By: Mitch Sava
“Open innovation” is a technique that is gaining greater consideration these days. For many companies, this practice has the potential to help them quickly and efficiently harness the new ideas they need in a volatile and uncertain business environment. It also may accelerate and de-risk progress from idea to launch. To realize the power of open innovation, businesses first should come to terms with how “open” they are willing to be.
94 percent of more than 500 executives responding to a recent Accenture survey reported that their strategy depends on their company’s innovation engine.
Innovation is often times viewed as the cornerstone on which an organization’s business strategy relies for long-term success. In fact, 94 percent of more than 500 executives responding to a recent Accenture survey reported that their strategy depends on their company’s innovation engine.
However, their ability to realize the full potential that innovation offers hinges on a number of factors from understanding what may appeal to the target market, to speed-to-market, to the ability to manage a balanced portfolio that includes bold breakthrough innovations.
As open innovation plays a larger part in the overall innovation agenda, companies can increase their innovation capacity, speed and breadth, without necessarily overhauling their innovation operations.
But the challenge for many tends to be the “open” part. Although the very nature of open innovation is that of a net cast wide, the initial instinct is to impose the same control over that process as one might with traditional approaches to innovation. Narrowing the ideation funnel too soon can lead management to prematurely discount the potential value of open innovation.
In fact, studies demonstrate that when used effectively, open innovation can be highly impactful —not just in research-and-development, but across an enterprise.
In fact, studies demonstrate that when used effectively, open innovation can be highly impactful —not just in research-and-development, but across an enterprise. By establishing parallel streams of activity and gaining leverage far beyond one’s internal capacity, a company may use open innovation to generate more ideas, vet them with a broader set of minds, and arrive at solutions more efficiently. Furthermore, by engaging others in the process, risk can be shared across participants, enabling more experimentation at a rapid rate.
A key to achieving success through open innovation begins with the goal setting at the outset of a project, thereby establishing the structure for it.
Typically thought of as being synonymous with crowd sourcing, open innovation is a highly open, customer-oriented methodology; with more than 20 different models exist under its canopy.
Typically thought of as being synonymous with crowd sourcing, open innovation is a highly open, customer-oriented methodology; with more than 20 different models exist under its canopy. These models run the gambit from social-media mining to wiki platforms to joint ventures. Selecting an appropriate approach for your particular need and context is essential to making the effort a success.
The selection of an open innovation approach is the product of an early conversation that articulates the goals for and characteristics of the project. That process helps management strike the right balance between constraint and improvisation. Once the sidelines are drawn, a company can be content to watch things unfold spontaneously on the field of play. To choose the right model, a company can look at its pending project through the prism of the following dimensions:
- Challenge: This refers to the breadth of the question one is asking – or even more to the point, the nature of the solution at which the company is trying to arrive. On one end of the spectrum might be something as broad as, “We are looking for any and all ideas that might improve our brand.” On the other end might be a challenge that is far more specific, for example, “We are looking for a polymer that has particular characteristics for density.”
- Location: Although open innovation is typically thought of as occurring online, many effective models involve physical proximity of participants, particularly when it requires rapid brainstorming and the collision of different perspectives. Think of the rise of the weekend “hack-a-thons” and “innovation camps,” which often involve 100-plus people working side by side around self-generated challenges or ideas.
- Control: To what degree does the company want to control project activity? At one extreme the company exercises complete control of the topic, participants, time constraints, monitoring, and idea vetting. At the other extreme is the “free-for-all”, such as an open source project with complete transparency, democratic decision-making, and self-monitoring.
- Collaboration: Paradoxically, there can be a lot of latitude as to how “open” an open innovation project might be. An example of a very open collaboration would be Wikipedia, in which anyone can participate. A closed model might be a joint venture, in which the participants are hand-selected and only known to one another.
- Depth: This refers to how penetrating the open innovation activity is within the greater organization. At one end lies a project that is surface-level and marketing driven, like an app challenge. This does not affect how the organization runs. At the opposite end is the truly embedded open innovation in which the project requires involvement across the organization.
Open innovation represents a paradigm shift in how innovation gets done. The old paradigm was dominated by secrecy so as to keep competition from stealing ideas and beating you to market. This resulted in low problem-solving capacity. The new paradigm is signified by its emphasis on collaboration so as to maximize all available brainpower and expertise. The benefits of this newer model include reduced speed to market and increased development at lower cost. While losing secrets to the competition is a concern, companies have found ways to successfully manage this risk.
Open innovation, as illustrated below, can be extended to capture insights and ideas, not only from within a company, its suppliers and customers, but also others in the public at large who may offer the breakthrough ideas that organizations are seeking.
Various degrees of “openness” exist. When establishing an open innovation strategy, considering these dimensions will enable you to not only choose the right tool for the job, but also provide the boundaries within which creativity can freely roam.
Question: How do your open innovation projects appear when you look at them through the prisms of challenge, location, control, collaboration and depth?
By Mitch Sava
About the Author
Mitch Sava is an executive in the Innovation and Product Development consulting group at Accenture, a global management consulting, technology services and outsourcing company.