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.

It may seem that seven years after Chesbrough’s book “Open Innovation” that posting an entry on getting started with open innovation would not be necessary. Even though there has been significant success and press regarding open innovation we still see companies that are just launching their open innovation efforts. Given this, we wanted to discuss some of the best practices in launching a successful open innovation program.

A quick disclaimer – for those of you who have been involved in large change programs, some of the following comments may be considered as “motherhood and apple pie” because they are common to any successful transformation program.

First, launching a successful open innovation program is not hard – but it does take commitment to see it through. Most all firms have practiced open innovation. They have worked with universities, suppliers or consultants on previous innovation projects. The major difference in an open innovation program is the scope of the outreach effort. In open innovation, rather that going back to the normal suspects, the firm will look broadly both globally and across industries for potential collaboration partners.

The major cultural challenge I see many times is "openness." Openness has two dimensions. The first is the firm sharing what they are trying to accomplish with the global innovation community. The second is being open to seriously evaluating what is returned from the global innovation community. We will talk about this in a future posting.

We see four key elements to a successful open innovation program. They are:

•       Leadership support

•       Scope

•       Selecting the right Needs

•       Resources

As in all change initiatives leadership is critical to success. Leadership must be behind the program answering the “why are we doing this” and providing the resources to ensure success. Leadership must be active in all facets of the program and visible to the participants. Finally, leadership must evaluate the results of the program and determine the next steps in moving forward with open innovation.

I will talk about the scope in the next post.