Microsoft tries Orchestrated Freedom and unleashes an innovation army

Microsoft is due to release their hope for recovering credibility in the smartphone market.

Windows Phone 7 will have a tough job. Apple's iPhone is the benchmark for style and sophistication. Google's Droid phones are now widely distributed and have overtaken US sales of the iPhone.

The critical factor for many in buying a smartphone is now the availability of applications to run on this poly-communication and entertainment device. Apple's 100 million iPhone owners have made 5 billion downloads of some 200,000 different applications.

That disguises a lot of asymmetry. The top 10 percent of paid applications dominate and have made most of the $1.5 billion spent on such software. The most popular are established games companies like Electronic Arts and Activision, as well as a few independent developers. Many of the independents - like Tapulous, producers of Tap Tap Revenge, now owned by Disney - are being bought out by the majors.

Microsoft has taken advantage of this consolidation by paying the most popular developers to port their software across to Windows Phone 7. Microsoft is now going further.

The company's 90,000 employees will each be receiving a new Windows Phone 7, and a little extra.

Employees at most companies are subject to strict anti-moonlighting provisions. Anything you develop while an employee becomes the property of the company you work for. Unsurprisingly, this tends to limit innovation.

Faced with the choice of receiving no benefit from a potentially lucrative idea, or having to quit a secure job in order to develop it further, most people opt to stay put and do nothing.

Great ideas never happen because employees are unwilling to part with them unless rewarded.

Microsoft has now opened the floodgates. Any employee who creates applications for the new phone will keep all the benefits of that creation. Microsoft doesn't want any part of it.

This is a long-awaited innovation: orchestrated freedom.

Companies are permanently in search of innovation and ways in which to motivate their staff to spur such creativity. At the same time they encumber their employees in a drowning morass of red-tape which stifles their freedom.

Corporate ambition is channelled upwards into fulfilling mandatory targets which can result in career advancement. Pay increases come from climbing the corporate ladder to higher positions of authority, not from innovation.

A person who identifies a way to increase the efficiency of a work process for everyone gets little by way of compensation. A person who regularly over-achieves their personal delivery targets – no matter how inefficiently – can get a performance bonus and a promotion.

Not everyone is cut out to be innovative and entrepreneurial, just as not everyone is cut out to surpass performance targets. If companies genuinely wish to unleash the potential for innovation in some of their employees they have to take creative steps.

Innovators are supported when barriers to personal reward are removed. Innovators can assert their creativity only when both their independence is recognised and their networking interconnections outside corporate confines is supported.

The question is not, "How does one motivate people?" It is how do companies relate their own ambitions to the natural motivations of their internal innovators?

Companies also have to recognise that not all "innovation" is going to be inspirational. I'm willing to bet that right now a Microsoft employee is developing an application that makes inappropriate farting noises.

Like free speech, not all innovation is strictly noble. Some is just teenage exuberance and some is outright horrifying.

Orchestrated freedom is about allowing stakeholders to innovate as they choose and encouraging their alignment with your objectives by rewarding the most successful.

It remains to be seen whether Microsoft will go far enough to make this work and whether they will continue allowing such freedom once their objectives have been met.

If it does it could be a wonderful new tool in corporate strategy.