successful projects – just over one a month on average – in fields as diverse as developing oil and gas wells and alternative fuels. Game Changer has also recently begun soliciting ideas from the public.

How About?

• Creating an internal marketplace for ideas inside your company?
• Formalising and communicating a process for seed funding ideas using peer review?
• Designing experiments to test the ideas fast and cheap?

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