Surprised to see a financial guy writing a blog on April 15^th?  Probably not.  We all love tax day, when we scramble to collate and scrub our financial records to do everything possible (but also legal) to reduce our taxes.   Operating a business without metrics can often lead to that same type of scramble when we are put to the task of evaluating business segment performance.  This is why I was so surprised to see that, according to our most recent benchmarking survey, more than 40% of companies in the advanced stages of open innovation are not employing the use of metrics.  Absent this, how can you measure progress towards your goals?  How can you evaluate your efficacy?

Using metrics for measurement and guidance is only as effective as the quality of those metrics.  That is why we work with our clients to establish open innovation metrics tied to pre-defined goals.  Depending on whether you are in the early stages of open innovation or you are optimizing its use, those metrics will vary significantly.  So where do you start?

Well, where do you start with your tax information?  I typically break the information down into the sections of the return.  Pages 1-4, Schedule A, Schedule B, Schedule C, etc.  Determining metrics can also start with similar compartmentalization.  How so? Departmentalization of impact.  For instance, financial (hard and soft impact of both revenue and cost), time (acceleration of ideation through product development and then on to dollarization), and new opportunity creation (relationship and network building that yields growth in ancillary areas and knowledge, not just the focal point of the task or topic at hand). 

Gauging success and defining metrics is as much art as it is science.  Your business model, your corporate structure and your culture all affect the determination of what metrics are most important to you and how you choose to evaluate your progression and ultimate success.   But you cannot have a painting without picking up the brush and splashing color on the canvas, so what are you waiting for?

Contact us today to launch your open innovation program with NineSigma.

Edmunds.com recently announced a contest to source ideas to answer the question of the much-publicized unintended acceleration issue. Seemingly Edmunds is as tired of all the rhetoric and ongoing investigations as is the general public and is looking for real answers to move closer to a solution. The underlying premise of the contest is that someone somewhere can shed light on the issue in a way that is not currently being employed. And did I mention the prize? An aggregate of $1 million will be awarded to the winning respondent(s) who can “demonstrate a novel and plausible cause of unintended acceleration in a consumer vehicle in accordance with the terms of the contest.” The contest opens May 3, 2010 and runs through October 29, 2010, with an anticipated announcement of winners in March 2011.

NineSigma has extensive background in the automotive industry given our longstanding work with OEMs and suppliers who utilize our network to find new solutions and capabilities to address a full range of technical issues.  We have run countless projects on everything from bio-inspired sensing systems to expert driver systems to extracting heat from parked cars. We were pleased that Edmunds invited our own senior engagement manager, Dr. Kevin Stark, to be an advisor for the contest. Dr. Stark will join other industry experts to help provide guidance on the review process and ultimately the selection of the right solutions. No doubt given the size of the bounty, the contest will attract global attention and prompt an array of viable responses. Wouldn’t it be great if next March Edmunds was able to provide the world and the automotive industry with new answers to this problem that has generated so much media scrutiny and public concern? We, at NineSigma, firmly believe in the power of the crowd and the immense expertise that is out there to solve the most elusive technical mysteries. We will keep our BLOINC readers posted as the contest gets underway.  

In our last post we discussed identifying and selecting Needs for an open innovation pilot program. In this post we will discuss the next step of engaging with potential solution providers that may have an answer to the Need.

Many organizations refer to this step as a "make versus buy" decision. This implies that there are only two options for solving the Need - either develop internally or find and use an external partner. In reality, there are three options - internal, internal/external and external. By external, I mean either license technology that exists or co-develop. We see many of our clients pursue the internal/external path where they are working on the issue internally at the same time they are searching externally for someone who has either solved the problem or is farther along or on a different, more compelling solution path.

The other process that is undertaken at this point is determining the solution network. For large, global organizations the first step may be to communicate the Need broadly within the organization to see if there is a solution available internally. We are currently working with a large multi-national chemical industry client to create a structure / process to communicate needs internally in order to leverage their globally distributed R&D resources. Once the internal search for a solution is exhausted then the search becomes focused on external resources. Now the decision becomes one of "do I use my existing networks or do I use a firm like NineSigma to communicate the Need broadly?" Again, here the answer is not yes / no, but what factors such as timing, cost, degree of technical challenge and others may play in the decision making. Many times for incremental technology development an existing supplier may be the obvious choice. Or there may be considerations for funding university work such as "community relations" that drive the decision.

Looking broadly, across industries to the global innovation community has one significant advantage and that is the opportunity to find an "unobvious" solution to the problem. In our work in over 1,600 open innovation projects, we have seen many unobvious solutions. Semiconductor research applied to fabric care, candy dispensing applied to appliances, agriculture sensor systems applied to automobiles and many others. In addition to the opportunity to find an unobvious solution, reaching broadly to the global innovation community will bring back considerable information that the project team can use. This external information combined with internal knowledge will help with decision making and ultimately reduce project risk.

Back to getting started with open innovation. We would recommend evaluating the Needs that were the highest priority and selecting some of these to communicate to the global innovation community. There are a number of firms today that can help with this. Evaluate them and select a partner. When looking for a potential partner a couple of key points to evaluate are:
- level of support provided to the OI project team
- breadth of network and is it a passive or pro-active approach to finding solution providers
- how is IP handled
- experience and references
- others

In the next post we will discuss what happens once you have connected with the global innovation community and have initial the results back.