“Open Innovation” is a term that is loosely used in business speak. As opposed to a closed model, OI is about groups of people coming together to share ideas and solve problems. It recognizes that some of the best people and best ideas reside outside the company, which often times lead to faster, more creative and valuable solutions to difficult problems.
I published an article last year on how OI models should leverage a wide range of participants to capture the imagination of original thinkers. It is through this diverse source of participation that ideas take shape in creative ways. Ideas can be built up and strengthened as groups of employees, business partners, and customers are expanded in both perspective and diversity in thought. Working together, participants tend to be drawn to the opportunity to learn new knowledge, share ideas, and solve problems.
The benefits of actively pursuing OI can increase the quality and number of new products implemented. Booz & Company (now part of PwC) reported that companies with “robust open innovation capabilities” were seven times more effective than firms with weak capabilities based on its survey population.
To take this further, according to a recent study conducted by the Boston Consulting Group, what separated strong innovators from weak ones was the scope of sources used to generate ideas. Strong innovators attributed their success, in part, to using an open model. As depicted below, note how strong innovators rely on strategic partnerships, external firms, social networks, and customers, among other sources. In contrast, weak innovators tend to rely on a limited, less diverse scope to generate ideas. Clearly organizational leadership should consider casting a wide net to generate and refine ideas worth innovating among multiple sources of input.
Experienced innovators know that it takes far more than simply adopting a methodology or hiring a consulting firm to generate innovative outcomes. People, process, and tools need to align as one integrated means by which the right problems are solved with the right ideas. Starting with exercising good judgment, several moderating variables are needed to know what to do, how to do it, and when to push forward. OI is neither an easy task nor a cure-all for solving innovation woes. While there are numerous things that can derail the best of intentions, some of the “gotchas” worth noting include:
While there are other “gotchas” beyond this list, the reader nonetheless has a sense of what needs to be carefully studied and acted upon to keep OI on track.
Key to achieving successful outcomes is through strong relationships with both internal and external partners, and an overarching corporate culture that encourages and rewards collaboration and information sharing across a wide body of participants.
“There are a number of elements that are critical in building a successful innovation partnership, but the key is for everyone to be the partner they’re looking for”
—Chris Thoen, former Managing Director, Global Open Innovation Office at Procter & Gamble
Wise words, indeed. Clearly the elements involved in OI factor into organizational leadership and innovation strategy. It starts with having the right mindset to infuse the culture with a can-do, must-do spirit. Easier said than done, though, as there is no easy or quick way to make this happen with repeated success. As an early OI pioneer, it took P&G several years under steady leadership, investment, and partnership to generate positive results.
Call for Tool Automation
While there is no substitute for hard, smart work when it comes to solving the right problems with great ideas, tool automation has significantly matured over the past few years to assist in this endeavor. Research firms Info-Tech, Forrester, and Gartner qualify the leading innovation tools with critical insight on particular strengths and weaknesses. The opportunity presents itself for organizations to augment the hard, smart work behind innovation with tool automation. Virtually all of the innovation tools listed in these three sources are configurable in varying degrees to the unique needs of the organization.
As applied to the problem areas listed above, tool automation can be thought of as being the “glue” that sticks to people engagement and process definition. Properly configuring tool automation to organizational needs can help enable:
- A defined framework of processes and roles to guide participants on how problems get surfaced and solved through idea generation and validation
- A repeatable workflow to facilitate how ideas get developed through the front-end, middle, and back-end phases of innovation
- Full and open transparency in the innovation challenges being worked and comments shared, including the objectives, scope, and criteria being used to define success
- An ability to cast either a wide or narrow net of participation to bring valuable talents to the forefront on how best to solve problems with creative, original ideas
- A more balanced, level playing field among individuals, groups, and outside partners in working as one integrated team regardless of geographic location
- Scouting and building an ecosystem among a wide range of known and unknown sources, including businesses, supply chain partners, academia, SMEs, customers, and competitors
- More and better ideas from a well-connected community of innovators in ways that lead to solutions with a higher probability of success than past efforts done differently
Such an undertaking requires new ways to guide how participants collaborate on ideas; how the internal work culture adjusts to accept outsiders as valued members; and how ideas get sourced in more inclusive methods with far greater creativity than past methods where less diversity and perspective tended to be the norm.
It may be obvious to some readers that old habits should give way to new ways of thinking, especially when it comes to innovation. Consider this, innovative companies are forecasted to grow at an average rate of 62.2% over the next five years, as compared to a much smaller 21% rate among the other companies analyzed, according to survey of CEOs conducted by PwC. The consensus among the CEOs was “innovation today is a key driver of organic growth for all companies—regardless of sector or geography.”
It therefore reasons that companies seeking greater growth should utilize more effective methods, tools, and capabilities to innovation. In adopting an OI approach, they need to cast a wide net to capture the best people and best ideas as a means to solve the right problems with original, creative ideas that delight customers. Perhaps it’s time to adjust your company’s tactics, to apply what is described in this paper to today’s rapidly changing, competitive environment.
Other Related Readings on Innovation Strategy: