© Bill Watterson
A few days ago an email alert from The Economist informed me that one of the year’s bestselling (Christmas) presents had so far been a drone. You know drones, right? Those unmanned aerial vehicles set out on pre-defined missions like land surveying, parcel delivering or checking power lines so that men hanging from helicopters don’t have to. Despite all these exciting developments, it’s not all fun and games and creative business applications in the drone world. If regulators (like America’s Federal Aviation Authority (FAA), who have banned commercial drones almost completely by the way) fail to get on board, this former military innovation’s routes-to-market will remain blocked and its potential severely underexplored.
And this takes us back to a fundamental issue in Open Innovation: clarifying operating principles. Here, coming to terms with with regulators and establishing by formal consensus what can and should be done to benefit everyone – policy makers, marketers, experts on the factory floor, users and service providers like Amazon etc. – in the product’s ecosystem would do the trick.
Actually, make that two issues: resolving conflict is equally important for successful Open Innovation. In the drone example, the conflict between those requiring that drone operators to have experience flying manned aircraft and those advocating a distinct type or certification (or no certification at all) is a case-in-point. Bottom line: unless matters like these are consistently dealt with, the drone technology and many more like it ever stand a chance to become available to 7 billion non-astronauts like you and I.
Over the past year I’ve talked (well, written) to you about falling into the incremental innovation trap, The Times’ journey from print to digital, and corporate clairvoyance (or foresight). I’ve encouraged you to see the value of experimentation and consider the barter economy as a means to boost your innovative projects. I’ve also written about buzzwords like living labs, gamification, ambidexterity, design-driven innovation and have even tried to “sell you” the formation flights as a metaphor for innovation ecosystems because I, like others, believe that metaphors work.
What I have failed to give you enough of is good practice. Consequently, in my first post from the new year I wish to share with you a little Open Innovation wisdom from the chest of Gene Slowinski, Director of Strategic Alliance Research at the Graduate School of Management, Rutgers University, and Matthew W. Sagal, former scientist at Bell Laboratories and now Senior Partner of the Alliance Management Group. You’ve already caught a glimpse of their recommendations in the introduction: clarifying operating principles and resolving conflict. Their highly acclaimed paper published in 2010, product of observing hundreds of OI relationships over the past 25 years and based on the Want-Find-Get-Manage model (appears in the Reinventing Corporate Growth book for the first time), provides a set of 12 good (Note: not best!) practices associated with high quality Open Innovation efforts that can be built by managers into their OI systems. Hopefully these 12 resolutions as I like to call them will inspire you to choose the most appropriate path to success and enjoy a truly happy new innovation-filled year.
Without further ado, your Good Open Innovation Practice List for 2015, is as follows:
In the WANT Phase…
1) Incorporate external thinking into the strategic planning process.
Use the external world as a source of inspiration and talent for your next endeavour. Ask yourself questions like: What are the unmet customer needs that lead to a more valuable product, service or business model and what internal resources do you, as a firm have, to meet these needs? Furthermore, how can you source these assets? Do you have the capacity (and willingness) to nurture collaborative relationships? This Forbes article will help you reflect on the matter.
2) Convert planning outcomes into a set of prioritized Want Briefs
At this stage you will want to convert intent & planning into a concrete (shopping) list of assets dubbed a “Want Brief”. Your Brief will comprise things like: how does a specific asset fit into your new product or service, the benefits it can deliver to the customer, intellectual property issues affecting the asset or its acquisition, minimum requirements and appropriate metrics to determine whether an asset meets your needs and so on. Very importantly: your Brief is an iterated document as the authors note. It will constantly change as new information and insight is added.
3) Utilize a structured process for the Make/Buy/Partner decision
It goes without saying that some assets will be more efficiently developed in-house (after all, there is a propensity to do so – ever heard of the not-invented-here syndrome?), whereas for others procurement is a more sensible option. Your firm must have a rigorous and dependable system that can make this distinction. How else will it engineer its next triumph? Here is a good contribution on how to partner with the “crowd”.
In the FIND Phase…
4) Look inside first
Employees, corporate databases, and external consultants are excellent sources of data when it comes to finding the missing piece of the resource puzzle. Mining internal tacit knowledge is also a useful technique, alongside patent mapping, literature searches or even visits to academic institutions or other companies in your area of interest. Equally important is the communication tool you are using – how will you ask for inputs from your internal community? Is an innovation campaign the best way forward? HYPE knows a thing or two about that…
5) Treat the Find effort as a bilateral process
The small world problem (or fewer degrees of separation) between any two individuals in the Internet age generates fierce competition for the best assets and or/ the sources that produce them. Moreover, it means that you as a firm need to come through as an attractive ally rather than just a demanding seeker. Look at the lengths to which Salesforce is going to come through as (Open) Innovation partner of choice; the CRM (client relationship management) software provider even rewards consulting partners (from the Salesforce ecosystem) that help to drive customer company transformation.
6) Use information in Find to refine the Want Brief
Let it snow flow. Let it snow flow. Let it snow flow. As you interact with external sources, feedback should be continuously added to the Want Brief, and the new document eventually run by the stakeholders for comments and approval. As Slowinski and Sagal note, the Brief is an accurate description of the firm’s objectives – it is therefore crucial to invest in a systematic process by which the updating and “refreshing” is done. In other words, do not just paste things in there.
© Bill Watterson
In the GET Phase…
7) Establish and maintain internal alignment
Every alliance is really three alliances in one. The phrase is, in fact, one of the highlights of the article. The three alliances are as follows: alliance between R&D, Marketing and Manufacturing in Company 1, alliance between R&D, Marketing and Manufacturing in Company 2 and the alliance between Company 1 and 2 respectively or the partnership alliance per se. A lack of alignment inside one or both of the partners is usually the cause of failure to get the desired asset.
One recent critique of this model and its relevance for Open Innovation was made by Prof. Wim Vanhaverbeke (one of the world's top 50 authors on innovation and technology management) on the MOOI Forum. Under the “Open Innovation Implementation Team” discussion theme in September, he added: “Slowinski's 3 alliances in one idea which makes perfect sense in Alliance Management. (…) Yet OI-teams probably have more volatile contacts with a broad range of partners. I'm not convinced that the 3 in 1 approach necessarily applies to the work of an OI-team. Happy to get some critical remarks.”
Resolution #7.1 Be critical of any Good Open Innovation Practice List in the new year!
8) Use a structured process for internal planning and negotiations
Building a Brief and generating a Find List is one thing, drafting an alliance (or partnership) contract is another. Conflicts can and will emerge (remember the drone in the introduction?) at this stage and it is best to settle them here in a systematic way. Furthermore, clearly written documents will avoid fuzziness and minimize wasted resources associated with cumbersome (and fruitless negotiations).
9) Negotiate with a focus on “Win-Win-Lose-Lose-Lose”
The execution of an alliance agreement is not the end of the Open Innovation relationship. In fact, it is just the beginning. And for the relationship to last throughout implementation, all parties involved must perceive the initial deal as fair. Compromise is once again the keyword as all parties try to maximize the benefits of being part of such an agreement. Here is how Coca-Cola approaches potential agreements in the light of its new Coca-Cola Founders platform – a platform that essentially invites collaborative (business model) innovation.
Finally, in the MANAGE Phase…
10) Hold a kick-off session to enable integration of management systems
Once the contract is in place (and this is at the beginning of implementation), make sure to bring together the management teams of the collaborating parties. A bad start can severely damage the relationship later on, especially if the partners are of varying size. It is not uncommon for and SME to have trouble collaborating with large organizations. Therefore it is important to identify pain points and resolve them through one or more meetings. This is what I meant by clarifying operating principles in the beginning.
11) Use the kick-off session to ensure that both firms have the same understanding of the operating principle established in the agreement
Here is the catch: even if the legal departments and higher management have done their jobs in drafting a beautiful document, it is seldom the case that this document translates into clear instructions for the departments; departments (from both firms) whom, by the way, need to work collaboratively for an extended period of time. Differing perceptions of the jobs-to-be done can lead to confusion. Use the kick-off sessions to speak about deeply practical matters and make sure everyone is on (not over) board.
12) Train managers in both firms in the principles of conflict resolution
The last bit of Good Practice touches again on conflict management and resolution. Certainly, some types of conflict are productive, whereas others less so. The key therefore lies in avoiding decision-making paralysis by means of effective and timely communication. Here is an excellent HBR article on the theme, slightly skewed towards resolving internal conflict issues and not inter-company disagreements. Oh well, two out of three alliances are better than none!
So these were Good Practices of Open Innovation in the coming year as extracted from Gene Slowinski and Matthew Sagal’s work. Like any new diet or a 30-day squat challenge, their advice and model must be tackled with caution. So gather your teams around the table, share insights and see if there is anything you can adapt, adopt or store for later use.
Happy Innovating and a very Happy New Year!