Developing and then measuring the benefits from an OI program can be a challenging exercise. We have coined the term Benefits Case to differentiate this from a more formal Return-On-Investment (ROI) analysis. The Benefits Case has financial elements, but also has “softer” measures as well.

Benefit cases all have the core elements of:

•          Quantifying major improvement opportunities

•          Ensuring that OI resources are allocated to the areas of highest leverage

•          Establishing the range of benefits to be achieved through OI implementation activities

•          Providing the basis for assessing the OI return and tracking benefits during the OI program implementation

•          Developing the rational basis for an OI program

Overall the OI Benefits Case identifies areas of opportunity and quantifies the improvement potential as a result of OI activities. The figure at the bottom of this post shows the components of a OI Benefits Case.

The OI Benefits Case will have both Measureable and Non-Measureable components. Measureable benefits may include revenue projections from new products and services as a result of OI activities, increased revenue impact from improved manufacturing operations due to OI projects, reduced costs due to improvements in speed-to-innovation or time-to-market, increased innovation productivity and other potential measureable impacts. Non-financial impacts may include increased customer satisfaction due to enhanced product features or improvement in product quality as a result of OI project impact.

Non-measurable benefit impacts include clearer roles & responsibilities, the impact of external knowledge gained through OI on decision making, enhanced innovation skills, improved leveraging of internal knowledge and other “soft” or non-quantifiable measures.

In addition to the positive financial benefits, we must subtract the cost side of an OI program. The cost side will include both internal personnel costs and external costs such as training, OI consultants, OI project costs and technology costs. This then provides the top left quadrant of the Benefits Case which is the OI program breakeven point and anticipated return.

The development of a Benefits Case at the start of an OI program provides both guidance in terms of areas of focus and a tool to use during the implementation of the OI program to guide the implementation team. One of the challenges in OI programs is the eagerness to jump right to a ROI, when in fact the full financial impact of an OI program can take significant time to develop due to time-to-market consideration in product development and launch. This is why capturing some of the “soft” benefits and then tracking these as leading indicators can be very valuable to both guide the implementation team and to assure senior management that progress is being made.

Indicators such as early stage innovation portfolio impact from OI, number of projects with a significant OI component, decisions impacted as a result of external knowledge gained through OI activities are all leading indicators of the future ROI as the result of either revenue or cost impacts to the business.

Bridging the gap between healthy living and sweet treats, frozen yogurt has re-invented itself, yet again. “Fro-yo,” fanatics are flooding these healthy and refreshingly tasteful establishments, rather than finding comfort in high calorie desserts residing in what has become a nation smitten over Mr. Ben and Mr. Jerry (my personal favorite).

So why, once again, the craving for a cold cup of guilt free bliss?

Perhaps it’s the creativity and innovation involved in positioning oneself as a frozen yogurt leader in a $2 billion marketplace, complimented by the health conscious movement sweeping our nation in recent years.

In today’s market, frozen yogurt retailers are all about developing low-calorie, zero fat, low-sugar products filled with live active bacteria cultures, often called probiotics. These cultures impart a lemon-lime like tartness to the product, aid in healthy digestion and contain immune enhancing attributes. “People who eat it every day know that it's a product with positive health benefits,” says Dan Kim, president and CEO of Red Mango. “It's part of a healthy lifestyle.”

On yogurt menus across the country, you’ll also find frozen yogurt high in protein and fiber, all-natural, gluten-free frozen yogurt, and even frozen yogurt with a Grecian flare, strained organic yogurt thickened with thickening agents for a more smooth and silky texture.

Consumers are also gravitating towards unique and exotic flavors such as green tea, cheesecake, red velvet, tart, cookies n' cream, mango, pomegranate raspberry and much more! Frozen yogurt research and development teams now have an increased focus on natural sweeteners, masking solutions and natural fruit flavors in order to satisfy their client’s throbbing sweet tooth.

Not only is the evolution of development and flavoring re-defining the frozen yogurt industry, but also the innovative design concepts surrounding its storefronts. “Fro-yo” is now being served in slick, minimalist stores with designer furniture and natural lighting. A far cry from the TCBY’s of the 1980’s.

Finally, we can’t discuss current trends and not mention the self serve frozen yogurt parlors popping up on every street corner. That’s right. Store owners are allowing the general public to create their own cups of guilt free bliss. Bring on the endless ounces of exotic yogurt flavors, fresh fruit, sliced almonds and dark chocolate slivers.

Go ahead, indulge a little. Spoil yourself with a healthy, delectable treat before the ”Fro-yo” fad retreats back into hibernation, only to re-emerge, once again, in about 10 years.

NineSigma’s innovation services can help you stay on top of the latest food trends.  Contact us to learn more about open innovation.

With the exponential growth in Open Innovation, companies have a broad assortment of services and platforms to fill their Open Innovation toolbox.  This presents a challenge for the casual-user of OI services who sees a toolbox that looks like mine – a well-loved jumble.  The Project Owner needs to sort through to find the right “tool”, but often he doesn’t know if he needs a screwdriver or a hammer.

How does a Project Owner with a Need select the right way to engage in Open Innovation?   Start by asking questions that will help you narrow down your options.

·        Can you clearly state your Need and what you seek to accomplish?  Test this out with someone who is not familiar with the project.   If they have to ask you many clarifying questions, then you probably should not “post” your Need on an open innovation platforms, where detail is generally scant.  An open innovation process that is fully facilitated can drive better results for more complex Needs.

·        Do you know if the answer can be found inside your company?  Have you tapped into all of your company’s resources and capabilities, both inside your company and with your extended network, like suppliers or university contacts?  If you identify an external solution through open innovation, you will likely be asked this question before the external party will be engaged.

·        Is this project highly strategic and secretive?  Is there any reason you would not want your extended network to know about your outreach?  Are there IP issues that require you to create an information firewall?  In some strategic cases, you may choose to engage with partners that you know well, to protect your strategy.  In other situations, you may prefer to investigate global resources anonymously through an intermediary.  Selection of your open innovation gateway should be influenced by the specific intellectual property and confidentiality profile of the Need.

·        What is the endpoint?  Will you offer prize money for a single “answer”?  Do you seek an ongoing collaborative R&D relationship?  Do you seek to own or license IP, or must you have unrestricted access to the information?  Crowdsourcing and postings on open innovation boards may be more appropriate for lower value Needs.  If you seek partners for longer-term, high value Needs, select an open innovation vehicle that allow you to vet potential alliances according to your business and technology criteria.

By answering these questions, you will have a much clearer perspective on what you want this OI tool to deliver.  Ask your OI service provider specifically how they will perform against your stated expectations.  If they are doing their job well, they will likely be asking you these same questions.  Let NineSigma help you launch an open innovation program.  Contact us to learn more about open innovation.

Congratulations! You have been tasked with implementing or re-implementing an open innovation program within your organization. What is your first thought? Google ‘open innovation’, read some books and papers, talk to people you know that are at companies that have active open innovation programs, hire a consultant or just wade in and try and make it happen? Actually, all of these are good things to do. Today, there is a rich body of knowledge about open innovation and how to create and implement a successful program.

For the last 15+ years, my work has consisted of consulting to companies that are engaged in large scale transformation programs such as re-engineering, SAP and most recently open innovation. If there is one lesson I learned from my consulting work that I would pass on to someone at the beginning of an open innovation program – it is to communicate, communicate and then communicate some more. Yes, you need a well articulated vision, clearly defined objectives and buy-in from leadership. You will need to make sure you know your innovation organization’s strengths and weaknesses. You will need to fully understand your innovation ecosystem (current network of partners/suppliers). At the foundation you will need to have some type of simple process to leverage your innovation ecosystem, and the people in the functional areas that interact with the open innovation process will need to understand their roles and responsibilities. All of this is necessary - and more.

Ultimately the long term adoption of open innovation will be a function of how well you communicate. You need to communicate that you are implementing open innovation, why you are implementing open innovation, and what you are learning along the way. Share the setbacks and successes and stories about the people on the front lines. This communication needs to happen in many forms, many places and not be limited to the open innovation group. And, when you think you have communicated enough, communicate some more. Think in terms of a constant drumbeat.

One of our clients talks about the three phases they are progressing through in their open innovation program. These are introducing, embedding and delivering. At each stage we have been communicating to the broad organization through multiple channels. They are seeing the benefits of this communication through new innovation as a result of both internal collaboration across business units and new external collaborations. They realize there is still much to be done, but they can see the change that is happening and a new mindset of open innovation emerging. Let NineSigma help you launch an open innovation program. Contact us to learn more about open innovation.

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.

Contact us today to find out how our open innovation experts can help you.