Driving the process to develop a new product vision into a final solution delivering value to customers is a process more likely to fail than succeed. According to Wikipedia, “Research findings vary: From fifty- to ninety-percent of innovation projects are judged to have made little or no contribution to organizational goals.”

An approach gaining momentum to increase the customer value created and the success rate of product development is to combine open innovation with external product prototyping.  This model expands the internal team’s access to new ideas from a broad pool of technologies and design concepts from other industries.    

For example, a global food products company acquired a manufacturing solution from the automotive industry that dramatically reduced product defects and a home appliance manufacturer acquired a dispensing technology from a food vending machine manufacturer. 

Similarly, an external product prototyping team brought the convenience and cleanliness of home detergent pour spouts and closure solutions to the paint can famous for spills and wasted product.

One thing is clear; a more holistic approach to product development is needed in order to achieve increasingly aggressive organizational goals for growth and profitability.

Open Innovation (OI), a well proven strategy for CTOs, marketing and R&D, is now gaining advocates amongst the CIOs, strategic business planning teams and CFO level financial management inside Global 500 companies.

Changing culture and the way organizations have always done things is a leader’s greatest challenge and I’m anxious to assess how well corporations can adopt OI across the customer facing operations side of the business.

I believe that the opportunity to quickly acquire new knowledge for services, business process, CRM (Customer Relationship Management) and new business models can exceed the value or competitive market share gain from OI for a new product.  Costco can adopt a Bank’s branch office customer service ideas or automobile manufacturers can adopt a new business process model from Starbucks for the automobile dealerships service department.  And the software to support the processes and assess business metrics for the CFO can be acquired as well and implemented by the CIO.

In some cases a business offering services is competing against a business providing products.  John Deere and other equipment manufacturers could begin losing lawn care product sales as the lawn care service provider sells lifestyle choices and long term cash flow as a reason to not buy the new mower.  John Deere needs to look outside the manufacturing industry for the next innovation to win market share from the lifestyle choices available to their customers.  And, what industry would John Deere look to for managing the financial risk issues in the transition process?  Perhaps the automobile manufacturing industry that adopted Starbucks business process model for auto services.