Many of our clients use their corporate website to highlight strategic and tactical needs as a way to solicit solutions from the global science and innovation community.  Today, I wanted to highlight a website from a client of ours, Johnson Controls, Inc. (JCI).  Their Open Innovation website, launched in mid 2009, is interesting because although many similar websites exist within the packaged food and consumer packaged goods industries, I am not aware of any other automotive OEM or Tier One supplier doing this today.  Below is a summary of a few questions I've been bouncing off the Johnson Controls Automotive Experience team (the division behind the OI website).

Kevin:  First, can you give some background - who is Johnson Controls?

JCI:   Johnson Controls is a global leader in energy and operational efficiency for buildings, innovative interiors for vehicles and advanced vehicle power solutions.  The Automotive Experience business of Johnson Controls provides automotive seating, interiors and electronics components and systems to almost every automaker globally. Our seating products include: seat trim, foam, metals and mechanisms, as well as complete seat systems. Our interior components include: door panels; overhead systems, sun visors, overhead consoles; in addition to center and floor consoles and instrument panels. Our electronics products include integrated electronics - displays, instrument clusters, connectivity systems and body electronics; as well as electrical energy management and the HomeLink Wireless Control System.

Kevin: How do people submit solutions, and what process do you have in place to review submissions?

JCI: As with most of these websites, in order to keep the flow of information clean and to avoid disclosure of proprietary information, all submitters must have issued patents or patent applications for their technology.  To review submissions, we have established an expert review process.  Each idea submitted is available to all experts for review, but individual ideas are categorized and sent to the appropriate experts to ensure the right people are notified immediately that an idea in their area of expertise has been submitted for their review. Inventors are notified if there is interest, typically within three months.

Kevin: What technology interests are you seeking from your website?

JCI: We are particularly interested in a few key technology areas.  These include surface / thin-film technology, new cover materials, bio-polymers and natural fiber materials, advanced high strength steels and structural composite materials and the associated technologies to form and join these materials, “smart” materials, injection mold tooling technology that reduces cycle time, technologies to reduce component assembly time and cost (such as unique fastening, assembly automation and in-plant logistics), sensor and actuator technology for electronification of interior features, unique technology to achieve downsized mechanisms like recliners and adjusters, and software tools to improve predictive analysis and design optimization.  We're also always interested in solutions that can reduce product weight, costs, and/or improve environmental sustainability.

Kevin: Why is your product set a good one for Open Innovation, and what kinds of solution providers are you seeking?

JCI: Our broad product scope requires solutions from an array of technologies to create successful systems. For example, many of our products serve a structural role and are important for performance and safety.  But what are ways to weld/join different kinds of components and materials?  This is something that is being addressed in a variety of industries (not just automotive), and therefore, new approaches are always of interest. As for the types of solution providers, we are looking to this website to communicate differently with our traditional supply base, but also of significant interest is the ability to extend our network to the many academic and non-profit research institutions, as well as to inventors working in diverse technologies and other companies searching to license applicable technology.

Kevin: What kinds of results/successes are you already seeing?

JCI: We are pleased with what we’ve seen so far. The submissions have been steadily coming in, and our internal network of experts has been enjoying the experience of reviewing the ideas and connecting with the inventors who have made the submissions to our site.  More than a few submissions have been technologies that have potential for application in more than one product area.  These submissions have been particularly exciting for us.  For example, just last week we had a series of meetings with potential solution providers, and we had a particularly interesting company in for a visit to explore their technology as it might be applied to automotive seating and interiors.

Kevin: What were your biggest obstacles in getting this initiative complete, and what advice would you have for other companies considering creating an Open Innovation-focused needs website?

JCI:  As you know, Kevin, executive support of Open Innovation is important for the success of these initiatives.   Innovation is a core value for Johnson Controls, and we have had great support from our leadership team, so getting this initiative up and running was not a significant challenge. Our challenge is to make connections with the innovative people outside of our organization with whom we have not yet met.  We want every inventor with technology applicable to Johnson Controls to know that we are open to their ideas and know how to share them with us. 

As for advice for other companies, I suggest that having a robust process for reviewing the ideas once they are received is critical.  We are seeing successes, in part, because we have a system in place to ensure that, while all of our experts have access to the submissions, individual experts are specifically notified when an idea in their area of expertise is received.  The initiative can’t be successful if the review process doesn’t expose the best ideas for follow through.

Did you hear the one about the automotive sensor manufacturer who found oil-level sensor technology from the dairy industry?  How about the time we connected a candy manufacturer with enabling dispenser technology to impact an appliance manufacturer?  Or the one where the crash sensor radar/imaging technology was applied for inspection of heat-sealed pouches for food products to detect a failed seal?  

Storytelling is the life blood of Open Innovation (and NineSigma, too), and cross-boundary/cross-industry connections not only make fantastic stories but validate day after day how powerful a structured Open Innovation program can be towards delivering results.  This comes to mind today, because during my staff meeting this morning, we spent part of it filming our technical team in order to capture and document just a handful of the amazing project stories among the 1600+ client engagements.  This is always a tricky exercise to showcase an interesting outcome, while protecting client confidentiality, but the passion surrounding the stories engaged everybody, and the excitement was infectious.  We look forward to finding better ways of sharing success and stories with the NineSigma community...  What other stories are out there?

In the last post we discussed defining the scope of the open innovation program. In this post we will discuss selecting open innovation projects or Needs. If you are familiar with the Want, Find, Get, Manage model for open innovation, Needs equals Wants.

What exactly are Needs? Needs are more defined than ideas. They are aligned with the firm’s strategy and help meet a customer value proposition. They have a direct impact on the firm’s business through either revenue generation or cost reduction justified by a simple business case. They should have a sponsor within the organization. The Need may be already being worked on or it may be something that has been identified, but resources have not yet been assigned.

This often brings up the make versus buy question. In reality the question that should be asked is make, buy or pursue in parallel? By parallel, I mean work the Need internally while scouting or searching for a solution or co-development partner through open innovation.

We typically see Needs falling into the following categories:

·         Breakthrough: The big, bold bets that significantly change the industry competitive landscape

·         Strategic: Platform projects that support multiple product initiatives

·         Tactical: Project specific “gaps” that keep a project from reaching its end point

·         Speed, Cost, Quality: Process improvements that impact a company’s cost position through improvements to cycle time, product quality or cost reduction

The process for selecting Needs for the open innovation program can take many forms. The one I find the most interesting is a two step process. The first step is to solicit key Needs from the organization. This step is focused on indentifying the Need and providing some level of detail around the desired outcome, the customer (internal/external) value proposition, the magnitude of the challenge to achieve the desired outcome and any other relevant information that is specific to the organization.

The second step involves getting the key stakeholders together to “hash” out a ranking of the Needs. Once this ranking is accomplished, the group then selects the Needs that will be worked on in the open innovation program. This stakeholder meeting is interesting to observe as the various people represent why their Need should have priority and others in attendance propose approaches to solving or identify existing internal expertise or IP that can be applied to the Need.

The goal is to pick a manageable number of Needs for the open innovation program.

I was intrigued last month when I saw the Yale University admissions informational video - "That's Why I Chose Yale" - sort of a new way to share the Yale experience and stand out among all the college guidebooks (especially among the "High School Musical Generation").  Now this week, I was amazed to learn that Tufts University allows applicants to submit short YouTube videos to supplement their application (about 1,000 out of 15,000 applicants did this).

Now that the College "Application Video" has emerged, how soon before we see the "Professional" Application Video.  Finding and vetting new partners used to be limited by corporate travel budgets (where conferences and trade shows thrived to offer opportunities for face-to-face introduction and interaction) to finding new partners on the internet and making introductions through written electronic communication (such as emailing or uploading expertise/proposal submissions to corporate needs project postings).  With virtual conferences becoming all the rage, it will be interesting to see how video begins to emerge beyond a social media enterprise and become a more prevalent professional media platform.  In fact, for NineSigma projects, we are starting to see occasional video submissions from solution providers to supplement proposals (often a custom demo specific to the project showcasing a capability or using video to demonstrate unique equipment in action).  As the current 20-somethings who grew up on social media continue to express themselves and communicate beyond email/texting/tweeting, it will be interesting to see how they expand their use of video communication platforms to initiate and secure professional partnerships.  Who knows, a video "resume" may not be too far behind!

I had an interesting phone conversation earlier this week as I was planning for a panel discussion that I will be hosting at the Front End of Innovation conference in May this year.  I was talking with the to-be panelists, Blaine Childress of Sealed Air, Graham Mott of Philips, and Tom Esselman of Hallmark, to plan for the session, which will be on the topic of Increasing Value Through Continuous Open Innovation Improvement.  Each panelist was asked to participate because of their advanced capabilities in the open innovation space, knowing that each would have very interesting stories to share with the audience.  As we were reviewing potential topic questions, the discussion started to shift, as we began to hear about the uniqueness of each company’s progression towards achieving open innovation effectiveness.  Not only did we suddenly realize how different each company’s path was, but also what the term “open innovation” meant to each company.  The differences were astonishing.  Since this phone conversation, I had discussions with several other companies just to hear about their experiences and perceptions, only to discover even more differences!

In order to trace each company’s experience, I used a simple two-dimensional model, consisting of an Engage axis (symbolizing the extent of a company’s reach into the global innovation community) and an Enable axis, which represents the level of a company’s readiness and ability to assimilate new knowledge that it receives from the outside world (see model below).  I was unable to find any two companies that took the same path.  Looking at it from an Engage perspective, most larger companies have a broader pool of resources to draw from, including other internal R&D departments, supplier networks, project-specific eco systems, and intermediaries, such as NineSigma, while smaller companies relied more on the use of intermediaries, because of their limited internal and close-in resources.  While tracing the Enable progression of each company, it was interesting to see the different approaches that companies were using to manage both internal and external innovation resources.  Results ranged from disparate databases to more formal scouting networks, knowledge management systems, managed supplier networks and ecosystems, as well as embedded open innovation processes and organizations.

While most early adopters of open innovation started on the Engage side of OI, we are now seeing many new adopters jump right into the Enable side, strategically deploying their people, processes and technologies before Engaging.  Whether starting out by dabbling with open innovation via an intermediary, or taking a more strategic approach, the results will inevitably be the same.  You will ultimately increase your innovation capacity, while reducing overall time to market and cost.

Now that you have made the decision to get started with open innovation and you have the management team lined up behind you - it is time to think about the scope of the initial program. Many times this initial program is referred to as a Pilot Program.

Pilot Programs are a proven approach to reducing risk and addressing the many tasks in implementing open innovation. Pilot programs are a well understood concept in most firms and are used to test new markets or introduce new products into a limited market prior to a major roll out. Pilot programs deliver valuable knowledge about the viability of the proposed concept in the actual operating environment. There is no substitute for the value of a working prototype as a learning tool, particularly when the critical resources of time, people, and budget are being considered. A well scoped open innovation pilot program will provide:

•       A manageable scope in terms of projects, people and time

•       A “test drive” of the work process by key stakeholders

•       Understanding of potential organizational changes and impacts

•       Increased buy-in for an overall open Innovation strategy

•       Key success factors for an expanded program

•       A defined decision point on the benefits of finding and acquiring innovation globally

In thinking about a pilot program, one must develop a program that is not so small as to not fully test the benefits of open innovation to the organization, but also not so complex and over-reaching that there is a long period of time until the benefits are realized. The scope of the pilot program will come down to two key factors. These are:

The first is leadership commitment to open innovation. By this, I mean is open innovation viewed as an experiment because the firm has not bought into the benefits of open innovation, or is this the first step on the path to transforming the way the firm does innovation? If it is an experiment, then the focus needs to be on quickly demonstrating the value of reaching broadly outside the firm to advance a current program forward. This will make the initial open innovation program  more project focused. If this is the first step on a broader transformation, then a larger scope that includes open innovation process, roles and responsibilities and metrics should be undertaken. These pieces can then be piloted and adapted as one learns and goes forward from the initial open innovation program.

Second is the size of the firm. If the firm is mid-sized with a centralized innovation organization then the scope of the program is a matter of how many people to involve and how many open innovation projects to launch. If the firm is a large, globally distributed organization, then the initial program can either be piloted in a single SBU or spread across a couple of SBU's and then rolled out to the broader organization.

Once the above two questions are answered, then developing and finalizing the scope of the open innovation pilot program is a matter of defining the resources required in terms of people, time and budget.

The last point is to establish a defined decision point to evaluate the program. This can be as simple as a leadership review that looks at progress made or a more formal review using metrics that were established at the outset of the program. Either way, the positives and negatives should be identified and reviewed.

In the next post we will discuss selecting the right Needs for the open innovation program.

You are ready to embark on your first open innovation initiative.  You know what you are looking for and you have identified several potential partners who claim to have the technology expertise you seek.  What is your next step?

A.     Call the external partner and have a chat

B.     Ask the external partner to send numerous tests and reports to demonstrate they can solve your problem

C.     Request samples, free of charge, for you to test

D.     Call the legal department

In fact, the answer is a combination of these choices.  Let’s go back to my mantra of “Put yourself in your partner’s shoes” and run through the options.

If you were the inventor who received a call The Big Corporation, what would be running through your mind?  “I am so lucky that The Big Corporation found my phone number that I will give them whatever they want”?  No! Your first thought is “I have invested my entire life in this great technology and I need to be careful, because if I tell them too much, they will steal my idea and develop it with their deep pockets of funding.” 

Therefore, if you select B and C, the external partner may not welcome you enthusiastically.  And if your legal department (choice D) requires you to send a one-way NDA before you start a dialog, it isn’t likely to be well received either.

The best way to take a mutual first step is (A) to engage in a non-confidential conversation.  To avoid giving your legal team a heart attack, refresh yourself on your company’s policy on non-confidential information exchange.  Generally, both parties can talk about what the technology “does” (performance parameters) without discussing “how” or the specific application.  Solution partners can establish credibility and expertise by sharing examples of other collaborations in similar areas, or their ability to conduct proof of concept or scale concepts.   Seekers can share limiting factors or target timelines without disclosing even their industry.

The goal of this first conversation is to confirm mutual interest – that the seeker and inventor believe the proposed technology is a good match, and that the two parties have the same vision for the framework of their collaboration.  Once this groundwork has been established, it may be appropriate to establish a mutual NDA, exchange samples, share test results and visits.  This first non-confidential conversation lays the foundation for a trusting and balanced relationship between potential partners.

Open innovation is one of those “feel good” initiatives that makes a lot of sense.  Leverage technology to build new capabilities, create openness that results in breakthrough growth, speed up the innovation process…why is everyone in the room smiling except the lawyers?

In most organizations, the legal team is given the responsibility of being the “protector” of the company’s intellectual assets.   There is no greater threat to protecting a company’s intellectual assets than opening the floodgates to a free flow of information, both in and out of the company.  Whereas the dreamy idealists envision an environment of sharing, lawyers envision lawsuits and liabilities.  Clearly, companies that successfully balance these two competing tendencies are the ones that can be most successful leveraging the power of open innovation. 

Here is my mantra for successfully managing IP risk in open innovation:  Put yourself in your partner’s shoes.  I don’t care if you are having a first conversation with a collaborator or trying to define the legal agreement. If you take your partner’s perspective first, you will always create a better collaboration.  An open innovation collaboration is a long term relationship, not a real estate deal.  If there is water in the basement, you will both be knee-deep in water.  If the terms of the collaboration respect both parties’ vital interests, and share both the risk and the reward, you have the fundamentals of a real partnership.

In my next entry, I will discuss a key IP event that can either block or smooth the path to a successful open innovation collaboration.

If you're like me, you are still catching up on your professional reading from a month back. My colleagues and I are always looking for good, instructive articles on open innovation whether they are theoretical or practical in nature. We try to share these with our clients and industry colleagues as often as possible. Below are a few noteworthy references in case you missed them as you were wrapping up 2009. If you have any other recent references you'd like to share with the OI community, please post a comment.

• Harvard Business Review, December 2009: How Open Innovation Can Help You Cope in Lean Times (excerpt of article)
• The Market for Open Innovation: Increasing the efficiency and effectiveness of the innovation process, December 2009 (excerpt from report by Kathleen Diener and Frank Piller)
• Wall Street Journal, November 30, 2009: Outsourcing Innovation 
• New York Times, October 31, 2009: Everybody in the Pool of Green Innovation
• University of Cambridge Centre for Technology Management, Institute for Manufacturing, 2009: How to Implement Open Innovation

Boy it's hard to stay focused today while tracking the latest live tweets from the CoDev 2010 conference and live blogs of the Apple event to launch the iPad (not to mention documenting project status reports, updating my NineSigma portal with new projects, etc.).  But actually, this hunger for new information (and how to make sense of it) is an important characteristic we look for in our own employees, and is also a driving force in the Open Innovation Champions we meet every day.  But what other skills are needed, and how can you spot your company's next Open Innovation Champion? 

First, it is important to recognize that (at least for now) 99% of the Open Innovation Champion roles are created internally by companies (so far I have seen very little movement to fill these roles externally).  This is because it is important for these OI Champions to really understand their organization, the IP requirements and preferences, and how much the organization can stretch.  Quite often, it is redefining a role that someone has been playing already informally, so filling internally makes a lot of sense. 

Critical internal experience also includes success at team building, visibility with the organization (and credibility across multiple disciplines, not just for the technical organization), exposure to corporate/business strategic goals/initiatives, and experience navigating approval and gaining buy-in to new initiatives (not to mention flexibility and adaptability).

In terms of external skills: deal facilitation experience, comfort interfacing with vendors/university partners/etc., and a passion for external collaboration.

Additionally, since OI Champions have to juggle quite a few tasks (many are in this role only part-time), excellent organization and communications skills are a must. It is critical for the Champion to be able to build, collect, and communicate best practices within the company and outside of it, and having ninja-like Excel and Powerpoint skills certainly is a plus.  

What is really quite interesting, is that although many of the OI Champions "grew up" through R&D or product development, OI Champions can really come from any role - marketing, business, operations, legal.  This reinforces how Corporate Innovation initiatives cross many different disciplines and organizations.  And as these roles continue to evolve (along with the evolution of the corporate innovation strategies), continued learning and training are essential. 

What thoughts do you have on good (or bad) characteristics for OI champions?  Feel free to comment below.