At some point in each of our careers we have learned Michael Porter’s Value Chain approach to understanding the movement of materials and information from early stages of inbound logistics to customer-facing services.  While the Value Chain model served us well over the years by providing an understanding of the various functions within a company, it has done little to represent the flow of ideas and information that lead to new innovations.  In fact, I would go as far to say that a company’s complete buy-in to the Value Chain model to represent organizational design and process flows can actually stand in the way of collaborative innovation.  Allow me to explain.

The Value Chain model portrays an organization as a segmented, linear flow of business functionality.  Many companies have designed their various departments to enable this flow, believing that they were conforming to best business practices – and the flow works fine within a typical operational cycle.  But this is only a part of what companies do.  When it comes time to innovate (i.e., stretch beyond the current bounds of the organization), people have a tendency to generate isolated solutions that are relevant only to their department, and not thought through or tested in a systemic manner.  Ever wonder why most organizations today suffer under the silo effect that inhibits the transparency of ideas and information?  A case in point is the proverbial gap between Marketing and R&D.  While ERP systems can help to alleviate some transparency issues, this does not address the core issue, and has little to no effect on innovation. 

If we were simply to take the linear Value Chain model, and bend it around the edges to create a circle (or cycle), it would have an entirely different effect within the company.  In the center of the new “Value Cycle” could be cross-functional teams, processes and social media systems that enable the introduction of new ideas from anywhere within the company, while allowing people from other departments to contribute their perspectives, thus building on and improving the original idea.  Around the outside of the new Value Cycle are the company’s suppliers, business partners, and even regulatory bodies who, if plugged into the process (i.e., the inner circle), can bring yet another perspective to what is now emerging as a new innovation that has been tested and vetted from within.  This merging of internal and external sources into a central innovation process, or cycle, must not be thought of as temporary – it has to become the norm.

If a company is still faced with what appears to be an insurmountable innovation challenge, it can reach out to yet another tier of innovation resources – the global innovation community.  Companies typically do this by instituting a technology scouting function, or simply by engaging an open innovation intermediary like NineSigma, that maintains a global network of solution providers representing virtually every technology category.  This next tier of innovation reach provides yet another perspective that comes from individual inventors, companies and universities from around the world, and often outside the company’s industry.  When new technologies and partnerships are forged from this tier, they too can become part of the inner circle of the company’s Value Cycle.  It is at this point that the company experiences the true essence and value of collaborative innovation.

I often see people struggling to understand the difference between Crowdsourcing and Open Innovation (OI).  Are they the same or completely different?  Is one a sub-set of the other?  Well, the unpopular, yet correct answer is “it depends.”  While Crowdsourcing is, by definition, different than OI, the two disciplines can, in fact, overlap.  Let me try to explain.  Crowdsourcing is a process by which an organization leverages the power of crowds (either a captive community or the general public) to help identify trends, or to source new concepts, ideas or designs for the marketing and development of new products and services.  Open Innovation, on the other hand, is the process of going outside an organization’s physical boundaries to identify and/or acquire new innovations, which can be in the form of a concept, expertise, intellectual property (i.e., technology), or a new supply source. 

Using the fishing metaphor, think of Crowdsourcing as a broad net, where the net (or challenge) is cast out to a larger population of loyal customers, targeted communities or the general public.  The person casting the net is interested in identifying trends and ideas coming directly from a large population (at least much larger than can be achieved by a typical consumer insight study).  OI, on the other hand, uses a fishing pole approach to target a very specific community that can solve an existing innovation problem – one that cannot necessarily be resolved by the organization seeking the solution.  For innovation needs that are more conceptual, Crowdsourcing can be used to find a solution.  However, as the seeker’s needs become more specific, other techniques, such as NineSigma’s RFP (request for proposal) method have proven time and again to be much more effective – especially when the seeker has access to a broad network of potential solution providers to whom the RFP or challenge can be sent.

It is important to know which approach to use and when to use it.   As companies begin to rely more heavily on OI and Crowdsourcing to resolve innovation issues and to support broad-reaching marketing efforts, picking the right approach can make a world of difference in terms of efficiency and overall success. 

Want to learn more about crowdsourcing? Contact us today to find out how our open innovation experts can help you.

The world famous French chemist and microbiologist, Louis Pasteur, once said that “Chance favors the prepared mind.”  So what does this have to do with open innovation (OI)?  Most people think of OI as a quick way to find a new technology, partnership or concept, and it certainly serves as a great vehicle for such tactical needs.  However, what many do not realize is that OI can (and really should) be considered a strategic tool to help companies manage risk, provide important intelligence, and to make overall better decisions.  Another flawed view of OI is when a company considers an OI initiative a failure, just because it did not lead to a closed deal with a solution provider.  So let’s see how Pasteur’s wisdom can be applied here.

Typically, when a company launches an OI project, they are looking for something specific to quickly move them along in their innovation pipeline.  Ultimately, this should lead to faster cycle times for new product development, and even early-to-market advantages.  Again, this type of thinking can provide many tactical advantages over the alternative approaches seen in closed innovation.  If innovation leaders could just take a step back, and realize that there are many more important knowledge points to be harvested from an OI project, they would begin to experience the strategic nature of the art. 

For example, a leading consumer products company engaged NineSigma to look for a very specific enabling technology for one of their commodity products.  The search yielded very few results, and those results were very general, with no intellectual property to back them up.  Expecting disappointment, NineSigma approached the company to tell them the bad news.  But to our surprise, they were delighted with the outcome.  This project just validated for them the opportunity to become the first to develop this new technology, and they subsequently went out and filed for 22 new patents. 

Building innovation capacity and environmental knowledge is a major strategic benefit of OI, and should be considered in the design and selection of every company’s OI initiative.  So we can safely rephrase Louis Pasteur’s famous quote for the OI community by saying, “Preparing the company’s mind with a broader range of strategic knowledge and innovation capacity can significantly increase the chance of success.”

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

I became aware of an interesting trend while traveling through Europe this past week.  During one of my stops in Perugia, Italy, I spoke with a group of senior level managers of small and medium sized organizations (SME’s).  I was discussing the process and value proposition of open innovation, and while most everyone was interested, they all realized that the cost of doing open innovation is still a bit higher than the price that these companies are willing to pay.  In other words, cost is a direct barrier to SME participation in open innovation.  Many of the participants spoke about what they would do if they could participate in the Open Innovation (OI) marketplace using an OI platform to help them find new ideas and resolve problems that have long haunted them, and how such access to a broad range of external knowledge would benefit their companies.  Clearly, they get it.  And, this is not a unique response from others that I received from SME’s in other countries around the world.  They all need it, but don’t know how to realize it with their streamlined budgets.

Now, let’s rewind to recent discussions I had with local governments in Africa, Europe, the Americas and the Middle East earlier this year.  Each of the government officials with whom I spoke made it clear that they had funds available to stimulate the economy through programs that would support local entrepreneurs and businesses in their respective regions.  In fact, many international institutions, such as the World Bank, the IMF and the EU are providing funds to spark regional economic development.  However, when I speak of open innovation with local governments, many of them claim that it hasn’t been proven yet in their regions.  The conservative “wait and see” response seems to be prevalent most everywhere.  However, do their current programs yield tangible benefits?  Have prior efforts worked for them in terms of spawning economic growth?  The answer to these questions is often a resounding “no,” according to the local SME’s.  The funny thing is, when I ask these local governments who helped them come up with the ideas for their existing programs, there always seems to be some internal guru who convinces the government agency that their new idea should work.  It rarely involves the constituency of SME’s in their region who are in dire need of help.  I think you see where I am going with this.

One brave little region in Northern Italy (Piedmont) had the guts to listen to their constituency and try open innovation as a means of sparking the local economy, and efforts for a new regional OI program are just now getting underway.  If more local government officials would listen to their constituency and realize the potential benefits an OI program would have in their regions, such as increasing revenue opportunities, job growth, and providing the foundation for a thriving local economy, they could possibly innovate themselves out of their current economic slump.  All eyes are now on the Piedmont region, and once they are able to demonstrate success, it is just a matter of time before universal adoption begins to take place.  For this to happen, local governments must be prepared to fund both the establishment of local resources for OI participation for their resident SME’s, and be prepared to offer funding for the various acquisitions that will likely take place once the program is underway.  These simple steps will remove barriers to SME participation in OI, and open the flood gates of innovation potential within their regions.  We are at the threshold of a new horizon, but some governments must be willing to work with their constituent SME’s to demonstrate what many large enterprises have known for years – OI works. 

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

Just recently, Stefan Lindegaard released his new book, The Open Innovation Revolution.  I just finished reading it, and must say that I am glad to finally see such a practical and applicable piece of work hit the bookstore shelves.  Stefan took a non-academic approach, and loaded the book with real-life stories and quotes from those actually in the open innovation trenches, living and breathing this stuff.  And since he spent time talking with those in the trenches he was able to shed light on something that has been all too often ignored – the soft side.  By soft side, I am referring to the human element.  You know – the effects of change on culture, the importance of communication, human roadblocks, and the like.  Why am I so passionate about the soft side of open innovation?  It’s simple – I have seen too many companies try open innovation without paying attention to these things, only to end up abandoning their OI efforts without reaching their end goals. 

Another great point brought out in the book was the importance of finding the right open innovation champions and ‘intrapreneurs’.  These people are not your typical R&D managers.  Rather, they need to possess a unique set of skills ranging from diverse technical competencies to keen networking skills.  They are the face of a company’s open innovation effort and will need to represent this function both internally and externally.  These people are bridge builders, spanning the proverbial gap between marketing and R&D, and working across various business units to educate people and to entice them to use open innovation where and when it is most likely to demonstrate success.  With each success, this person communicates the results and continues to build momentum behind the cause.

These are key concepts addressed in The Open Innovation Revolution that should be strongly considered by every company embarking on a new open innovation journey.  The book gets right to the heart of what really matters, and should be read by anyone in the planning phase of open innovation, or anyone looking for ways to improve an already existing program.

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

I recently spoke at a number of conferences throughout South Africa on the topic of open innovation.  Knowing that open innovation was practiced primarily by large enterprises in the US, Asia and Europe, I was curious to see how a region populated mainly with small and medium sized enterprises would react to my talks.  Not only was I surprised by their warm reception to open innovation, but also by their deep knowledge and decisive action they were taking in this area.  In order to remain competitive in this dynamic world of rapid innovation, industry and science parks are picking up momentum in South Africa, and other parts of the world where small and medium sized enterprises are grouping together, both physically and collaboratively, to share costs, resources and ideas.   

The concept of the science park is a worldwide phenomenon, mainly seen in developing regions. The concept is based on cooperation between academia, industry and government operating in close proximity to strengthen the region’s innovation output.  In South Africa, which has a developing economy, the science park concept offers a means of becoming competitive with those fully developed regions that host major companies, universities and other key sources of innovation and knowledge.  Knowing the power wielded by large enterprises through their vast pool of resources and far-reaching supplier networks, these science parks are finding new ways to mimic this capability through collaboration and co-location.  Open innovation is an integral part of the science park concept.  What a company does not have in terms of innovation resources, may be found within one of the partnering companies.  And if still not found, members of the park will soon begin to share open innovation resources, for example, the NineSigma office that is being established at the South African Innovation Hub in Pretoria, which will be managed by our local partner in the region, RIIS.

It’s fascinating to see open innovation take root in areas like Sub-Saharan Africa.  The innovation efforts taking place today in such regions will soon begin to offer great insights and ideas for small and medium sized enterprises throughout the rest of the world.  We see such companies in Asia, North America and Europe struggle because of their limited resources – especially in today’s tough economy.  So perhaps the emerging science park model could offer a next chapter in open innovation and provide a means to accelerate innovation in this underserved market sector.

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

Over the past month the headlines have been dominated by the BP oil-spill crisis.  Unfortunately, much of this noise is filled with individuals and organizations that are leveraging the crisis as a cheap PR opportunity.  They try to force half-baked solutions on BP, and when BP does not adopt these solutions, they are accused of “coming up empty,” and “ignoring help” that is being presented to them.  The reality of this type of situation is typically more complicated than it appears, and players in the open innovation space should have the experience to recognize this. 

One of our Program Managers brought to my attention a similar story that occurred back in the early days of WWI where the English tried to use a pre-Internet form of “crowdsourcing” to quickly remedy the unexpected sinking of many ships in the English Channel by German U-Boots.  This was a new phenomenon that was causing great losses to the British fleet, yet nobody knew how to deal with the situation when it began.  So they placed ads in all major newspapers asking the public to send in ideas on how to defend against these unexpected stealth intruders, and within a short period of time they were flooded with proposals ranging from human swimmers to trained seals.  Despite the massive response, none of the outside ideas provided a viable solution to the crisis.  The practical solution ended up coming from those scientists working directly with the military, who understood all of the details and parameters of the situation.

The lesson that we can take from this story is clear.  Unsolicited solutions do not work without first coordinating with those directly responsible for the crisis.  Without a full understanding of the situation, the resources already allocated, and the actual environment of the crisis, unsolicited responses are as effective as an armchair quarterback. 

I would be interested to hear the opinions and insights of others who are involved in the open innovation space.

I had an interesting phone conversation earlier this week as I was planning for a panel discussion that I will be hosting at the Front End of Innovation conference in May this year.  I was talking with the to-be panelists, Blaine Childress of Sealed Air, Graham Mott of Philips, and Tom Esselman of Hallmark, to plan for the session, which will be on the topic of Increasing Value Through Continuous Open Innovation Improvement.  Each panelist was asked to participate because of their advanced capabilities in the open innovation space, knowing that each would have very interesting stories to share with the audience.  As we were reviewing potential topic questions, the discussion started to shift, as we began to hear about the uniqueness of each company’s progression towards achieving open innovation effectiveness.  Not only did we suddenly realize how different each company’s path was, but also what the term “open innovation” meant to each company.  The differences were astonishing.  Since this phone conversation, I had discussions with several other companies just to hear about their experiences and perceptions, only to discover even more differences!

In order to trace each company’s experience, I used a simple two-dimensional model, consisting of an Engage axis (symbolizing the extent of a company’s reach into the global innovation community) and an Enable axis, which represents the level of a company’s readiness and ability to assimilate new knowledge that it receives from the outside world (see model below).  I was unable to find any two companies that took the same path.  Looking at it from an Engage perspective, most larger companies have a broader pool of resources to draw from, including other internal R&D departments, supplier networks, project-specific eco systems, and intermediaries, such as NineSigma, while smaller companies relied more on the use of intermediaries, because of their limited internal and close-in resources.  While tracing the Enable progression of each company, it was interesting to see the different approaches that companies were using to manage both internal and external innovation resources.  Results ranged from disparate databases to more formal scouting networks, knowledge management systems, managed supplier networks and ecosystems, as well as embedded open innovation processes and organizations.

While most early adopters of open innovation started on the Engage side of OI, we are now seeing many new adopters jump right into the Enable side, strategically deploying their people, processes and technologies before Engaging.  Whether starting out by dabbling with open innovation via an intermediary, or taking a more strategic approach, the results will inevitably be the same.  You will ultimately increase your innovation capacity, while reducing overall time to market and cost.

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

If you are reading this blog, you’re probably already aware of the fact that open innovation (OI) has not yet reached its prime across all industries.  In fact, many business leaders still haven’t heard of it yet, or want nothing to do with it.  So why is it that some companies swear by it, and have reached a point where OI is completely embedded in their internal organizations and processes, while others are afraid to play?  I have a theory about this, which boils down to two key points:  market leadership culture and reward systems. 

Companies with a culture of market leadership have traditionally relied on strong internal innovation competencies in order to develop and maintain market share for their products.  These leaders have recently realized (sometimes the hard way) that achieving and holding on to market share is no longer reliant upon the old first-to-patent or ownership philosophy held by a company’s innovators.  It now has more to do with who is in control of the IP.  With today’s ever-increasing speed of information flow, coupled with the vast availability of global OI resources, companies no longer have to own their IP.  In fact, such a belief can actually hold a company back.   If a company focuses more on control vs. ownership of the new technologies that they need to stay ahead of their competitors, they can continue to maintain their leading edge, drive demand, and create new product generations, but at a much faster rate. 

Understanding the evolution of market leadership principles is one thing, but putting them into practice is quite another.  Changing the ways that R&D organizations have been working for decades can be a real challenge.  So how can we suddenly align our first-to-market business objectives with those who are deeply rooted in the traditions of first-to-patent or first-to-invent?  Are we talking about a complete cultural change?  Well, changing a company’s culture doesn’t happen overnight.  We can, however, guide the behaviors of people with a few basic business fundamentals.  A clearly communicated reward system based on first-to-market drivers, guided by a clearly articulated set of metrics can quickly align a company’s overarching objectives with those of its innovators.  When the entire company is aligned under first-to-market vs. first-to-patent objectives, OI efforts will begin to take hold, allowing a company to realize success through sustainable market leadership. I am interested to hear how R&D leaders are instituting change in their organizations and the metrics they have defined to measure success.

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

Have you noticed the major shift over the past two years, where companies are now shuffling to meet new public demands for sustainability?  We sure have.  In fact, we see nearly eight out of every ten companies that we deal with now identifying Sustainability as a major component of their overall corporate strategy.  I salute these companies for making a difference (or at least, budgeting to make a difference).  Now that the honeymoon period and excitement of planning for a new green strategy is over, the real work begins.  As the saying goes, “The devil is in the details.”

Most innovative companies have a track record of responding to consumer demand, and finding creative new ways to meet them.  However, we are now seeing something unprecedented – nearly at the magnitude that the Internet revolution caused back in the 90’s.  We see a vast majority of companies struggling with the same issue of reinventing their products, processes, facilities and manufacturing practices in order to reduce energy, waste, toxic materials and overall carbon footprint, while increasing efficiency.  For most companies, this means tapping into a whole new area of expertise that previously did not exist.  While this presents great new market opportunities for some, it also carries with it a great deal of risk for those not prepared to completely restructure their core competencies. 

What most companies struggling with their new green strategies may not realize is that they do not have to reinvent the wheel in order to meet this new demand.  In fact, for nearly every new innovation challenge they face, there is likely already an existing technology that will allow them to quickly bridge their innovation gaps.  Literally hundreds-of-thousands of green entrepreneurs have anticipated this trend, and have been developing new technologies in hopes of fulfilling a new sustainability need.  Open Innovation (i.e., the management practice of going outside of your company’s four walls to find breakthrough innovations) has given these revolutionary shifts in both the supply and demand sides of green technologies new hope.  Companies are realizing that they can make a difference faster, by getting their new green products and processes in place at an accelerated rate.  Feel free to share your insights and experiences.

If you’re interested in open innovation and sustainability, contact us today to find out how our open innovation experts can help you.