One of my US colleagues said that the refreshing thing about Europe is that it has 20 or so very different systems which all, in some way or another, seem to be working. Multiple solutions for the same need, that seems like the essence of Open Innovation. Was OI invented in Europe?

Reading the article ´Connect and Develop´ by the very American Harvard Business Review inspired me in 2006 to start a company in open innovation providing expert services. The idea was simple enough:  disclose the enormous innovation potential for companies in Europe by engaging the people who actually invented all the technology and developed all the great products of the last 20 years. They were going to retire anyway and it seemed like a great idea to intelligently use this wealth of wisdom.

There was one small challenge to overcome: getting the companies to engage with these top experts.

One of my lessons learned from working in open innovation in the past four years was that corporations lack the interface for actually sourcing and engaging with external partners in innovation. One of the CTO´s in a more philosophic mode remarked that it was related to the unbalance between “Yes” and “No” inside corporations. If someone says “Yes”  to something from the outside they are required to explain and defend their choice for working with an outside party. Saying  “No” obviously does not require explanation, even if it would be discarding the million dollar idea…

It goes to show that we should applaud the heroes that actually say yes to collaborative innovation, willing to explain themselves to their superiors, colleagues and existing partners. Within NineSigma Europe we are very aware and grateful for the champions that we have at the clients in Open Innovation. That is why we want to organize a way to recognize these champions and create some visibility for those people and organizations that lead OI.

More on this in my next Blog.

Just this past week, I had the opportunity to update my retirement account contribution through my employer’s plan. Included in the glossy brochure that explained all the new features and investment products available to me was a quiz. You probably know the one- it has a series of questions that assess your tolerance for riskiness in your retirement investment portfolio. I bring this up because in the 3 years that I’ve been a Program Manager at NineSigma, I’ve seen many clients and potential clients with a broad range of risk tolerances when it comes to Open Innovation (OI). Yes, many of our clients are Fortune 500 companies, and Wikipedia defines middle market companies as “those with revenues generally between USD$100 million and USD$1 billion per year.” Some of you might assume that a big company with annual revenue of $1 billion plus might have higher tolerance than a smaller company for spending money on OI, for opening up to new suppliers and development partners, or simply for participating in a process that can sometimes bring in completely unexpected results.  Do the Fortune 500 have more resources to wade through and vet potential solutions, and to engage with and fund new solution providers? Maybe, but my experience has been that it’s really a matter of comfort with the unknown that drives “success” in the application of OI in any organization- no matter what the annual revenue is.

Big companies and small can face challenges and road blocks as they try to improve processes, reduce costs, enter new markets, and drive products to market faster than their competitors.  Addressing these issues might mean that a company asks an OI intermediary like NineSigma to conduct a search for a partner with a very specific set of design/development/manufacturing capabilities, for an experts group to act as an advisory panel for a new market, for technical and business intelligence in a clearly defined technology arena, for co-development partners for a new product, for a novel technology that will improve an internal process, or for a toll manufacturer or material supplier. Bottom line is that we see needs of all types across companies of various sizes. Open Innovation intermediaries can give you access to people, technologies, and geographies that you might not be able to reach on your own, even if you do have the internal resources for an extensive scouting group. The Fortune 500 may run multiple NineSigma projects and a smaller company might run one or two a year, but the process we use, and the support we provide, is the same and applies equally well. Depending on your openness to new ways of looking at and solving challenges, OI could be a nice addition to your middle market company’s  “investment” portfolio.

What happens when you go to a meeting or a party and someone asks you what you do?  “I’m a blah-blah” is usually followed by “That’s interesting” and then there’s small talk on the subject, right?  When I respond “I help companies do Open Innovation”, what follows is ....silence.

But that may be coming to an end, because the U.S. Government is getting innovative.

I recently participated in Industry Day for Open Innovation, sponsored by the U.S. General Services Agency (GSA).  The day was kicked off by Aneesh Chopra, the U.S. CTO.  When I explain to someone what I do, (yes, it requires explanation), their response is “That is totally awesome”, if they entered the world after Heavy Metal music, and “Cool” if they can sing along to Fleetwood Mac.  But can you imagine being the CTO of the U.S. Government?  How cool is that?!?

And that is exactly my question: how cool is it that the US government is embracing “innovation”?  For those of us who believe that innovation is the way of the future, it is extraordinary.  NineSigma believes that partnering with our government creates an innovation bridge to bring technology, resources, transparency, and access to our federal system.  Current innovation and crowdsourcing efforts in the Department of Education, NASA, and the Department of Energy are just the beginning.

But if the government is doing it, can it still be “awesome”?  According to Urban Dictionary,  “cool” is “the best way to say something is neat-o, awesome, or swell” but "awesome" is “the highest rank of 'cool'”.  If the New York Times runs a weekly column on “innovation” and the U.S. government has a CTO, has “innovation” gone “mainstream”? 

I certainly hope so.

My colleagues work closely with innovation champions who are the backbone of their companies' open innovation programs. They hear stories of frustration, elation and the day-to-day effort that is poured into their work to make open innovation a success. These champions are part change agents, motivational speakers, visionaries, and also the 'work horses' that get the job done.

There was an interesting article on Harvard Business Review's blog yesterday that addressed the unique challenges faced by innovation champions. The author, Rita McGrath, argues that success in open innovation "depends on middle managers, scientists, and intra corporate entrepreneurs scavenging for resources in an informal way". We see this in some cases but we also see a general recognition among our clients that this is clearly not sustainable and the proper processes, organizational design, technologies and yes, budget need to be established to maintain a successful program. We like it when 'serendipity' happens and we find a highly unexpected solution and solution provider for our client, but we don't think serendipity belongs anywhere within the foundation of the open innovation program.

As an early adopter of consumer electronic gadgets far and wide, I am constantly reading and absorbing everything I can in print and online when it comes to technology.  Recently, I caught the announcement that Microsoft pulled their Kin phones just 45 days after product launch.  This is as fast as the closing of a bad play on Broadway (but way more expensive - one estimate says the failure cost Microsoft at least $240 million after selling possibly only a few thousand devices).

This got me thinking about the challenge in balancing the drive to be "first to market" with the mantra of "fail early and fail often", and how our work with clients fits into this.  A critical element to open innovation is that although these new skills can enable a robust product devleopment funnel (by combining internal activities with enabling external components, subsystems, platform technologies, ideas, products for acquisition, etc.), but it is critical to have metrics in place to evaluate projects at every step of the way (even after product launch).  Many companies have "stage-gate" type processes, but often these processes are not strictly adhered to. 

For example, one thing I've learned in working closely with CPG and Food and Beverage companies, is that product development activities have to be closely aligned not only to the corporate/business strategy, but also to consumer insights.  Consumer insights are not only useful for test marketing products and driving marketing and brand development, but with solid integration of Open Innovation practices, gaps in the product features/performance can be identified and then rapidly filled via external innovation. 

By the way, before you count Microsoft down for the count, the entire Kin team has already been reassigned to enable them to focus exclusively on the Windows Phone 7 mobile platform, so you can bet Microsoft will learn from their mistake and come back stronger.

Once upon a time, a long, long time ago, before anyone had heard of “crowd sourcing”, (coined in 2006) NineSigma clients were fascinated by the opportunity to reach into every corner of the globe for answers to their biggest challenges.  The focus was on “how” and “where” to get the solution.  NineSigma solved the “how” by providing the answer to “where”.

Fast forward to 2010…companies have more information than they can process.  Chat rooms, company-sponsored websites, OI intermediaries like NineSigma…Open Innovation can feel like the suggestion box on steroids.  The real challenge today is how to manage and optimize Open Innovation.

The companies that will be the Open Innovation leaders tomorrow are those that are successful in creating their Open Innovation Office – the structure that broadcasts the right information outside to the best external resources, and then funnels the value back inside to act on it efficiently.

We believe that three pillars are essential to building a successful, sustainable Open Innovation Office. 

Framework –Vision, Process and Organizational Design, and underlying Software

Support – People and resources to:

• Develop OI best practices and build OI adoption
• Manage the Needs Funnel, relationships with external partners and integration of OI projects into the product development cycle

OI Toolbox –Partners and tools to engage internally and externally

Framed by executive commitment to your OI Strategy and program management and accountability, these three pillars build an integrated, managed and optimized Open Innovation program.

Over the last ten years, we have either worked for or discussed working for a large number of companies that are implementing open innovation programs. Many times they have referred to NineSigma and others as Open Innovation intermediaries.

I have always pushed back when firms classify NineSigma as an OI intermediary. To me an intermediary is a group that simply connects two groups together and hopes for the best from the connection.

At NineSigma our work is focused across the two dimensions of Engage and Enable. Our Engage business is all about supporting our clients in solving a critical business challenge. This may involve finding and acquiring a platform technology to enable a suite of new products, it may be mapping out a white space and presenting options to our client on how to capitalize on new opportunities, it may be helping indentify new applications for existing technologies or it may be identifying and then contracting with a co-development partner.

The work typically involves broadly Engaging the global innovation community in order to deliver the desired results to our client. We use the term Engage to differentiate NineSigma's level of interaction with the global innovation community. Engage implies searching for and then engaging groups identified to deliver results to our client. Engaging means dialog, analysis, interpretation and synthesis to create a final work product that adds value to our client. This is much more that simply acting as an intermediary and connecting two groups together and hoping for a good result.

I have always liked these funny eye tweaking images in which you can see two different images depending on how you focus on the picture.   

Trying to solve a problem is quite the same; depending on how you look at the problem your outcome may vary. When looking at the image, your brain is doing the trick on its own, but how can you do that with a problem? Most of the time we look at the problem from one single angle: the one we are familiar with. Whether this “way of thinking” comes from our education or is built on our experience doesn’t count, what matters is its uniqueness and the difficulty we have to change our point of view. Corporate thinking in organizations tends to polish peoples’ creativity thereby limiting dissension.

Methods like Lateral thinking and tools like S.C.A.M.P.E.R. or TRIZ are available to help creativity and can be applied to problem solving but they require some training and self- discipline. Very often, getting an “outside view” is simple, fast and efficient to help in finding novel approaches. 

At NineSigma, every day we practice this “outside view” for our clients looking for innovative solutions or business approaches. Even better, we perform a “double outside view” that I have seen at work very efficiently dozens of times since I have joined the team. The first “outside view” pass, occurs with our Program Managers who unscramble, decompose and formulate the problem. They methodically review every possible approach in order to open as many paths as possible for potential solution providers. The second pass is done by the solution providers who offer their own knowledge and approach to the problem. Of course, the first pass drives some expected results in, but almost on every project we do receive unexpected or unobvious solutions. The famous quote from Albert Einstein: “Problems cannot be solved at the same level of awareness that created them” has never been so true.  

Exactly one month ago I was sworn in as a US Citizen, and this 4^th of July will thus have special meaning to me.  I will now look at what’s happening on this day with a sense of belonging and sharing, and being a part of something bigger. I think in a lot of ways that is what happens when people practice Open Innovation. When collaboration between two companies is done successfully, they will share many very important details around their future growth goals and projects, and create something that is bigger. It is almost like being “sworn in” to be a part of the community of Open Innovation Practitioners.

America became a very successful nation by being a “melting pot” of people from all nations; people that brought their brains, their energy, and their passion here in order to build a future for themselves and this country. Again, there is a striking analogy here since Open Innovation is also about people from all nations bringing solutions to problems that will help companies, and consequently also countries to have a better future. Could America have been as successful if only one set of people were allowed to contribute to this country?

Lastly, when thinking about the birth of this nation, there was a set of progressive thinkers that were passionate about doing the unthinkable:  To create a true democracy, with “The People” contributing to the development of the country and its institutions. Likewise, Open Innovation was started by some progressive thinkers that did the unthinkable: To say that more and more innovation needs to come from the outside!

My hope is that just like this great country that has been around for well over 200 years, Open Innovation is here to stay as well. It has had its revolutionary wars, but it has come a long way from its early days.

A Happy 4^th of July Weekend to all of you!

Sincerely, Andy Zynga

In my last blog post I described my checkered past, and how from graduate school to present what we now call Open Innovation has been a constant presence in my career.  I reached outside many times, and can document millions of annual profits because of it.  I ended with this comment:

 “I’ve worked as they say, both sides of the street, and now I work in the in middle, part traffic cop, part coach, part target.”

Open Innovation is something I think is very much worthwhile even if I’m constitutionally allergic to the business jargon and buzzwords that surround it these days.  I have a privileged position now, applying my experience to helping other people do this.  I get to see a lot of what goes on inside a great many companies both in the US and now from my seat in the NineSigma office in Europe.

My first observation is that in general people are not as successful at open innovation as I was or current leaders like Procter and Gamble are.  I’m not unique in making this observation. Sieg et al ( J.H. Sieg, M.W. Wallin and G. von Krogh, R&D Management 40, 3, 2010) have looked at the use of intermediaries and come to similar conclusions examining the activities of another OI intermediary.  One of the striking observations is that 7 of 8 of the clients had abandoned their relationships with that intermediary.

Investigating the causes of these failed relationships it becomes clear that project expectations were not met. But is that the whole story?  Were the project expectations reasonable?  Were in fact the project choices reasonable?  In short the answer is mostly not.  This quote is all too familiar to me-

“If I said our scientists were not very enthusiastic, you can imagine what kind of problems the scientists put up and now I exaggerate a bit [ …] they […] didn’t come up with things they think might have a good chance of being solved.”

How is it that the corporate leadership that buys these services doesn’t see this coming?  Consider the possibility that the leadership has either been oversold or all on their own ‘over bought’.  OI is surrounded by hype about easy successes due to scooping up readily waiting technology and making big immediate impacts on bottom lines, promoting growth etc.  The very projects that don’t have a good chance of being solved above are also those that are likely to have hung around gathering dust precisely because if they were solved a great benefit would come.  So a skeptical or threatened scientist puts forward these unsolvable problems as a way to get this culturally new means doing things off their plate and senior management approves them because they fit the big score expectations that they have for OI.  A winning combination. 

The expectation of easy success going outside is one of many mistaken ideas we see.  Another is the false belief that the problems chosen are uniquely recognized.  The idea that the major problems in your market and/or technology space are not recognized by your competitors has no basis in reality.  Our team may be smart, but generally so is theirs.  But following this line of thinking leads to poorly specified requests being created in an effort to hide the real purpose.

A belief that is equally perplexing, but well known to researchers is the idea that our own team isn’t smart, so we need to look outside.  Generally, this attitude develops when scientists point out to management that their pet idea has a problem.  For years consultants have made comfortable livings providing second opinions in cases like these.  Now OI is used as well when internal scientists proffer an unwanted answer.  This in turns leads to projects where the chance of finding something is low.

So what makes a good OI project?  One clue can be found in the Seig article.  In describing progress towards a goal, the authors note that while the main objective is well documented and planned “…when problems occur on the way, they are discussed with colleagues in the group or in the hallway but rarely formulated in an explicit problem statement.  The problems are ‘in the heads of the scientists’…  My experience in delivering results with OI is that those little intermediate problems are precisely where big impacts on time to delivery of the overall project can be made.  Need to blend a mixture of dissimilar size and shape pellets? Need to separate misblended mixtures?  Sure we could have done it in house…eventually.  But going outside was so much faster.  Need to understand how a competitor achieved a longer shelf life?  Sure, we could have collected samples and tried one analysis after another, but finding the right expert got the job done in days to weeks.

What doesn’t get recognized also is that many of those ‘little’ problems are already solved by the use of outside resources.  We needed to reduce coking in a reactor preheater section.  A sales rep provided us with the right feed atomization technology.  This sort of problem solving is routine and because it isn’t a big problem, isn’t captured generally when people speak of OI success.  But without that atomizer or a hundred little things like it, we couldn’t have delivered the reactor model, and without the reactor model we couldn’t have built the pilot plant and without the pilot plant we couldn’t have validated the reactor simulator, and without the reactor simulator we couldn’t have designed the new system that put the millions on the bottom line.  For the want of a nail..the kingdom was lost.  These days, when working with clients, I tell this story and I ask them, “What are YOUR nails”?