Congratulations! You have been tasked with implementing or re-implementing an open innovation program within your organization. What is your first thought? Google ‘open innovation’, read some books and papers, talk to people you know that are at companies that have active open innovation programs, hire a consultant or just wade in and try and make it happen? Actually, all of these are good things to do. Today, there is a rich body of knowledge about open innovation and how to create and implement a successful program.

For the last 15+ years, my work has consisted of consulting to companies that are engaged in large scale transformation programs such as re-engineering, SAP and most recently open innovation. If there is one lesson I learned from my consulting work that I would pass on to someone at the beginning of an open innovation program – it is to communicate, communicate and then communicate some more. Yes, you need a well articulated vision, clearly defined objectives and buy-in from leadership. You will need to make sure you know your innovation organization’s strengths and weaknesses. You will need to fully understand your innovation ecosystem (current network of partners/suppliers). At the foundation you will need to have some type of simple process to leverage your innovation ecosystem, and the people in the functional areas that interact with the open innovation process will need to understand their roles and responsibilities. All of this is necessary - and more.

Ultimately the long term adoption of open innovation will be a function of how well you communicate. You need to communicate that you are implementing open innovation, why you are implementing open innovation, and what you are learning along the way. Share the setbacks and successes and stories about the people on the front lines. This communication needs to happen in many forms, many places and not be limited to the open innovation group. And, when you think you have communicated enough, communicate some more. Think in terms of a constant drumbeat.

One of our clients talks about the three phases they are progressing through in their open innovation program. These are introducing, embedding and delivering. At each stage we have been communicating to the broad organization through multiple channels. They are seeing the benefits of this communication through new innovation as a result of both internal collaboration across business units and new external collaborations. They realize there is still much to be done, but they can see the change that is happening and a new mindset of open innovation emerging.

One of my US colleagues said that the refreshing thing about Europe is that it has 20 or so very different systems which all, in some way or another, seem to be working. Multiple solutions for the same need, that seems like the essence of Open Innovation. Was OI invented in Europe?

Reading the article ´Connect and Develop´ by the very American Harvard Business Review inspired me in 2006 to start a company in open innovation providing expert services. The idea was simple enough:  disclose the enormous innovation potential for companies in Europe by engaging the people who actually invented all the technology and developed all the great products of the last 20 years. They were going to retire anyway and it seemed like a great idea to intelligently use this wealth of wisdom.

There was one small challenge to overcome: getting the companies to engage with these top experts.

One of my lessons learned from working in open innovation in the past four years was that corporations lack the interface for actually sourcing and engaging with external partners in innovation. One of the CTO´s in a more philosophic mode remarked that it was related to the unbalance between “Yes” and “No” inside corporations. If someone says “Yes”  to something from the outside they are required to explain and defend their choice for working with an outside party. Saying  “No” obviously does not require explanation, even if it would be discarding the million dollar idea…

It goes to show that we should applaud the heroes that actually say yes to collaborative innovation, willing to explain themselves to their superiors, colleagues and existing partners. Within NineSigma Europe we are very aware and grateful for the champions that we have at the clients in Open Innovation. That is why we want to organize a way to recognize these champions and create some visibility for those people and organizations that lead OI.

More on this in my next Blog.

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.

Over the last ten years, we have either worked for or discussed working for a large number of companies that are implementing open innovation programs. Many times they have referred to NineSigma and others as Open Innovation intermediaries.

I have always pushed back when firms classify NineSigma as an OI intermediary. To me an intermediary is a group that simply connects two groups together and hopes for the best from the connection.

At NineSigma our work is focused across the two dimensions of Engage and Enable. Our Engage business is all about supporting our clients in solving a critical business challenge. This may involve finding and acquiring a platform technology to enable a suite of new products, it may be mapping out a white space and presenting options to our client on how to capitalize on new opportunities, it may be helping indentify new applications for existing technologies or it may be identifying and then contracting with a co-development partner.

The work typically involves broadly Engaging the global innovation community in order to deliver the desired results to our client. We use the term Engage to differentiate NineSigma's level of interaction with the global innovation community. Engage implies searching for and then engaging groups identified to deliver results to our client. Engaging means dialog, analysis, interpretation and synthesis to create a final work product that adds value to our client. This is much more that simply acting as an intermediary and connecting two groups together and hoping for a good result.

I have always liked these funny eye tweaking images in which you can see two different images depending on how you focus on the picture.   

Trying to solve a problem is quite the same; depending on how you look at the problem your outcome may vary. When looking at the image, your brain is doing the trick on its own, but how can you do that with a problem? Most of the time we look at the problem from one single angle: the one we are familiar with. Whether this “way of thinking” comes from our education or is built on our experience doesn’t count, what matters is its uniqueness and the difficulty we have to change our point of view. Corporate thinking in organizations tends to polish peoples’ creativity thereby limiting dissension.

Methods like Lateral thinking and tools like S.C.A.M.P.E.R. or TRIZ are available to help creativity and can be applied to problem solving but they require some training and self- discipline. Very often, getting an “outside view” is simple, fast and efficient to help in finding novel approaches. 

At NineSigma, every day we practice this “outside view” for our clients looking for innovative solutions or business approaches. Even better, we perform a “double outside view” that I have seen at work very efficiently dozens of times since I have joined the team. The first “outside view” pass, occurs with our Program Managers who unscramble, decompose and formulate the problem. They methodically review every possible approach in order to open as many paths as possible for potential solution providers. The second pass is done by the solution providers who offer their own knowledge and approach to the problem. Of course, the first pass drives some expected results in, but almost on every project we do receive unexpected or unobvious solutions. The famous quote from Albert Einstein: “Problems cannot be solved at the same level of awareness that created them” has never been so true.  

Exactly one month ago I was sworn in as a US Citizen, and this 4^th of July will thus have special meaning to me.  I will now look at what’s happening on this day with a sense of belonging and sharing, and being a part of something bigger. I think in a lot of ways that is what happens when people practice Open Innovation. When collaboration between two companies is done successfully, they will share many very important details around their future growth goals and projects, and create something that is bigger. It is almost like being “sworn in” to be a part of the community of Open Innovation Practitioners.

America became a very successful nation by being a “melting pot” of people from all nations; people that brought their brains, their energy, and their passion here in order to build a future for themselves and this country. Again, there is a striking analogy here since Open Innovation is also about people from all nations bringing solutions to problems that will help companies, and consequently also countries to have a better future. Could America have been as successful if only one set of people were allowed to contribute to this country?

Lastly, when thinking about the birth of this nation, there was a set of progressive thinkers that were passionate about doing the unthinkable:  To create a true democracy, with “The People” contributing to the development of the country and its institutions. Likewise, Open Innovation was started by some progressive thinkers that did the unthinkable: To say that more and more innovation needs to come from the outside!

My hope is that just like this great country that has been around for well over 200 years, Open Innovation is here to stay as well. It has had its revolutionary wars, but it has come a long way from its early days.

A Happy 4^th of July Weekend to all of you!

Sincerely, Andy Zynga

An Israeli investor in the medical devices industry recently complained “Israel has too many start-ups. Israeli companies are great at taking an innovative idea through the alpha stage, but then the start-up goes under because we lack companies with the expertise to fund through beta and scale to manufacturing”.  “Aagh”, as my Jewish grandmother would say, “we should only have such problems”.

With the jobless rate for newly minted college graduates at historical highs of 7.5%, Thomas Friedman bemoans policy makers’ lack of focus on what the U.S. needs to create good jobs for the future.  “We need three things: start-ups, start-ups and more start-ups,” recommends Mr. Friedman.  

To create a dynamic economy, I question if a country needs to excel at every link in the innovation value chain.  If Adam Smith could speak to me from my Economics 101 textbook, he would ask, “Why can’t my economic theory of the “invisible hand “be applied to create a free trade approach to global innovation?”  

Here’s a free trade innovation model to consider: American industry jointly funds technology incubators that sponsor foreign-grown start-ups.  By nurturing and co-investing in early stage technologies, American companies gain two advantages.  First, they share the risk of failure (which should be high! That’s what makes these start-ups), and second, they nurture technologies that match their applications and needs.

Adam Smith could not have known in 1776 how “innovative” his theory could be in 2010…

Here we are in 2010, some seven years after Henry Chesbrough published the book Open Innovation and we are still seeing a wide disparity in results from open innovation initiatives. In addition, there are many companies that are still trying to determine if they should even try or pilot an open innovation program. What does organizational culture have to do with the success of open innovation?

Hill and Jones defined organization culture in their book Strategic Management (Houghton Mifflin, 2001) as “the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.”

If we break this definition down (at a very high level) and apply it to open innovation can we glean any insights?

First, let’s explore the phrase “collection of values and norms that are shared by people and groups in an organization.” If an organization has always relied on internal resources for innovation and all of the major successes have originated internally, then it will by default be hard to convince this group of people to suddenly change the way they have innovated in the past to look broadly outside of the organization for co-development partners. On the other hand, if there have been innovation successes that have originated through supplier or university partnerships in the past, then this group of people will be much more receptive to changing to be more open to new innovations that originate from outside the firm.

The phrase “control the way they interact with each other and with stakeholders outside the organization” lends insight as well. Here “interact with stakeholders outside the organization” is insightful. Many times we have seen an organization overcome the hurdle of reaching broadly outside the organization to search for new co-development partners only to hit a wall when having to assess what they find from outside the organization and build agreements for co-development and sharing of intellectual property.

One of the lessons I have learned over the years is that you cannot directly change culture. You can change individual behaviors and through this process slowly change culture. In looking at organizations that have benefited from open innovation, what I have seen is an emphasis on changing behaviors through training, rewards, recognition and managers that constantly ask – Have you looked outside? What did you find? How did you use what you found?

I was running late, and I couldn’t find my car keys.  I looked in all the usual places: top of the kitchen counter, inside my purse, refrigerator (OK, that’s not a usual place for my keys, but I was getting desperate). As the minutes ticked by, I found myself becoming more frustrated, until I knew that I wasn’t going to find the keys.

My husband, no longer able to ignore my huffing and puffing and pacing all over the house, came to my rescue.

“What’s your problem?”

“I can’t find my keys!”

“Did you look in your purse?”

(Insert silent glare here).

“Here they are”, he said as he picked them up and tossed them to me. They were, of course, right in front of me.

The moral of the story:  Sometimes, all it takes to find something is a fresh pair of eyes.

That’s how I describe my work with the NineSigma Intelligence Team. Our clients are often already the leaders and experts in their fields, so why do they come to us to find solutions? I think, in part, they come to us because we can see into their space without any bias or preconceived ideas. We look at the information we compile with a fresh perspective that allows us to extract meaning that they might not recognize on their own. In other words, we are the fresh pair of eyes that can find things whether they are deeply buried, or hidden in plain sight.

In our last post we discussed identifying and selecting Needs for an open innovation pilot program. In this post we will discuss the next step of engaging with potential solution providers that may have an answer to the Need.

Many organizations refer to this step as a "make versus buy" decision. This implies that there are only two options for solving the Need - either develop internally or find and use an external partner. In reality, there are three options - internal, internal/external and external. By external, I mean either license technology that exists or co-develop. We see many of our clients pursue the internal/external path where they are working on the issue internally at the same time they are searching externally for someone who has either solved the problem or is farther along or on a different, more compelling solution path.

The other process that is undertaken at this point is determining the solution network. For large, global organizations the first step may be to communicate the Need broadly within the organization to see if there is a solution available internally. We are currently working with a large multi-national chemical industry client to create a structure / process to communicate needs internally in order to leverage their globally distributed R&D resources. Once the internal search for a solution is exhausted then the search becomes focused on external resources. Now the decision becomes one of "do I use my existing networks or do I use a firm like NineSigma to communicate the Need broadly?" Again, here the answer is not yes / no, but what factors such as timing, cost, degree of technical challenge and others may play in the decision making. Many times for incremental technology development an existing supplier may be the obvious choice. Or there may be considerations for funding university work such as "community relations" that drive the decision.

Looking broadly, across industries to the global innovation community has one significant advantage and that is the opportunity to find an "unobvious" solution to the problem. In our work in over 1,600 open innovation projects, we have seen many unobvious solutions. Semiconductor research applied to fabric care, candy dispensing applied to appliances, agriculture sensor systems applied to automobiles and many others. In addition to the opportunity to find an unobvious solution, reaching broadly to the global innovation community will bring back considerable information that the project team can use. This external information combined with internal knowledge will help with decision making and ultimately reduce project risk.

Back to getting started with open innovation. We would recommend evaluating the Needs that were the highest priority and selecting some of these to communicate to the global innovation community. There are a number of firms today that can help with this. Evaluate them and select a partner. When looking for a potential partner a couple of key points to evaluate are:
- level of support provided to the OI project team
- breadth of network and is it a passive or pro-active approach to finding solution providers
- how is IP handled
- experience and references
- others

In the next post we will discuss what happens once you have connected with the global innovation community and have initial the results back.