The OI Scorecard Survey tool was developed in the 3^rd quarter of 2010 to help companies assess their collaborative innovation capabilities both internally and externally. We recognized that companies struggled with understanding where they were in relation to other companies using collaborative innovation, and set out to create this online too. In addition to being  interactive and easy to use, the OI Scorecard tool has provided tremendous insights into where  companies are making progress, and where they are not.

I find that one of the more interesting pieces of data from the survey highlights an issue that we have heard many times from some of our large multi-division, multi-national clients. And that is – while 62 percent of those responding rated themselves as effective in tapping into the creative brainpower of their colleagues, only 10 percent had the systems and processes in place to recognize the most promising ideas, and quickly bring them to market.

We expect to see tangible progress in the area of internal collaboration over the next few years. Even companies who lead their industry struggle to improve internal access to information and expertise. As we heard from Dick van Beelen, Director of Open Innovation, AkzoNobel, in our recent Webinar,  “If only we knew as a company what we know, or if only we use what we have - and that in itself sounds like an open door. But, if you think about a siloed organization, this is indeed a big challenge.”

There are many proofpoints collected from the survey data and articulated in the OI Scorecard Survey Report . Have you had a chance to read the report? If so, what findings did you relate to most, or what surprised you? We would like to hear your thoughts.

While failure is perceived to be a natural part of the innovation process, no one really wants to see their innovation team fail, particularly when the stakes are high. My NineSigma colleagues and I have been giving it some thought lately, and it is interesting to hear people's answers to the question 'Why do teams fail?' Fast Company featured this topic in their 30-second MBA video series and asked NineSigma's Denys Resnick to prepare a short (yes, 30 seconds) video on the topic. Denys asserted that it is 'trust' that lies at the core of any good team. When we proposed the question to a broader audience via our LinkedIn group, we received an interesting response from a client.

Blaine Childress, a seasoned innovation leader from Sealed Air and a client of ours, had some interesting thoughts on the why teams fail. Per Blaine: "There are many, many reasons:

1)  lack of trust- results in isolated rather than cooperative, synchronous progress. If the members are not interacting and communicating, an advance by one sect may not fit with that by another. If this continues too long without shared update re-tooling is needed, time is lost, and blame games too often ooze in.
2)  environment- a team may possess the right composition, practice the proper level of communication and role responsibility, but be broad-sided by upper management's sudden change in priority. Budgets can be cut to a crippling level; critical members may be pulled away (together with the skill/talent they were previously providing); and excitement fades. It is difficult to resume the race with such losses.
3)  loss of urgency- nothing drives team melding like a common sense of urgency. Rapid progress toward what is uniformly seen as IMPORTANT provides self-satisfaction. Management must be present at quarterly or monthly team report meetings to echo/reinforce the importance of the effort and the launch date. A team ignored can often be a team that loses momentum. Obviously, urgency is linked to environment.
4)  lack of continuity- the team should have consistency in terms of its leadership and communicators. Membership will naturally change as a project matures from early prototypes to early stage manufacture, but champions from the internal and external subteams should be kept to insure clear relay of purpose and maintain trust."

In addition to these reasons, I am interested to hear what other factors can cause a group to fail. Please share your thoughts with us. 

We enjoy regular dialogue with other leaders and strategists active in the blogosphere and especially those who take interest in bringing innovation to new heights. NineSigma President  Matthew Heim recently was invited to participate in a five-part Q&A series with business strategist and thought leader, Sramana Mitra. The insight and perspectives they discussed in the interview deliver a compelling read to anyone interested in learning more about collaborative innovation. Please check out the full transcript of this in-depth discussion of the dynamic innovation landscape on Ms. Mitra's blog.

Article I in a series of four articles published in the Innova Food and Beverage Innovation publication in 2011. Reprinted with permission from Carlos Barroso, a former client of NineSigma's while at PepsiCo.

This is the first in a series of “how-to” articles for getting tangible results with an open innovation approach to research and development specifically in the food and beverage category. Written from hands on experience and a strong knowledge of the open innovation space, this article covers both how to get started and how to set the strategy. The remaining series will address:

·         Soliciting proposals for external research partners

·         Filtering proposals and getting to contracts with research partners

·         Managing a network of external partners including weeding and feeding

About the Author

Carlos Barroso is a highly experienced, international Research & Development Executive in consumer products, with deep experience in Foods and Beverages.  He has built an extensive, open innovation network with external research partners across universities, suppliers, consultants, and small entrepreneurs located around the world.

Carlos is the Founder and President of CJB and Associates, a high level R&D consulting firm specializing in Product Development for the Food and Beverage category. CJB and Associates manages open innovation projects, conducts Innovation Assessments, creates Quality Assurance programs, and facilitates innovation and strategy ideation sessions as well as helping with high level R&D strategy.

Prior to starting his consulting firm, Carlos was the Senior Vice President for R&D for PepsiCo’s $27 billion global food and snacks business. Before joining PepsiCo, Carlos was an Associate Director of R&D at Procter & Gamble. In addition to R&D he has Market Research experience in consumer product testing.

How to begin

You’re ready to embark on an open innovation project. Maybe you’ve already had some projects. Maybe it’s your first time. Regardless, the first step is to clearly define the problem and what success would look like. Let’s also be sure to ask why we think we need an open innovation approach and how do we think it will be different from the way innovation has been done in the past.

Open innovation has become part of the innovation vernacular since Dr. Henry Chesbrough coined the term in his 2003 publication on it. Procter & Gamble embraced it early and brought it to the world of Consumer Product Goods companies with the 2006 publication of  “Connect and Develop” by Larry Huston and Nabil Sakkab in the Harvard Business Review.

It’s a good idea to spell out what open innovation means to your company. Keep it simple. If all your R&D has been done in house it may be as simple as looking for some development or technology from outside the company. If you already have a strong network of external partners it may mean expanding that network to research partners in other fields or industries or geographies

Set The Innovation Strategy And Define Success

I have often seen teams jump on an open innovation project without spending enough time up front to define and align on what success will look like. The focus is often on the scouting part of the process without having spent a lot of time agreeing on the problem to be solved and the criteria for success. While seemingly trivial, setting a solid idea for what qualifies as “success” is a vital first step in any innovation oriented project. All too often, an otherwise capable team will embark on a project without clearly outlining this step and will be brought to a standstill when confronted with the varying goals in the different functions or divisions of a company.

Setting the innovation strategy should be done cross functionally and with strong management support and involvement. Too often we’ll see an open innovation project go after solutions to problems that are not seen as priorities because the team has not done the alignment with enough of the internal customers. In the CPG world you have to have engagement from Supply Chain, Marketing, Sales, Legal and R&D and possibly Human Resources if there is a cultural hurdle to over come.

At CJB and Associates, we spend a lot of time on the upfront part of a project assembling the right team and having an in depth review of what the innovation priorities are and where and how open innovation can help. It’s important to include the existing network of research partners. Every company we’ve worked with has some sort of network in place. Usually, they include suppliers, a group of consultant experts, and possibly some universities and trade association groups. If a good solution can be found with an existing relationship it saves the time and risk of having to establish a new one.

Considerations For Setting The Success Criteria

Every project will have a unique set of success criteria, the more specific the better. We ask the client to clearly describe what will be different a year from now and three years from now if the open innovation project is a success. The use of imagery is especially helpful for a cross-functional team as it allows each function to describe success from their perspective.

The R&D function may talk about breakthrough technology. The legal team will want solid intellectual property (IP) protection and little risk of infringing on other’s IP. The marketing team will think about a superior consumer proposition. Sales will want a great story to bring to customers and a cost basis they can work with. Supply chain will want to make sure the new technologies that emerge can be scaled up and planned for in their capacity and ingredient purchasing planning. Finally, senior management should be able to articulate expectations of what a successful increase in sales and profit would look like and over what time frame.

Once the expectations from the various functions on the project team are clearly articulated it is up to the team to distill them down to a short list of project objectives with a clear definition of success and expected actions. CJB and Associates strongly recommends that these objectives and definitions of success are written in a “contract” and signed by all team members. This is the time for second guessing the priorities, not once the requests for proposals are out and the team is contracting work with external research partners.

What May Be Included As Success:

Solutions from non-obvious sources

Keep an open mind towards non-conventional solutions to achieve your goal. Often times such a solution will end up saving valuable time and money. We have found one of the hallmarks of successful open innovation is when a solution comes from an unexpected source. For example, we found a lead for a lower sodium salt from a group working on solutions for osteoporosis. The research group happened to use salt in their proof of principle for a technology that was never intended to apply to the food sector. In a different project that looked for a better way to refine healthy edible oils we found a promising lead from a group working on fuel cell technologies. In this case the fuel cell team was working with novel separation technologies that as it turned out could work for edible oils as well. 

In projects involving food ingredients we have found many break through solutions from the pharmaceuticals world. Pharmaceutical companies have spent years working on better drug delivery technologies. Many of those technologies are ideal for delivering flavors. The pharma groups are usually happy to find new applications for existing technologies and the food companies can take advantage of the years of development and safety testing without spending the many millions of dollars typical of a pharma R&D project.

Protect the Technology

Protecting the technology can be realized a number of ways. The important thing is to make sure your company will own it for the applications you’re interested in. Patents are a common way to protect IP. However, you need to be thoughtful about who owns the patent if you engage external research partners. You can demand full ownership of any emerging IP. But, it may be more constructive to consider jointly owned IP where each party defines the applications they want to own. For example, if you are looking for a better oil for frying potato chips, you may be willing to do joint research with an edible oil producer who is primarily interested in the french fry business. As long as you own the IP for potato chips and have no vested interest in the french fry business you can allow the oil producer to own the french fry application. 

Building a superior consumer proposition

Because we’re focusing on the CPG world any success criteria has to involve a benefit to the consumer. It could be better taste, a health benefit, a cost benefit or some combination. A tangible and measurable definition of success will make defining actionable objectives much easier. For example, if better taste is an objective set a consumer test win versus competition or an internal reference as success criteria. If health is an objective you may need a clinical trial or at least very clear product nutritional guidance (e.g. no trans fat and less than 15% saturated fat; less than 100 calories per serving).

Strategic fit

Having a strategic fit assumes there is a clear innovation and business strategy in place. For example, you may have a strategy of improving the health and wellness of your portfolio against a clear set of objectives such as having over 50% of new revenue from healthy products. A project that addresses that strategy such as a lower sodium technology or a natural non-caloric sweetener would likely be a good strategic fit. Though you may chose to pursue an open innovation search that is not a strategic priority it will still be helpful to be explicit whether or not a strategic fit is a relevant success criteria or not.

Likelihood of Success

There is a natural tension between the degree of breakthrough of an objective and the likelihood of success. A tasty and inexpensive non-caloric carbohydrate with heart health benefits would be a breakthrough objective but a higher risk (or lower chance of success) and should be reflected accordingly. CJB and associates recommends a portfolio of objectives and a mix of prospective technical solutions to balance a risk / reward portfolio.

Lay out the game plan and communicate milestones

With the project objectives set and aligned be sure to communicate broadly to the team and senior management what to expect in the coming months and even years. In our experience many senior teams are enthusiastic about taking on breakthrough innovation but are used to time tables that are more appropriate for close in product upgrades, not game changing technical innovation. We have found it is especially helpful to define tangible milestones in the project on a least a quarterly basis to make sure the broader team and management knows what to expect and has the opportunity engage in the process if they don’t agree with the project flow or want to build on it.

The diagram below is an example of how a team can lay out a general game plan for the project.

Open Innovation Project Kick Off

With the objectives set and the key milestones and timing broadly communicated the next step is an official kick off. Key stakeholders from all the functions should be invited. It’s important to make roles clear. Some individuals will be advisors while others will be owners and, of course, there is an overall project leader who can make decisions.

Setting the Budget

Be sure to have a budget in hand to get things moving. It’s hard to know exactly how much to budget but we recommend having enough to get through the first six months which is typically how long it will take to solicit proposals from external research partners, filter the proposals, and establish contracts to engage a short list of partners. Ideally, there should be enough for some early seed money, typically for generating early prototypes. For example, if you ask prospective research partners to submit “proof of principle” prototypes there may be a cost involved. If it is coming from a university where budgets are typically strapped even a modest cost of a few thousands dollars will likely need to be covered by the requestor.

A typical budget for the first phase of an open innovation project is $250,000 - $500,000 which includes engaging a firm for the search, related project travel and consultants if needed. Doing an open innovation search “on the cheap” usually means talking to suppliers and partners who are already in your existing network. This may be fine but don’t expect novel or protectable solutions.

The Next Step

With the team assembled, success criteria articulated and communicated and a budget set you are ready to begin the process of soliciting proposals from external research partners. Stay tuned for the next article in this open innovation primer series . . .

Earlier this month, approximately 70 innovation leaders from 54 companies and nine countries gathered to discuss the future of open innovation at NineSigma’s Open Innovation Leadership Summit.  Conference participants had the chance to network with their peers, while addressing common challenges in OI such as culture change, speed-to-market, public-private partnerships, OI leadership development, IP management and more. While a few of the attendees knew each other from innovation conferences or similar events, it is safe to say that most attendees left the Summit with a number of new connections and memories of an enjoyable time together in Arlington, Virginia. 

One of the conference highlights was the presentation of NineSigma’s inaugural Excellence in Collaborative Innovation award to Open Innovation champions who have demonstrated dedication, leadership and passion in the field of Open Innovation. Our five 2011 winners were: 

• Dick van Beelen, Director, Open Innovation, AkzoNobel NV
• Christophe Mangin, Director,  R&D Global Strategy, General Motors
• Hajime Nagai, Executive GM, R&D Planning Division, Suntory Holdings
• Katja van der Wal, Director Open Innovation, Philips Consumer Lifestyle
• Michael Wynblatt, Vice President, Engineering Technology, Eaton Corporation

From left to right:

Michael Wynblatt, Christophe Mangin, Alexandre Nicolau (accepting the award for Hajime Nagai), Dick van Beelen and Katja van der Wal

Read more about the NineSigma OI Leadership Summit, May 2-4, 2011. Mark your calendars for the next OI Leadership Summit to be held in October, 2012. Details to come.

Since the end of the year is typically a time of self-reflection, it was appropriate that all of us at NineSigma were asked to take part in a Caliper personality assessment. NineSigma has developed a joint program with Caliper launching next month (more on that coming soon!) and we all took the Caliper test to become familiar with the process and learn something about ourselves in the meantime.

Although I was very interested in the assessment process from a professional standpoint, I’ll be honest there was a fleeting moment of apprehension. I thought, do I really want to know what makes me tick? Furthermore, do I want my manager to know that I’m short on patience and skeptical of others? I think all of us approach our work with a good sense of where we are strong and where we need development, and I was therefore quite surprised by how significantly the Caliper process was able to provide new insights into my work behavior/performance.  After taking the Caliper test and discussing the results with one of their trained consultants, an entire picture emerged that drew upon and made sense of everything I thought I knew. The picture showed my strengths, limitations (even though we don’t want to admit it, everyone has them) and motivations. By understanding the bigger picture, it has become much clearer on how I can work effectively with my teammates and maximize my performance.

If your organization is like NineSigma, there is real diversity in the backgrounds and personalities of your fellow team members. We have all enjoyed some private laughs and “ah-ha” moments as we compare and contrast our findings. We may joke that we are low on empathy or accommodating others, but high on urgency as we rush through our days trying to get everything done. Kidding aside, it has become clear that there is now a higher level of self-awareness and team awareness within the organization. As we enter the New Year ahead, we will do so with even greater resolve and confidence that every goal is achievable since we understand ourselves and know how to put our best foot forward.

It’s difficult to chart a path forward if you don’t fully understand your starting point. After years of working with companies at all levels of open innovation maturity, we have developed an open innovation diagnostic tool, the NineSigma OI Scorecard, which helps Solution Seekers quickly assess their open innovation capabilities. The web-based tool provides an initial evaluation of a company’s ability to collaborate as part of their innovation process, both with internal and external partners. The tool also assesses the organizational structure and systems that are needed to effectively support collaborative innovation.

Specifically, the open innovation tool measures a company’s ability to collaborate on innovation in three tiers: within and across the company, with the company’s existing external network, and with the global innovation community. What’s different about this tool is that it not only provides a snapshot of the company’s current status, it offers concrete recommendations for how to address the gaps identified while building on the company’s strengths. The scorecard survey takes about 5-7 minutes to complete and is free of charge. We encourage Solution Seekers to check out this new tool and gain a deeper insight into effective collaborative innovation. 

Read more about NineSigma's new OI Scorecard tool. Get your open innovation score today.

My colleagues work closely with innovation champions who are the backbone of their companies' open innovation programs. They hear stories of frustration, elation and the day-to-day effort that is poured into their work to make open innovation a success. These champions are part change agents, motivational speakers, visionaries, and also the 'work horses' that get the job done.

There was an interesting article on Harvard Business Review's blog yesterday that addressed the unique challenges faced by innovation champions. The author, Rita McGrath, argues that success in open innovation "depends on middle managers, scientists, and intra corporate entrepreneurs scavenging for resources in an informal way". We see this in some cases but we also see a general recognition among our clients that this is clearly not sustainable and the proper processes, organizational design, technologies and yes, budget need to be established to maintain a successful program. We like it when 'serendipity' happens and we find a highly unexpected solution and solution provider for our client, but we don't think serendipity belongs anywhere within the foundation of the open innovation program. Let NineSigma help your open innovation team launch a program. Contact us to learn more about open innovation.

As Anne Morrow Lindbergh was quoted as saying, “Good communication is as stimulating as black coffee, and just as hard to sleep after.”

We are seeing just this type of communication on Open Innovation. Our clients typically have formal internal communication processes that include company newsletters, websites, cross-business meetings and the like. Open Innovation is fast becoming a topic of choice as companies strive to educate and inform their employees on the impact and potential of Open Innovation. Companies are more openly talking about successes they’ve experienced and the challenges they’ve faced as they work at embedding Open Innovation across the enterprise.  

A long-time client, 3M, recently used Open Innovation in its ‘cover story’ for the company’s internal newspaper. The article discussed 3M’s pursuit of a new platform technology:  “The incubator lab team collaborated with [Robert] Finocchiaro to initiate a global technology search. Together, they enlisted NineSigma, an open innovation service provider, to solicit solutions from researchers worldwide. ‘We got more than 40 responses,” [Rick] Neby noted, and one was from a company based in Switzerland that was coating 1.15 refractive index materials for improving ink reception on inkjet paper. Their material had some very desirable optical properties that could ultimately affect products in several divisions.’” The article went on to describe how the company’s incubator lab was sparking new innovation in ways they didn’t think possible.

Siemens recently referenced their Open Innovation work in the company’s magazine, Pictures of the Future. “Siemens is making use of OI methods in research as well. When faced with particularly tricky problems, Siemens researchers sometimes turn to “e-brokers,” who team up with external problem-solvers. In such cases, developers publicly describe their problem on an e-broker website, such as NineSigma or yet2com, and offer a cash reward for the best solution. And that solution can come from a large IT company in India or from an amateur developer in Germany. Approximately half of the problems are successfully solved in this way. So it’s not surprising that large companies like BASF, Novartis, and Nestlé are likewise using this method of finding solutions.”

Open Innovation will continue to be a hot topic within our client organizations, particularly as OI leaders are able to share big wins and lessons learned through the process.  This will further stimulate creativity among employees and help to get them thinking about the infinite possibilities Open Innovation can create for even the most sophisticated companies.

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

I admit, I have had some lingering questions in the past year or so about the role of Twitter in a comprehensive B2B marketing strategy. I've even questioned what Twitter can do for me personally - is it information? is it entertainment? And then I had a sort of social media epiphany as colleagues were gearing up for the Front End of Innovation US conference yesterday in Boston. I was really wishing I was there as I had worked with our President, Matthew Heim, and our panelists from clients Hallmark, Philips Consumer Lifestyle and Sealed Air over the past couple months to prepare for the event. I knew that FEI had invited people to live blog and Tweet from the event, but when I finally tuned in I was impressed. This was real content that made me feel (almost) like I was there. Here are some of the key takeaways I learned through the Twitter coverage:

• Hallmark's Esselman: once "open innovation" mindset was formalized, existing suppliers became extremely competitive

• Philips' Graham Mott: continuous innovation must be driven from top down, but the challenge is keeping champions' enthusiasm up

• Hallmark wants to create an emotionally-connected world and they see consumers defining emotional connections

• Blaine Childress [Sealed Air] talking about how IP personnel inside AND outside the organization have fears - lose my job versus lose my idea

• Tom Esselman [Hallmark]- Crisp definition of needs to commercialize open innovations makes open innovation more likely to be faster

• Graham Mott talking about how stating challenge too broadly will make it hard to sort through the submissions and evaluate them

And at the end of the day there was a great FEI blog post capturing the key learnings from the NineSigma panel session. Now, I know that live blogging and Tweeting is not unique to FEI and that plenty of other events do this. However, the quality of reporting and integration between the different media helped me see the light; that when executed properly, social media can involve you in a physical event in a way that traditional media cannot. I am a believer (well...I am getting there).

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