Co-working.  In a world of collaboration and co-creating, we now have co-working.  According to the New York Times July 17, 2011 article “Working Separately, Working Together”, freelancers and telecommuters are finding that being unshackled from the office environment is not nirvana.  Instead, it is a lonely place.   The work-at-home crowd is abandoning their corner Starbucks for membership in co-working spaces called IndyHall and Hive.  These 5000 square ft., open floor plan office spaces offer the community and collaboration that comes from a shared, non-virtual work space.  You can “rent” a cubicle (isn’t that what they were fleeing?!?) and soak in the collaborative energy of tapping keyboards and human contact.

At NineSigma, we witness this collaborative energy in our Linked Innovation programs.  Clients come together to address some of the thorniest problems, recognizing that their combined efforts can accelerate the outcome that they each seek.  One group has been working together for 6 months to address a key sustainability issue that impacts their entire industry.  Merging the perspective of nearly a dozen powerhouse corporations into a shared vision statement and action plan is no small task.  As they toiled to blend the nuances of each company’s viewpoint, I secretly admired their passion and commitment.

These companies recognize that they cannot solve the big, global challenges by “freelancing”.  Whether they are seeking new technologies to achieve their long-term sustainability goals, or finding efficient ways to meet regulatory standards that ensure consumer safety, collaboration is the accelerator.  NineSigma’s Linked Innovation program provides the “co-working” environment for them to bring together their collaborative energy into a virtual and physical place.

And like Hive and IndyHall, we even provide the coffee.

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.

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.