In my last blog post I described my checkered past, and how from graduate school to present what we now call Open Innovation has been a constant presence in my career. I reached outside many times, and can document millions of annual profits because of it. I ended with this comment:
“I’ve worked as they say, both sides of the street, and now I work in the in middle, part traffic cop, part coach, part target.”
Open Innovation is something I think is very much worthwhile even if I’m constitutionally allergic to the business jargon and buzzwords that surround it these days. I have a privileged position now, applying my experience to helping other people do this. I get to see a lot of what goes on inside a great many companies both in the US and now from my seat in the NineSigma office in Europe.
My first observation is that in general people are not as successful at open innovation as I was or current leaders like Procter and Gamble are. I’m not unique in making this observation. Sieg et al ( J.H. Sieg, M.W. Wallin and G. von Krogh, R&D Management 40, 3, 2010) have looked at the use of intermediaries and come to similar conclusions examining the activities of another OI intermediary. One of the striking observations is that 7 of 8 of the clients had abandoned their relationships with that intermediary.
Investigating the causes of these failed relationships it becomes clear that project expectations were not met. But is that the whole story? Were the project expectations reasonable? Were in fact the project choices reasonable? In short the answer is mostly not. This quote is all too familiar to me-
“If I said our scientists were not very enthusiastic, you can imagine what kind of problems the scientists put up and now I exaggerate a bit [ …] they […] didn’t come up with things they think might have a good chance of being solved.”
How is it that the corporate leadership that buys these services doesn’t see this coming? Consider the possibility that the leadership has either been oversold or all on their own ‘over bought’. OI is surrounded by hype about easy successes due to scooping up readily waiting technology and making big immediate impacts on bottom lines, promoting growth etc. The very projects that don’t have a good chance of being solved above are also those that are likely to have hung around gathering dust precisely because if they were solved a great benefit would come. So a skeptical or threatened scientist puts forward these unsolvable problems as a way to get this culturally new means doing things off their plate and senior management approves them because they fit the big score expectations that they have for OI. A winning combination.
The expectation of easy success going outside is one of many mistaken ideas we see. Another is the false belief that the problems chosen are uniquely recognized. The idea that the major problems in your market and/or technology space are not recognized by your competitors has no basis in reality. Our team may be smart, but generally so is theirs. But following this line of thinking leads to poorly specified requests being created in an effort to hide the real purpose.
A belief that is equally perplexing, but well known to researchers is the idea that our own team isn’t smart, so we need to look outside. Generally, this attitude develops when scientists point out to management that their pet idea has a problem. For years consultants have made comfortable livings providing second opinions in cases like these. Now OI is used as well when internal scientists proffer an unwanted answer. This in turns leads to projects where the chance of finding something is low.
So what makes a good OI project? One clue can be found in the Seig article. In describing progress towards a goal, the authors note that while the main objective is well documented and planned “…when problems occur on the way, they are discussed with colleagues in the group or in the hallway but rarely formulated in an explicit problem statement. The problems are ‘in the heads of the scientists’… My experience in delivering results with OI is that those little intermediate problems are precisely where big impacts on time to delivery of the overall project can be made. Need to blend a mixture of dissimilar size and shape pellets? Need to separate misblended mixtures? Sure we could have done it in house…eventually. But going outside was so much faster. Need to understand how a competitor achieved a longer shelf life? Sure, we could have collected samples and tried one analysis after another, but finding the right expert got the job done in days to weeks.
What doesn’t get recognized also is that many of those ‘little’ problems are already solved by the use of outside resources. We needed to reduce coking in a reactor preheater section. A sales rep provided us with the right feed atomization technology. This sort of problem solving is routine and because it isn’t a big problem, isn’t captured generally when people speak of OI success. But without that atomizer or a hundred little things like it, we couldn’t have delivered the reactor model, and without the reactor model we couldn’t have built the pilot plant and without the pilot plant we couldn’t have validated the reactor simulator, and without the reactor simulator we couldn’t have designed the new system that put the millions on the bottom line. For the want of a nail..the kingdom was lost. These days, when working with clients, I tell this story and I ask them, “What are YOUR nails”?