Archive for July, 2008
Recently I metÂ Dr Bettina Von Stamm of the Innovation Leadership ForumÂ at the FDIN Breakthough Innovation seminar where she delivered a very interesting and insightful presentation on Open Innovation. Afterwards, I asked her if she would mind answering a few questions on the topic ofÂ Open Innovation for this blog and here is what she had to say:
1. Can you tell us a little about your background and about the Innovation Leadership ForumÂ
The Innovation Leadership Forum is the umbrella under which I conduct all my activities: anything to do with understanding and enabling innovation, primarily in large organizations. This includes teaching, writing, working with companies, and running a networking initiative. While I have been thinking and working around innovation for the past 16 years, the current networking group has been running since 2004 – though it built on a networking initiative, the Innovation Exchange, I ran for 5 years on behalf of London Business School. We started with 4 companies in 2004 and are now up to 17 subscribed members, some more are currently considering to join us. I would talk a lot more about this wonderful group – but I think the real interest here is around Open innovation. Those who’d like to find out more can always email me or have a look at the website.
2. What would you say are the main benefits of engaging in Open Innovation?
I always say that innovation happens when you connect previously unconnected bodies of knowledge. For me, that is what open innovation is about. It is also about allowing people with different perspectives and different backgrounds to take a look at our issues, problems, opportunities with a different set of glasses, a set of glasses that we would never put on. The way the human brain works means that we organize things in boxes, and not only that, we tend to stick new things into existing boxes, often ignoring the fact that they don’t really fit… This is one of the barriers innovation comes up against. By opening up to the outside world, and inviting others to look at issues through different glasses we might come up with entirely different solutions.
That was a rather long answer to your question; the short one would be: the main benefit of open innovation is that it allows us to access a large group of people with diverse backgrounds and ways of thinking, which is key to innovation.Â
There are other benefits, for example, working with external partners on an idea makes it more difficult for it to be killed; it would plainly be too public and embarrassing; especially with radical innovation this can be a considerable benefit.
Another is that all organizations have to manage their resources carefully. Tapping into outsiders can provide a useful additional resource. However, I believe that at some point in the future this may raise interesting questions about what organizations actually stand for – that becomes a rather philosophical discussion…
3. In what ways is Open Innovation different from earlier models of collaboration?Â
I think that most other forms of collaboration are about problem solving – rather than uncovering opportunities. In more traditional forms it seems to be the case that we identify a problem and then start to look for the right partner who can help us solve it. Open innovation is different; we are looking for external parties to help us uncover new areas of opportunity that we can, perhaps jointly, pursue.Â
Implicit in the above is that we have to have a different mindset if we want to engage in open innovation. Here all the arguments about believing that we have all the talent inside our own organization, that we know best what our customer wants etc. come into play.
4. What steps would you advise an organization interested in engaging in Open Innovation to take?
Talk to some organizations who are doing it. but be careful, what is right for one organization is not necessarily the right approach for another. You need to understand your organization’s culture; you need to know which aspects would support open innovation and which aspects would get in the way. You need to work with both.Â
You should also think about what the areas are where you are willing to share, where you are truly willing to open up. True collaboration only works if there are benefits for both parties, and both parties share openly and honestly. If it is one-sided – as much of traditional subcontracting and outsourcing is – it will not work.Â
This also means that you need to think about what you can do to help develop trust and respect between the collaborating parties. Given that they might come from quite different perspectives, with different values and mindsets, you are in trouble otherwise (the prejudices we have against those who are different from us can be quite a powerful obstacle).Â Â
5. What are the critical components you need for successful Open Innovation?Â
In a way I have already mentioned it above:
- A willingness to share
- Trust and respect between both parties
- A win-win situation
- Structures and processes that enable and support open innovation, and provide a solid link back into the organization
Â 6. Specifically in terms of Breakthrough Innovation, why can an Open Innovation approach help?Â
This comes back to my first point. We all suffer from what is called so wonderfully âBetriebsblindheit’ in German. It basically means you cannot see the wood for the trees. We get so used to our way of thinking and doing things that, at least for most of us, it is quite difficult to still see the patterns and rules according to which we are behaving and judging. As we all know, for radical innovation we need to think âoutside the box’. Given the way our brain works this can be rather tricky, and it can be much easier for an outsider to see an entirely different approach or solution.
Â My thanks to Bettina for this interview. One point which comes home to me from Bettina’s answers very clearly is that fundamental to Open Innovation is a new mindset which, in itself, needs to be “open”. Sometimes, in my view, this can be the biggest obstacle to innovation of them all.
I’ve just watched a video on ethnosnacker which really brings to life how ethnographic research can uncover and rationalise unconscious and seemingly irrational behaviour. The video shows two shoppers making purchase decisions and they both illustrate a four step process all shoppers go through. the four steps are:
- find a reference point
- compare other products against the reference point
- chose the product
- final check
This insightful model has had profound impact on point of sale design across many categories. Very impressive – good one Siamack.No comments
the food industry today is facing a similar Ęťtipping pointĘź to that which became apparent to many in the energy sector around 5 years ago. Just as the energy sector is facing growing demand, rising prices, climate change and security of supply by shifting its view, so too can the food industry.
Within the food industry and food markets, there are a number of macro drivers of change that are increasingly being recognised as either essential or highly probable developments. Two main driver are:
- the iminent large scale adoption of GM food, driven by the pressing need to get more yield per unit area of farm land and the impact of the food vs. fuel balance. According to the report, Organic food will be seen as no more than a worthy blipÂ away fromÂ the path to increased food yield
- the rapid and, given current production techniques, unsustainable rise in global meat consumption due to the growing middle classesÂ of India and China moving up the protein ladder. This trend my well need to be answered by the emergence of alternative protein production methods, such as large scale laboratory cultures.
The article goes on to outline three main catalysts for future innovation:
- Â Water Scarcity – according to the paper:
the increasing lack of fresh water for the growing global population will result in more water wars, rising prices and, as a regulatory response, the requirement to declare embedded water. Today, not many people are yet aware that it takes 400,000 litres of water to make a car and 140 litres to make a single Starbucks cappuccino.
- Efficient Product – this seems to be all about eliminating waste, where the paper says the food industry has some way to go:
As other sectors aim for 100% recycling of product and packaging, the way we manage food and drink supply chains needs to fundamentally change and become more efficient in terms of waste. Innovation in this area in other sectors is already showing tangible results and fuelled by increasing attention to the topic, consumers will expect similar standards of efficiency across sectors.
- Localised Processing – I’ve talked about his trend in previous posts about future consumers and emerging trends in food production to reduce environmental impact and increase trust in the source of the food. The paper says:
The real changes are coming in the area of food processing which is being driven by a combination of both top down eco-footprint regulation and bottom up community interest. Whether this is for ready meal preparation or more simple produce conversion, shifting the final finishing of more foods from a centralised production model to a smaller, decentralised approach will demand coherent effort across the agriculture sector, food and ingredient manufacturers, retailers and regulators.
The above trends present a mix of threat and opportunity and it’s clear that the organisations who can start to exploit these changes and innovate to provide relevant solutions will be very successful in future. On the other hand, concerningly, there will be increasingly major challenges aheadÂ to find ways to ensure everyone can be fed.No comments
One of the most basic and frequently observed TRIZ laws is the law of non-uniform evolution of technical system components. This law states that within any technological system, the various system components evolve along their own S-curves at non-uniform rates. This non-uniform evolution causes the development of System Conflicts. Put another way, this law predicts that systems will have areas of perfomance which are not good enough. If you follow the Clayton Cristensen line of reasoning, as outlined in the Innovator’s Solution, the companies who work on these areas and consistently advance these areas will be able to make bigger profits. So, the law of non-uniform evolution can really help you target the most profitable product areas for your business in future. Here are a couple of examples of technological systems where this law is being or has been played out. First an historical one, the evolution of the bicycle:
In this picture from theÂ 1890sÂ you can see three different formats of bicycle being used at the same time. On the left is a safety bicycle with chain drive, but solid tyres, in the centre is a lever drive bike, allowing the rider to sit further back and lower. On the right is an “Ordinary” bicycle with pedals directly driving the front wheel. Although this bicycle is the most primitive format, it has the most modern tyres – pneumatic. To get to the final format of bicycle which we recognise today, many system conflicts were overcome. A key system conflict in the “Ordinary” format was the need for increased speed against rider safety, which resulted in a very large front wheel with severe risk of injury in the event of a fall.
Now lets look at a current example which is getting a lot of press right now because of the rising cost of fuel and fears about global warming. The electic/hybrid vehicle: A key system conflict being played out right now in this area relates to the performance of the battery system. Right now the latest battery technology is too expensive and the infrastructure is not in place to support long journeys.Â As a result,Â many manufacturers are targeting plug-in hybrid vehicles, which require more complexity and still generate emissions and use up fuel. I’ve just read in the Sunday Times that GM is planning to bring the development of battery technology in-house which backs up the Cristensen model. Clearly, whoever manages to take battery technology forward sufficiently to break through the current system conflict will be able to generate very healthy margins.No comments
I saw this article in Fast Company about P&Gs sustainability approach and I thought it illustrated a common situation – the company organises itself and thinks in one way and the consumer thinks in another way. When this happens who is right? A clue to the answer is in the P&G matra “the consumer is boss”. The article takes P&G to task over their “illegal” chemicals while covering the subject of sustainable products. For P&G, these subject areas are very different, for a typical consumer they are the same. If an “innovative”, consumer focusedÂ business like P&G has this problem in aligning it’s corporate mindset to the consumer, what’s happening for everyone else?No comments
I’ve just come across the BMW GINA concept car, see thisÂ videoÂ and it made me wonder if it could be the next step on the line of increasing flexibility for the automobile body. According to the TRIZ laws of technological system evolution, you can predict potential next stepsÂ forÂ technological system evolution. The line of increasing flexibilityÂ for any technicalÂ systemÂ starts with a “stiff” system, then moves onto a one joint system, a multi-joint system, an elastomeric system, a fluid based system and finally to a system based on a fieldÂ interaction.Â If you refer back to my example ofÂ aircraft control surfaces, you can see many of these at play. In the case of the car body, originally the car had a rigid one-piece body. Very quickly this evolved into a segmented body with an opening to access the engine. Later further hinged sections were introduced for doors, truck, roof, windows and lights. The GINA appears to emply an elastomeric outer shell on a rigid skeletal structure. The full line of evolution can be show as follows:
When setting out to deliver new breakthrough product offerings to your market, I have found that a key first step is to construct a picture of your current business, market and offer. By taking stock of your current situation in a multi-dimensional way you can set an innovation contextÂ to help you target future opportunities in a more effective way. Â
When I work with my clients to create market breakthrough products, because I’m often new to their business and I need to get up to speed quickly, I run through a discussion guide covering all aspects of the innovation space available to their business in future. Of course, depending on the client business I will tailor the questions to suit but the overall structure for my interview is broadly shown in this diagram:
My first area of focus is around Business Direction, Processes and Value Model. The key areas I probe here are:
Values, Culture and Leadership:
- What principles form the basis for behaviours within the organisation and, more specifically, what are the key criteria which provide the basis for prioritisation decisions? I will probe this area by referring to specific examples from the company’s innovation history.
- Where does the key drive for innovation come from within the organisation? For example, is innovation initiated most commonly in sales, manufacturing or R&D?
- What is the attitude to risk? Is decision making based on gaining consensus or through personal accountability?
- How engaged is senior management in innovation activity?
- What type of innovation mindset does senior management have? E.g. when they say they want a “break-though” do they really mean it?
- How does the business Mission Statement relate to this innovation challenge?
Â Business Processes, Financials, Business Model and Network:Â
- What product development process does the company operate?
- What processes does the company follow to build its capabilities? E.g. recruitment, research, manufacturing, commercial, marketing and sales.
- What processes does the company follow to generate revenues?
- What other partners operate in the value chain and what are their financial investment and rewards?
- Who are the key partners and suppliers?
- How is the organisation funded?
- What is the attitude to capital spending and valuation of assets? I probe around tangible assets and intangible assets (e.g. IP)
My second area of focus is the Market:
- Who does the client sell their product or service to?
- Who uses the product?
- What does the market landscape look like? How does the client segment their market?
- What is the geographic scope of the current market?
- Who are the other stakeholders in the success of the product or service?
Category and brand values:
- How does the client define their market category?
- What does the client think the key considerations are for this category?
- What does the client’s brand mean to consumers or customers in the category?
- Given the current brand and category, how open to new products or services might the current consumer base be?
- How are consumers and customers using the client’s product or service? What are the key consumer or customer problems that the product solves?
- What are the underlying consumer or customer insights that form the basis for the product or service?
My final area of questioning is around the current Offering and Competitors:
Technologies, performance, value and context:
- What technologies and capabilities are key to the client’s current competitive position?
- Which areas of product or service performance are currently most important to consumers and customers?
- What is the current pricing structure?
- Are there critical considerations which might limit innovation such as surrounding infrastructure and large capital investments either by the client or their partners?
Â The competition:Â
- Who is the main competitor?
- Which competitor has the best-in-class performance?
- Is there a key limitation which all products in the category suffer from?
- Is there any competitor IP or other prior art which might limit future innovation?Â
I’ve found this discussion guide to provide a very effective foundation for innovation. Due to the broad scope of the format, it brings out a comprehensive picture of the total innovation territory. It has often sparked some very useful discussion and has even generated fresh insights for the client.1 comment
A while ago I posted an article about the three leading Open Innovation marketplaces (a.k.a. Ideagoras) but in that post, I didn’t shedÂ much light on what the process felt like from the perspective of a Solution Provider. I’ve now submitted two proposals in answer to RFPs from Nine Sigma and eventually, after quite a bit of initial interest, I have received feedback that neither proposal is suitable for their clients. I’d like to share a bit more about these proposals with you in the hope that my learning experience might be useful if you ever decide to enter the murky and strangely disconnected world of the Solution Provider.
Proposal 1: an automotive transmission lock. I teamed up with an automotive gearbox technology company and we identified a novel transmission lock design which did not seem to be present in the prior art. I prepared a detailed patent document for the transmission lock and I filed the patent with the UK patent office within three days. I filed a patent specifically because of the policy on Nine Sigma around “non-confidential disclosure” of proposals. I prepared the proposal and the outline plan with my contact at the gearbox company and he submitted the proposal to Nine Sigma in early May. In total I put in about 4 days of work and my colleague at the gearbox company did about the same. We thought we had done a good job. Then we waited and we waited and we waited. Eventually, in the second week of July my contact received an email from Nine Sigma saying that the client thought the proposal was good but they didn’t believe that the solution was suitable for them. We didn’t get any more detail on exactly what didn’t work for the client.
Proposal 2: an improved catheter system. I analysed the problem situation using TRIZ and researched the prior art. Based on this work, I identified a conceptual solution which appeared to be novel and I tracked down a company based in Cambridge, UK with the necessary expertise to produce a proof of principle demonstrator. As in the previous proposal, I prepared a detailed patent document for the improved catheter system and filed it on-line with the UK patent office. I prepared a proposal to Nine Sigma and sent it off in early June. This time, I didn’t have to wait so long. I received confirmation from Nine Sigma in the second week of July that, following an initial screening meeting with their client, excitingly, they were interested in my proposal. My excitement soon dissipated, however, as over the next two weeks I received and answered 9 increasingly incomprehensible e-mails asking about various functional aspects of my proposal, questioning if the idea was indeed unique and implying that I hadn’t applied for a patent after all. By the time Nine Sigma said that their client thought the new technology would take too long to develop and so had decided not to proceed, I was actually quite relieved.
So, where has this left me in my burgeoning career as a Solution Provider? Actually, a little more positive than you might have thought. At least I got feedback on my proposals. I’ve spoken to others who have now given up answering RFPs from Nine Sigma because of the lack of feedback. So on my experience, there’s improvement there. In terms of the communication gap which I experienced, now I know what to expect, I’ll be ready for it next time. In fact, I’ve been looking through the list of new RFPs and I’ve already lined up another couple to have a go at. Meanwhile, if I get a good search report on Proposal 2, I think it could well have legs and it may well find its way onto yet2.com.
I reecently saw in a Business Week Innovation blog a post about how WL Gore & AssociatesÂ have set up a “Capability Center” at its Barksdale, Delaware site in order to show off it products and technologies. The new facility was opened last year and was designed with the help of design agencies Carbone Smolan, IDEO and Homsey Architects. It’s not just intended to be used as a way to sellÂ to clients. Gore’s own business model means that the company’s thousands of employees (Associates?) are widely dispersed around the site. According to in interview with Gene Castellano, Project Director for the Capability Center “Bill Gore had ideas about organizational dynamics and as he evolved his company, he tried to maintain a culture that fostered small teams.” As a result of this, employees focus on individual businesses and are scattered across many buildings with little sense of the overall corporation. So the facility is also used to “sell” ideas and technologies internally, helping employees to think about novel applications and combinations of Gore technologies. I’ve seen a very similar approach at 3M where the periodic table of 3M technologies is showcased in a dedicated technology and innovation section of the UK 3M head office in Bracknell. Very impressive it was to especially when combined with the traditional 10% innovation time rule at 3M. Anyway, here are a couple of shots of the new facility at Gore to give you a flavour.1 comment
I’ve recently picked up in a Strategy and Business Innovation blog called Christiansarker.com and on Business Week that the old chestnut of whizzy ways to measure how innovative you are has come up again. This time, however, rather thanÂ a complex formula being promoted by an expensive and flashy Boston-based management consultancy, the proposal has come from good old British NESTA. They claim that the usual measures of innovativeness (is that a word?) related to R&D spend and number of patents are off the mark for financial institutions and other service based businesses (of which the UK economy has a quite a lot) and want to implement a range of measures related to training, organisational change and an industry-based “peer review in which company executives both help to define the innovation indicators and rate each other”. Hmm, well I reckon we’re all pretty innovative, don’t you agree chaps? Let’s give ourselves all a five out of five on that one.
I’m probably being hopelessly simplistic and niaive, but what’s wrong with some kind of vintage measure to assess innovationÂ - you know, % of sales from products/services launched in the last year. You might need to set up some criteria to help define the word “new”Â but I reckon that’s a lot better than some kind of dodgy old boys club peer review. I think output measures areÂ most usefulÂ when you’re trying to assess your true innovation impact, after all, if it doesn’t hit the bottom line, how can it really be innovation?No comments