By Mikkel B. Rasmussen, August 20, 2013
On Friday, Quartz reported that Google’s famous “20% time” work-on-whatever-you-want policy is as good as dead. According to employees, the upper management at Google has decided to dismantle the policy, which is probably the most famous and most copied innovation strategy in the world.
The demise of this symbol of an innovative business policy disappointed many people in the progressive part of the software industry, and put shock waves through the blogosphere—but it might actually be good news for companies that are trying to become more innovative.
While 20% time might have worked well at Google, it is doubtful whether it would work outside Mountain View, California for a number of reasons:
1. The 20% rule is not really a rule—it’s an attitude
According to sources at Google, employees don’t actually register their time, so how do you or your manager know you spend 20% and not 18%? As reported by several former Google employees, the 20% rule was not really controlled or managed; it was much more a mindset of allowing people to work on non-planned projects. Making this mindset instrumental and rule-based will probably not help you if you don’t already share the entrepreneurial attitude of Google.
2. The results are debatable
Some sources claim that all of Google’s innovations came from the 20% rule; others report it is much less; and many claim that it’s not really possible to find out. In 2007, Google ran a commercial where it claimed that Gmail was invented in the 20% space. Shortly after, Gmail’s inventor Paul Buchheit disagreed: “It wasn’t a 20% project—it was my regular project. It predates the 20%-time rule, in fact.”
3. It might get you stuck
There is a big difference between having a great idea and building that great idea into a successful launch. It has been documented in several studies that the majority of companies, across all industries, have very low hit rates in getting from ideas to successful launches. The reason is often so-called “belly problems”: too many ideas stuck in the middle between idea generation and execution. Belly problems can take away a lot of resources in the R&D budget, and lead to a complete stall. In one medical device company I recently met, 85% of the R&D budget was used on projects that had been stuck in the pipeline for more than three years. Ironically, the company had implemented its own version of the Google 20% scheme called “Innovation Days.” This had let to a dramatic increase in the volume of ideas but the company simply didn’t have the execution power to deal with all these ideas.
4. It is very, very expensive
Google hasn’t published numbers on the size of investment on the 20% scheme, but if all the employees actually spend 20% of their time on their own projects—which is doubtful—a quick estimate would be an investment of more than half a billion dollars a year. In companies where labor costs take up the majority of the total costs, the 20% scheme will lead to a dramatic drop in profitability. Of course that will change if the ideas generated can increase your sales dramatically. But then you need to ask yourself the question: Could other types of initiatives give better results for less investment?
5. It can blind you from seeing what’s next
If you spend 10-15% of your total resources on harvesting your own employees’ ideas, there are serious risks that all your ideas are tinged with the internal culture of the company. Over time this situation can create a closed system of navel-gazing, which will blind your sense of what matters to your customers and prevent you from adapting your innovation culture to meet your customers’ needs. Signs of a navel-gazing culture are arrogance, a tendency to jump on popular trends, and a growing need to spend money on persuading customers that your offerings are great.
Even though it is doubtful that Google’s 20% scheme will work in other companies, its myth persists. The 20% scheme is one of the most widespread and persistent symbols in innovation circles around the world. It works almost like an old folk tale that travels from person to person, until everybody believes it to be true. Like all good folk tales, it mirrors a much bigger belief: There is a simple trick that can transform your company into a creative powerhouse. This trick is called liberation. If you give people enough freedom to do whatever they want, their ideas will automatically flourish and find wonderful things. Maybe not all of the ideas are great, but out of 100 ideas, there might be one that will completely change the game.
This idea of liberation of ideas has many variations beyond the 20% scheme: Hack Days, Innovation Camps, Wild Idea Days, Blue Sky Sessions. These events are mostly harmless in themselves. The problem is when the idea of liberation becomes a substitute for actually leading innovation.
What? Leading innovation?
Yes, it can be done. In many ways it is the opposite of letting people loose on whatever project they want. When LEGO went through a big crisis in 2004, the management spent time understanding what was happening to the culture of play. This gave them deep insight into what LEGO should stand for in the future, and a clear direction for what kinds of innovation the company needed. When Adidas introduced the lightest soccer shoe ever in 2010, it came out of a decision that “lightweight” was the focus of innovation in the soccer category. When Samsung introduced the world’s best-selling television screen in 2005, it was based on an insight that TVs were becoming a piece of furniture; that insight became the direction for its engineers and designers.
Setting a strong direction for innovation doesn’t mean that the ideas of employees are no longer important. On the contrary: For most people, having a puzzle to work on and a perspective against which to test their thinking ignites their imagination, gives them an engine for their gasoline, and frees them up to be more innovative.
Now that the 20% scheme is officially declared dead, it might be a good time to turn attention to how you actually lead innovation.
This article originally appeared in Quartz.