Archive for the 'Managing Innovation' Category
For many years innovative organisations have been trying to resolve the conundrum of how to get to bigger impact innovation more quickly and with less investment. In answer to this, the practice of Open Innovation is increasingly being adopted as the normal mode of operation for leading innovative companies. Open Innovation, applied correctly, offers the opportunity to access leading capabilities from around the world, exploiting complementary technologies and partnerships to short-cut the need for expensive internal activity and to realise innovation strategies faster. Some companies have adapted to this new way of working quickly and relatively painlessly but many organisations have had teething problems, to say the least. We have identified 10 common mistakes which can stop organisations from benefiting from the Open Innovation way of working.
1. Engaging externally without a clear innovation strategy
With all the talk about Open Innovation, it’s tempting to just give it a quick go. Just because Open Innovation is current flavour of the month and you’re just trying it out doesn’t mean that you should avoid linking it to your strategic objectives. In this respect, it’s just like any other type of innovation – if it’s not linked to strategy, you’re unlikely to be able to implement it and you’ll end up burning money.
2. Poor definition of the requirement or need
A poorly defined initial brief can make the crucial difference between success and failure to connect with potentially relevant partners. One aspect of poor definition which I see time and time again in Open Innovation is requirement definitions which focus on pre-conceived solutions rather than focusing on functions and parameters to be delivered. This kind of thinking really narrows down the solution space at a point when the process should really be divergent and it can seriously obstruct cross-industry engagement. A key area where Open Innovation can really score is in bringing in cross industry connections. These are great because you’re less likely to have competitive issues and if you’re clever about connecting with the right industry, their technology can be more advanced than yours. If your brief stops you making cross industry connections you’re going to miss out on big opportunities for faster, lower cost and bigger impact innovation.
3. Failing to get sufficient internal business or brand team engagement
Using Open Innovation, you can connect with great partners, but if you can’t get the attention of your internal business or brand teams then all you effort can be wasted. Clearly, having a shared innovation strategy will help a lot but sometimes you also need to find ways to engage your internal customers in the possibilities that the world outside the business can offer. Creating an engagement strategy upfront linked to organisation and processes to deal with this new form of innovation can be critical in getting buy-in and “pull” for your externally sourced ideas and technologies.
4. Not having a clear, aligned internal view about how to handle IP
This may seem obvious, but Open Innovation projects can stall not only as a result of failure to agree external terms around IP licensing or sharing but also through internal misalignment with regard to IP. I remember a meeting amongst IP professionals where Open Innovation was discussed where two whole flip charts of IP issues were raised before a single positive aspect of Open Innovation was mentioned. The IP team needs to be actively engaged in your Open Innovation strategy, with a mindset based on finding ways to make it happen.
5. Ruling out radical or unexpected options too quickly
One interesting factor with broad based Open Innovation is that potential solutions can come from anywhere. This can sometimes make it difficult to understand the value of solutions which are really different. If the requirement has been set poorly, it can be all too easy to miss the option which might give you a real innovation edge.
6. Lack of variety in Open Innovation approach
The Open Innovation area has evolved significantly since its inception some year ago. This means that there are many options which can help you to connect with potentially valuable partners. Many companies still fail to exploit the richness that is on offer and stay with one supplier. This can seriously jeopardise the chances of finding the right partner. For example, the average success rate achieved through idea market places such as Nine Sigma or Innocentive is around 40%. That means that 6 times out of every 10 you will fail to get the result you want. The best option is use a combined approach of two or more Open Innovation service providers.
7. Not understanding the attitude as well as capabilities of potential partners
A potential partner might have the right technology to satisfy your needs but do they have the right internal motivations, attitudes and behaviours to become a long term, trusted partner? Many of the on-line Open Innovation tools fail to give you a flavour of this important part of your potential partner’s profile. You need to make sure your evaluation tools and review processes specifically probe this area.
8. Not respecting the needs of potential partners
In any innovation process, lack of feedback can quickly kill interest from the solution provider end. At the least, the solution provider deserves a rapid and detailed response so that they can stay engaged with the process and feel better equipped to answer the next challenge. The decision making processes in large organisations can be long and drawn out and without any interim feedback or indication of good faith the solution provider can become suspicious even before a direct contact has been made. This really isn’t a good way to start a new long term relationship.
9. Looking at potential partners in isolation
Modern innovation often requires complex combinations of capabilities to be brought together, creating unique and sustainable value to the end customer. A step that is commonly missed is to try to “join the dots” and consider interesting combinations of capabilities. An even more sophisticated route which is often overlooked is to creating additional value by bringing together disparate network contacts to solve problems which are mutually important to you and your partners.
10. Last but not least…failure to build trust
If you were asked by a mysterious company to share your deepest technology secrets in an open “non-confidential” way with only the vaguest chance of any reward at the end, would you do it? The only reason that solution providers do just this is because they have some (possibly unwarranted) trust in the Open Innovation process and some belief that they may have just the right solution for the client. Going into Open Innovation without a win-win approach and behaviours which deliberately build trust will quickly kill your chances of getting anything meaningful and long term from it.6 comments
Back from my vacationing now and kicking the blog back into life. While on my hols, I’ve been avidly watching the Olympics and I have to say, from the Brit point of view there has been a beacon of innovation in the shape of the Great Britain Cycling Team. Just over 12 years ago in 1996, GB cycling was an international joke but now, after an admittedly large cash injection, some really strong strategic management, focused implementation efforts, inspired coaching and leading edge technology innovation (basically anything which could give a proven time saving), GB cycling is the force in world track cycling. UK Sport set various targets for British sporting teams going into the Beijing Olympics; the cycling team was¬†tasked with delivering a higher than average¬†6 medals. In the end the cyclists won 14 medals; eight golds, four silvers and two bronze medals. Not only that but there were some fantastic breakthrough performances from young riders such as Stephen Burke and Jason Kenny which shows the system is really working and gets me excited about things going even better in London 2012. There has been a lot in the press, questioning why other sporting teams such as the GB athletics team can’t deliver the same type of transformation, unfortunately these sports are still being run by paid amateurs for now. Anyway, regardless of this, I think Dave Brailsford and his team have really hit the sporting innovation sweet spot. What an inspiring innovation example!
Just as a reminder, here’s a picture of Bradley Wiggins winning the individual pursuit. Apologies to non-Brit (especially Australian) readers.No comments
Recently I met¬†Dr Bettina Von Stamm of the Innovation Leadership Forum¬†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 of¬†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 Forum¬†
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.¬†
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?¬†
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.¬†
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.¬†
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.¬†
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).¬†¬†
5. What are the critical components you need for successful Open Innovation?¬†
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
¬†6. Specifically in terms of Breakthrough Innovation, why can an Open Innovation approach help?¬†
This comes back to my first point. We all suffer from what is called so wonderfully ‚ÄėBetriebsblindheit’ 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 ‚Äėoutside 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.
¬†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 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 than¬†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 innovation¬†- 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”¬†but I reckon that’s a lot better than some kind of dodgy old boys club peer review. I think output measures are¬†most useful¬†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