Implementing Open Innovation – Making It Stick

By: Tom Culver

Open Innovation is becoming an essential part of an enterprise innovation strategy. Yet, so often, companies focus on getting a narrow set of tactical activities going without thinking through the strategic and organizational issues necessary to enable those activities to have the intended impact. This brief article covers a few of the implementation challenges faced by companies seeking to establish successful Open Innovation programs.

Many organizations today are making considerable investment and progress in developing an Open Innovation (OI) culture to enhance their internal corporate innovation capabilities. OI involves identifying and using ideas, technologies, or innovations from parties external to an organization. OI entails effectively working across the boundary that exists between an organization and the external innovation ecosystem surrounding that organization. OI management seeks to optimize the innovation in-flows and out-flows through this boundary to create value.

Often lacking in OI efforts is a well-managed strategic vision

Highly functioning innovation-driven companies have well-established internal processes and capabilities to bring innovations through the traditional research, development, and commercialization phases. These existing internal innovation capabilities can and should be augmented with OI activities that leverage external innovation activities synergistically with the internal innovation efforts.

Look before you leap

Often a corporation jumps right into building a tactical OI capability based on adopting a known OI process, using outside OI experts to get things going, and piloting an OI initiative focused on “making it work.” Tactical OI activities such as developing ideation, scouting, partnering, and OI communication resources are often the first OI focus areas for a corporation and, with good planning, are usually well implemented. But effective OI also demands a more sophisticated means of seeing the external world of opportunities and engaging it before and throughout the new product development pipeline.

To become an “OI-driven company” requires a vision and a strategic plan

To become an “OI-driven company” requires a vision and a strategic plan for working beyond the boundaries, not just bringing innovations in from external sources when research and development cannot deliver. The following diagram (Figure 1) illustrates that throughout the traditional new product pipeline (orange inner funnel) there can be many opportunities to steer information, ideas, and technology to, and even beyond, an external innovation ecosystem (green outer funnel) to drive innovation and create value. The porous new product funnel, which enables spinning technology in or out, is a typical OI framework.

Figure 1. Open Innovation Model of New Product Development Pipeline

 

The external lens

Often lacking in OI efforts is a well-managed strategic vision—and the associated business-aligned filter—that sits in front of the funnel and provides a “focused external view.” What RTI sees in practice is that as high-functioning innovation companies begin to implement OI, they often struggle with considering and managing a few essential activities, all of them related to developing a “focused external view.” Some of these focused-external-view implementation challenges include the following:

• Systematically managing the world of ideas that exist outside a company and that lie upstream of that new product funnel
• Building a strategic vision informed by a managed set of those ideas (shifting the “fuzzy front end” into a “focused front end”)
• Identifying and clarifying the unmet innovation needs required to achieve that vision
• Filtering the projects that get selected to enter the inner funnel (active development) so as to focus energy on only the best projects
• Monitoring and nurturing the ecosystem (green external funnel), but only engaging it when it aligns with strategic, filtering, and project imperatives.

Developing the processes and capabilities to maintain a “focused external view” is a large part of the OI implementation challenge. However, once a focused external view is achieved, other tactical OI activities such as technology and venture scouting, strategically aligned ideation, and value-driven out-licensing efforts can all be much more effective. With a clearly defined OI strategy, processes, and activities, an organization has a much better chance of developing a transparent—and engaged—OI culture, which is essential for successful OI.

Organizing for adoption

Creating a strong culture for OI is critical for both the initial and longer-term success of OI, especially at the strategic business unit or department level. Consistent and proven support for OI by corporate leadership is often mentioned as a first key step toward building an organizational and cultural acceptance for OI. While executive-level support is critical, so is cross-functional and cross-business support, and getting that support requires a structured and transparent approach.

A “focused external view” is a large part of the OI implementation challenge

In addition to managing external boundaries, large corporations adopting OI also have to manage internal boundaries—those between and among the corporate OI function and the Strategic Business Units (SBUs). Figure 2 illustrates a typical OI organizational model that shows how OI initiatives and resources can be focused and driven from a corporate hub but, to succeed, must have a strong two-way connection to the SBUs.

Figure 2. Typical “Hub and Spoke” Model for Large Corporate OI Organizations

In terms of OI implementation, this type of model requires defining, communicating, and developing the roles and responsibilities of the OI leaders at the corporate and SBU levels to create OI competency. In practice, RTI sees that educating, engaging, and empowering disparate SBUs can be a challenge to OI implementation. Some common OI competency challenges are listed below:

• Identifying and developing a core set of trained and capable staff that have a clear understanding of the strategic and tactical OI elements, and the processes, tools, and funding options to execute them
• Building competency and advocacy for OI at the SBU level
• Developing an internal network of “connectors,” “influencers,” and “sponsors” within and across the global enterprise, in addition to dedicated OI leaders
• Choosing which OI activities—e.g., ideation, project definition and selection, scouting, or networking—should be done, how to implement these activities, where in the organization to implement them, and when to implement OI activities as part of existing innovation and new product development cycles
• Scaling internal support resources to make OI efforts successful as internal and external activities evolve and increase.

Learn by doing

Addressing these kinds of OI competency challenges requires education focused on fundamental OI frameworks, processes, and strategies.This fundamental education should supplement training on the mechanics of actually doing OI tactical activities, such as developing useful needs statements and following a structured technology scouting process. Beyond building capabilities and competency, true SBU engagement in OI comes from “seeing and doing” actual OI projects using best practices and tools.

Educating, engaging, and empowering disparate SBUs can be a challenge to OI implementation

RTI has found that providing SBU leads with a clear understanding of the strategic framework for OI, combined with strong training in areas like technology scouting, is a critical first step to get the SBUs to accept OI and seek out opportunities to use OI to their own benefit. By organizing mentoring and communities of practice among SBU leads, the corporate OI leads at the “hub” can provide the ongoing support required for SBUs to learn and develop the best practices that are culturally suitable and necessary for sustained use of OI within SBUs.

Addressing these kinds of OI competency challenges requires education

There are many challenges associated with incorporating OI into a company’s overall innovation system and creating a culture that is willing to adopt and truly benefit from OI. Before moving directly to establishing tactical OI activities, a company should pause and think about some of the common strategic, external vision, and organizational implementation challenges above and address them intentionally from the beginning. With a more strategic and structured approach to implementation,companies can build OI systems and cultures that will stick around and have long-term impact.

By Tom Culver

Photo: business hand writing concept of idea from shutterstock.com