To Boost Internal Innovation, Ericsson Thinks Inside The Boxes

IdeaBoxes, that is. Here's how Hans Sandholt's system for organizing ideas could bring faster (and cheaper!) mobile phones—among other great products—to all of us.

The central paradox of the wireless network industry is that super-fast data connections take lots of back-end hardware that must be slowly, painstakingly installed.

Take LTE, the transmission system behind so-called 4G, the current gold standard of seamless high-speed data transfers: Since the new system started rolling in 2010, most of the network-building giants behind that coverage grid have had to physically install new hardware, replacing microwave equipment around the country to make sure a new radio interface system syncs properly. Part of the reason your mobile phone data rates are so pricy? It costs everyone a lot of time, money, and manpower to make stuff faster.

Magnus Karlsson

That doesn’t just frustrate clients; it bugs computer engineers who hate gross inefficiency, too. So one morning Hans Sandholt, a systems manager at Ericsson, got tired of just groaning about the problem over coffee with his co-workers and decided to do something about it. His cool idea: Create a series of software upgrades that could be installed in the microwave equipment in the field to essentially reprogram it rather than replace it as the broadcast technology changes. The result: Way less swapping hardware. "You can have a product that can evolve while keeping it part of the system," Sandholt says.

Unlocking IdeaBoxes

Sandholt certainly worked at a place that would welcome that change. Ericsson, the Sweden-based communications technology company, offers services, software, and infrastructure for major telecom companies and other industries. Still, he faced his own managerial paradox: Technically, he was mere middle management, that central purgatory where many great ideas at companies often get overlooked.

Thankfully, Ericsson has created its own internal innovation pipeline precisely for once marginalized people like Sandholt to get their own concepts noticed and developed. In 2008, the company started IdeaBoxes, an online idea sharing platform that is used for all types of ideas, from game-changing to incremental. Employees can post their ideas to an online forum to solicit peer feedback and votes of approval. The best way to think of IdeaBoxes is as dedicated brainstorming space. First, managers are encouraged to start topics relating the places where they spot inefficiencies and, in many cases, suggest a broad way that can be refined. Each box creator then becomes the manager of their own thread, tinkering with the suggestions that come in from others until they’ve built their rough idea into a more polished finished concept that might attract attention.

Once a box is created, dozens and sometimes hundreds of employees can weigh in with their own ideas. An idea that might help more than one department can always be placed in more than one box. Employees can also find existing boxes to send their suggestions to using keyword matching, which also helps departments around the world see how others are tackling similar issues. Most importantly, everyone gets credit for their contributions. Managers who like suggestions are encouraged to publically flag them with notes saying what was claimed for interest, action, or implementation.

"We said, 'Let’s create a system better than the traditional suggestion box,'" says Magnus Karlsson, director of new business development and innovation in the company’s Group Function Strategy department. Rather than having employees just push raw problems to higher-ups, they can now pull together to better solve them—and figure out who might take the lead in that action. As Karlsson puts it: "We wanted to let ideas travel freely throughout the different silos of the organization."

Today, about a quarter of Ericsson’s 100,000 person workforce uses the system, weighing in on everything from standalone products and services, to tweaks of existing processes, business models, or ways of working. The current platform has about 200 active boxes. It’s helped generate 60,000 comments on roughly 30,000 ideas. One out of every 30 ideas generally proves good enough to get implemented.

The "Innova" Innovation

Many IdeaBoxes fixes are small, simple, and cost nothing. But after starting the forum, Ericsson quickly realized that they lacked a key component—funding—to make many of their more pie-in-the-sky ideas happen. The answer: the Innova box, a space that also functions as their own venture capital circuit. There, a team of internal funders can award employees both grant money and extra time to pursue very promising projects.

Innova was founded in 2010 and exists mostly for concepts that can be commercialized. While the company won’t disclose exact numbers, funding varies and is provided by the division the product would fall into. Sandholt’s idea, for instance, would fall into the company’s Development Unit IP & Broadband Division, which allocated 1% of their overall budget to Innova development. That’s petty cash to the publicly valued $34 billion company.

In September 2010, Sandholt submitted his LTE software upgrade idea to the Innova box, cataloged under the jargon-rich headline: "Phase sync over legacy modems using HCC channels rendering solution immune to traffic load." It was tagged with a series of equally programmer-specific search words (1PPS, LTE, FDD, etc.). By January 2011, it had been viewed 286 times and received several comments that were helpful enough for Sandholt to receive his first Innova award: a week off to finalize the idea and create a formal product pitch. He would become the entrepreneur of his own idea.

At Innova, initial awards are often quite cheap—typically that week off and, in some cases up to $500 of seed money. From there, future project funding is secured by pitching the VC team personally. To date, about one in 10 submissions—roughly 100 per year—get funded. After getting his initial idea green-lit, Sandholt went on to receive two more rounds of Innova funding, first to finance a trip to China, where he collaborated with manufacturers to create a prototype, and then to support a trip to Hungary, where he worked alongside another company development team on how to best integrate it.

The Incentive To Innovate

Most innovators don’t receive raises or bonuses for creating new products for the company, but interactions on IdeaBox do pay off in other ways. Traditionally, each box creator hands out virtual medals—that’s gold, silver, or bronze—to the collaborators who help best troubleshoot solutions. That gives idea creators visibility, which can help to build their reputation as innovators internally. Box managers are also allowed to incentivize their idea exchanges (some offer their own gift certificates for great suggestions).

Each IdeaBoxes participant also accrues points, which become important around review time. "One of the discussions that managers have with employees is around innovation," Karlsson says. "And since there is a common system across the company it’s easy to get the metrics to see how much the person is contributing."

In December, Sandholt’s software solution rolled out to 30,000 clients worldwide. That should help the company save millions in hardware creation and installs for LTE upgrades—and will probably save millions more as the general concept gets applied to future technologies.

Sandholt is now back at his old job. While he hasn’t submitted any ideas recently, he’s excited to help others refine their ideas and earn clout from that. In the meantime, his concept was recently named the "Best Idea" at the Ericsson Innova Awards held in Silicon Valley, which recognizes people spurring innovation.

For him, that’s a validation about what it means to have a breakthrough in the modern age. "A misconception that so many people have is that you need to have a new invention to get noticed. But this isn’t an invention, it’s an innovation, an evolvement of things we already have," he says.

Ericsson isn’t the only beneficiary. Long term, such thinking could mean even faster connections and even cheaper cell phone bills for everyone.

[Light bulbs Image: Arthur Domagala via Shutterstock]

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2 Comments

  • Victor Newman

    Interesting article. Whilst Idea Boxes is a great improvement on traditional suggestion-schemes, it fails to address the real issue which is the importance of having an innovation strategy (for creating new market value), in the first place to act as a pull to ideas. In other words, you can be much more innovative if you know what you need to be innovative about in the first place. 

  • Mark Jefford-Baker

    Well, having a suggestion-scheme presupposes that you know what to do with it. In my experience I got most out of 'boxes' when we had a clear target area. 'Boxes' wouldn't (shouldn't) exclude other inputs