Open Innovation is a challenging task for any company. Yet it yields great opportunities, and in this new world of digital transformation and rapid change in traditional markets, it's an approach CINOs have to consider.
But how do you get started, and what do you have to consider to make it a sustainable part of your transformation strategy?
Fishing in a bigger pond
There are two main drivers you commonly hear when you ask why a company is looking to do open innovation:
- The need to find new sources for ideas
- The need for greater diversity of thought
Most companies have departments where innovation is traditionally rooted, historically in the R&D department. At some point, and especially in the face of growing market pressure, companies find that ideas from these traditional sources are rather incremental in nature and not the transformational solutions they are looking for. It is also obvious, that most of the world's experts - naturally - can be found outside of the company.
Consequently, as a CINO or Innovation Manager, you would start to look for a broader audience. By mixing subject matter experts with non-experts from outside the market, you can create a tension that is ideal for the generation of unusual ideas and approaches.
The challenges of open innovation
Many CINOs find that starting and running an open innovation program is certainly not easy. At HYPE, we commonly find the following challenges for open programs:
1. Lack of control
As you move out from your core innovation group to include broader audiences, you will find that you have less control over submissions. This often leads to concerns that you might lose valuable IP. Also, it is much harder to understand and manage motivations within a diverse crowd.
2. Lack of process
When you look at the status quo, you'll soon find that ideas are already flowing into your organization from the outside, whether through suppliers, customers, or the society in general. However, this happens in a very chaotic, unstructured way. You have no control of where these ideas end up and they are hardly comparable. Also, your contributing parties don't have any support from your company.
There are certain myths perpetuated around open innovation that stifle the success of an initiative, or prevent it from being started in the first place:
- Lawyers are blockers; they strangle the life out of the creative process as they impose complicated regulations and legal protections on the innovators.
- A different view: legal agreements with external parties like suppliers and partners are often existing and good enough to get collaborative innovation started. And lawyers may welcome the opportunity to keep track of IP exchange within a central collaboration software platform.
- It's hard to get started; you never really know whether you pick the right third party to work with. And you might look foolish if you propose a challenge to the wrong party.
- A different view: many 3rd parties appreciate wider collaboration and you might encounter vested interests in your success, leading to firm support. Define your goals and set up a list of suitability criteria to rank 3rd parties according to the challenge you are trying to solve.
- End Consumers: huge crowd, plenty of ideas; if our focus group is already successfuly today, just imagine what 100,000 consumers could do for us! And certainly, since they buy from us, they would love to work with us.
- Another view: people with serious business proposals (e.g., an entirely new business model) do not tend to just share it with the public. Also, they are generally less intrinsically motivated to help with other's ideas as they don't feel part of a community.
Tools for practical open innovation
How can we deal with those challenges? Here are some tools that make handling open innovation easier:
1. Third party assessment
Evaluate 3rd parties you are considering to engage in your OI program based on four key criteria (and potentially more based on your individual needs):
- Vested interest: this one is crucial. The 3rd party you work with should have a personal interest in your success to ensure they support you and your program. If there is no vested interest, you can consider to create it.
- Quality of relationship: do we know this party well enough? Do we trust each other on a personal level?
- Model of engagement: How can we approach the 3rd party effectively and efficiently and offer a shared space to collaborate?
- Commercial considerations: which contracts are in place to help with IP issues and confidentiality?
Generally, suppliers and partners are easiest to collaborate with, customers less so, and second-degree suppliers, i.e., the suppliers of your suppliers, and the public can be rather challenging to engage with - which is not to say that it cannot be worth it, depending on your challenge.
2. Specific goals
This suggestion might seem like a no-brainer, but if you force yourself to go beyond a high level goal like "more revenue", it will help you define the "layout" of your program. These are only a few of the questions that can guide you along this way:
- What's the purpose of your OI program?
- Who's the right addressee?
- How are they motivated?
- Who are the main drivers in your organization, e.g., which department?
- What does the legal framework look like?
At HYPE, we use an "Open Innovation Matrix", a framework to map out an OI program, guide our clients through this process, and make sure all relevant areas are considered.
3. Dedicated technology
A dedicated innovation platform offers a range of different benefits, among others:
- Scale; especially for an open program, potentially reaching out to the public. Realistically, there is no way you can handle the process and masses of users, roles, and actions without a dedicated software platform.
- Flexibility regarding time; software allows people to collaborate asynchronously, independent from their individual time zones.
- Flexibility regarding location; people can participate from all around the world, you can provide a shared space for distributed teams and different cultures.
- Transparency; software allows you to clearly communicate the process as well as individual actions taken. Automatization features reduce your effort at the same time.
- Information vault; when you use dedicated software as the backbone of your program, you will never again lose track of what happened to an idea. Plus, for IP purposes, everything submitted is date and time stamped, with author details, as a digital record.
A roadmap "beyond the enterprise"
The measures mapped out above lead to a roadmap, or step-by-step list for open innovation programs, that can in principle be applied by any CINO or Innovation Manager looking to open his or her program. Follow these steps, enriched with the individual requirements of your company, and you'll have a soft start into this aspect of innovation management:
- Start out with your objectives, set your goals and make sure your consider the key aspects outlined above.
- Run an internal campaign; that gives you the opportunity to try your approach with a safe audience and fine-tune your messaging.
- Identify your target audience; which 3rd party offers the perspective and expertise you are looking for? Don't forget to evaluate them against your third party assessment criteria.
- Online collaboration; use engaged employees of your company to drive the discussions and keep other participants motivated.
- Communication; as in any innovation initiative, communication is everything. Make sure you constantly provide feedback about individual ideas and what's happening in your campaign in general. Push behaviors you are looking for and give examples of how to participate best.
Would you like to learn a bit more about how others did it? In our webinar recording, Colin Nelson gives you an introduction to the open innovation initiatives of Hershey's and Enlight:
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