Open Innovation (Part 4/4): What are the keys to implementing Open Innovation?
This is part of the Open Innovation series dissecting:
1. What is open innovation?
2. When is open innovation successful? What are its advantages and disadvantages?
3. What are examples of Open Innovation models?
4. What are the keys to implementing Open Innovation?
We’ve already address what is and isn’t Open Innovation, when it’s successful, its advantages and disadvantages, and discussed a few examples of Open Innovation models. Now, what are the keys to implementing Open Innovation well?
A lot of people think that the hardest part in Open Innovation is identifying (i.e, scouting) external sources of innovation, ideas, and technologies, but having spent a good deal of time working with organizations to implement Open Innovation effectively, we believe that scouting is only a small part of the overall process. Naturally, identifying opportunities will determine the health of your overall OI pipeline. Still, we find that adequately evaluating these opportunities, keeping track of them, and dealing with the interpersonal, cultural, and implementation challenges are just as important to actioning Open Innovation.
Ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions. — Steve Jobs or Derek Sivers (the internet isn’t sure).
Let’s look at how Open Innovation expert, Mike Docherty, CEO of Venture2 Inc address the keys to Open Innovation:
Key #1: Broaden your view
We all see the world through the “lens” of our own experiences and pre- conceived viewpoints. For this reason, having the right people doing the looking and having the right mindset becomes critical in where/how you look for innovation and how you filter what you discover. As an example of this “ filtering,” it’s interesting to look at a study from Dr. Richard Wiseman’s book Luck Factor, about his study of self-reported “lucky” and “unlucky” people.
One of his studies showed that when each of these groups were shown a newspaper and asked to count the number of pictures, on average the self-reported unlucky people spent about two minutes on the exercise while self-reported lucky people spent seconds. The reason? Lucky people tended to spot the message on page two — in big type — “Stop counting: there are 43 photos in this newspaper.” In fact, the unlucky people tended to miss not only this message, but the next one about halfway through — “Stop counting. Tell the experimenter you saw this and win $250.”
The lesson: “Unlucky people miss chance opportunities because they’re too busy looking for something else. Lucky people see what is there and not just what they’re looking for.” Leverage nontraditional sources of ideas and inspiration for your innovation efforts. Create ongoing collaborations with inventors, universities, entrepreneurial startups and other creative sources that can give you surprising insights into the next big thing.
I know an inventor who took his patented small appliance to nearly every major branded player in the category, only to be shunned time and time again. Even when one manufacturer agreed to take it to market, their launch plans were nearly nonexistent; and the inventor took it upon himself to line up a spokesperson and convince the company to launch the product via infomercials. The inventor’s name is Michael Boehm and his invention was the George Foreman Lean Mean Grilling Machine.
Key #2: Create alignment across the innovation ecosystem
Creating alignment within any company is critical to achieving the organization’s goals, and a lack of alignment is often cited as a barrier to effective innovation, especially when there are conflicting goals across functional groups. These barriers become even more pronounced in cross-company collaborations.
Often in collaborative relationships, at the highest levels it appears that groups are aligned because they agree on the major goals to be achieved. But if you look deeper, you’ll often see that incentive systems, and functional and organizational goals are often in direct conflict with the overall stated goals.
So, how do you minimize these issues and drive for alignment across the innovation ecosystem? It is critical to surface these issues early in programs, and we have found no better way to do this than extended face-to-face planning summits.
Whirlpool Corporation has been managing co-development programs for many years, often long term and global in scope. One tool they have adopted is the concept of Partner Summits10. These are three-to-five day extended sessions with all key players, and include both working sessions and social events to reduce barriers, develop deeper discussions, and ultimately deeper relationships that often pay dividends during difficult periods of development.
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Key #3: Adapt to your organization’s tolerance for risk
In my current business, I had a new product/service executive from a major utility approach me with a request for support in convincing his management to pursue what he saw as strategic initiatives that were critical to the organization’s success. He had the support of the CEO, yet the business general managers and other levels of middle-management took a more risk-averse view of these opportunities. This executive saw the others as roadblocks and was compelled to bring them over to his way of thinking or go around them if needed.
The problem was, this wasn’t one or two individuals — this risk- averse mindset was a broadly held view across most of the management team. I advised him to stop trying to take on an organizational culture change within his program, and instead adapt his approach to innovation in a way that matched his organization’s tolerance for risk. Authors and consultants James Andrew and Harold Sirkin present a framework for alternative approaches for structuring strategic initiatives that are in line with an organization’s tolerance for risk. An organization needs to determine which role best suits its own culture and initiative-specific needs.
The three types of roles include that of Integrator, Orchestrator, and Licensor. Integrators manage all the steps necessary to generate profit from an idea. Orchestrators carry out some steps and link with partners to carry out the rest (the traditional view of co-development). Licensors license the innovation (or brand) to another company to take it to market.
When viewed through the lens of managing risk, these approaches can be adapted to suit an organization’s culture and needs. For example, we’ve used the Licensor role to allow a smaller group to take the initial risk with a venture, while providing the larger established company with a first right of refusal to scale up the venture should it succeed in a small scale launch.
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Key #4: Put the focus on learning, not just results
Open innovation initiatives can be thought of as strategic experiments in many ways. In collaborative development, there are many unknowns and the focus should be on accelerating learning, not solely results. Theory-focused planning12 and other more flexible planning approaches recognize these differences and put the focus where it belongs: on learning.
Flexible planning methodologies focus on creating conceptual and predictive models (even simple graphical views) that describe the business model, how value is created, and how spending and revenues are likely to interact. Success in implementing an open innovation model depends at least in part on your ability to learn quickly (i.e., fail fast) within an environment with many unknowns.
