Who Controls Eco-systems in Open Innovation?

by Stefan Lindegaard

In a discussion in my Leadership+Innovation group on LinkedIn, Mark Karasek asked for examples in which “open standards” ecosystems benefited everyone rather than giving one company a lion’s share.

I had a hard time thinking of such examples so Mark raises a valid point. Actually, I would say that most – if not all – effective eco-systems are initiated and/or controlled by a company that stands to benefit most from this.

I do not view this as a negative thing. However, it should caution especially smaller companies when potential partners pitch you a project in which they say everyone will win. Most likely everyone will benefit – if not then the eco-system will falter as no eco-system can sustain if only one partner benefits from it.

We should just not forget that some always win more than others do. Apple is a great example. They walk a thin line as they keep strong control of their eco-systems and reap the most profits. Nevertheless, they still manage to bring in lots of new partners for their initiatives.

A critical task for smaller companies in such a situation is to evaluate whether this is the right setup to join given that they have limited resources and hopefully several options. They need to keep in mind that not every deal is worth doing.

Is China Innovative?

by Stefan Lindegaard

I tapped into an interesting discussion on LinkedIn. Chris Gelken, who is host and co-producer of Today, a live news magazine, asked whether China is an innovative society.

Personally, I find the development of China to be both fascinating and a bit frightening seen from a Western perspective. Based on several visit, my take is that if China avoids too many financial bubbles, then the drive and ambition of the Chinese people to climb the value chain ladder will turn it into an innovation hotspot sooner than many think.

There are many great comments in the discussion and I have inserted snippets from a couple of them below. Check out the rest for yourself: Is China an Innovative Society?

Zhiyun Chen, Vice President at Pixelligent
I think as indivduals Chinese are very creative. It is result of strong natural selection by firece competetion in a closed society. The problem, though, is Chinese society still lacks mechnisms to channel the creativity of individuals into constructive innovations.

Edward Eng, Copywriter at Getchee
Rather than ask if China is innovate or not, people should focus on how China needs to improve its global marketing skills. The reason why many people think China isn’t innovate is because no one knows what they are doing in China. People and businesses in China have great ideas and products but sometimes they just don’t know how to effectively market them to the global consumer market. This is where China needs to strengthen its innovative juices.

John Walmsley, MD at Scot Lift Systems
They have the ideal situation for innovation as the Universities concentrate on designing and developing products which will meet a market need and not play around learning things which do not relate to Industry and Commerce. Where there is a gap is in Product design where they seem to lack the skills in making their products look modern and appealing. If they get that right then look out World.

Stephen DeKuyper, Managing Principal at CresaPartners
My experience tells me an overwhelming “no”. Good at copying, good at driving costs down, but not innovative. I would be interested in seeing how many patents are applied for out of China. I guess it would be very low. I think with the size of the population, it will go up, but on a per capita basis, I think it will remain low. This does not equate to being smart or not. I just don’t think there is an environment for innovation.

Bill Dodson, Principal at TrendsAsia
China excels at innovation, but not disruptive Innovation. “Small i” innovation is about patching and work-arounds. “Big I” Innovation is about changing the course of markets and even of societies. Chinese culture and history have always been supportive of “small i” innovation, due to the capricious nature of local government policies and decisions; and due to dramatic turns of events – revolts, revolutions, banditry, dynastic dissolution – that quickly destroy the fruits of labor. Hence, the tendency of so many constructions and creations in Chinese society to be just “good enough”; after all, who knows how long such works will be able to stand?

Open Innovation and the Power of Viral Marketing: Simple and Effective Lesson from General Mills

by Stefan Lindegaard

General Mills presented several of their open innovation initiatives at the recent CoDev conference. They are doing great work and I will post more about this later. In this post, I want to show an example of how open innovation can be done in a simple, yet effective way.

The open innovation team at General Mills uses small business cards to describe what they are seeking. The cards are distributed to their contacts. Since the issues are not relevant to everyone, they make sure to ask whether the recipients could forward the card to other relevant people in their network. This is a very simple idea with a strong viral potential. You can see an example of the cards below.

What could be next on this? I would definitely look into how to do this digitally and thus make the viral potential even stronger. Microsites with short postings could work. Twitter can help spread the word fast on this. Short videos on YouTube might work as well.

Can you add other ideas?

I have previously stressed the importance of communication and branding in this post: Why Communication is Key to Successful Open Innovation. I think this is a nice, little example on how to not only get in touch with external partners, but also communicate that you are committed to open innovation.

Crowdsourcing Is Not Always Open Innovation: Lesson from PepsiCo

by Stefan Lindegaard

We need to be careful about defining open innovation as this can have different meanings for different companies in different situations.

Personally, I like to describe open innovation as a process in which a company bridges internal and external resources and act on the opportunities identified in this process. I also believe that it only becomes open innovation when the external input is significant and thus beyond simple idea generation from external resources in the early phases.

My take on this is quite broad compared to other definitions and so far the companies I talk and work with have found it flexible enough for them to accept it.

Open innovation covers many other terms and crowdsourcing is definitely one of them. However, this is not necessarily the same thing and in a nice little article on PepsiCo and their leadership position on the use of social media tools by Paloma Vasquez is a good example.

In the article, Vasquez mentioned a couple of thought starters given by Bonin Bough, Global Director of Digital and Social Media at PepsiCo including these two:

• Crowdsourcing product development via Dewmocracy resulted in the most successful limited time offers (LTOs) ever – PepsiCo will launch a second round of this campaign

• The real-time conversations taking place in the social media and digital space offer the richest resource for consumer insights and innovation – but require a process by which to monitor

Crowdsourcing and social media are potentially strong tools for innovation. However, some innovation leaders and others with an interest in open innovation have a tendency to confuse such initiatives with open innovation.

Neither Vasquez nor Bough do so in the article, but the case described is just such a case many others could get wrong. In my opinion, this deflates the value of open innovation.

Don’t make that mistake : – )

The Key Questions on Open Innovation

by Stefan Lindegaard

I am working to develop a list of questions that people who are interested in open innovation can use to gauge the state of corporate initiatives. The list can also be use for interviews with companies and thought leaders in this field.

It is still work in process, but I thought it would be helpful to share this with you in order for us to create this list together.

As I started to write this, my initial approach was to view this as questions I could use for interviews with corporate open innovation leaders. The categories and current questions reflect this. Please feel free to add more categories to extend this to the broader open innovation community.

I will post a revised version in the near future. In the meantime, please let me hear your comments and please forward/tweet this to other relevant people in your network.

GENERAL QUESTIONS:

• What is driving open innovation at X COMPANY?
• Which issues on open innovation are the most pressing right now at X COMPANY?
• Where do you see open innovation in X COMPANY five years from now?
• How do you define open innovation at X COMPANY?
• In which business functions do you have the most open innovation activity in your company?

YOUR VIEWS AND ADVICE ON OPEN INNOVATION:

• What got you to work with open innovation?
• How do find inspiration on open innovation practices?
• What do you see as the next practices of open innovation at X COMPANY?
• Do you believe cultural differences have an impact on open innovation? Can you share some examples on this?
• Which companies do you believe are leaders in the open innovation movement? Why?
• What advice would you give to an innovation leader who has been put in charge of driving open innovation at his/her company?
• What advice would you give to companies that are about to embrace open innovation?
• I believe the future of innovation is open and global. If you agree, what advice would you give to people aspiring to build a career within innovation?

SCOUTING / NEEDS:

• What systems or processes do you use to find partners that can meet the needs of X COMPANY?
• Do you have a formal scouting program in place? Can you explain how this works?
• It can be difficult explaining the outside world what your corporate needs are? Which actions have you taken to improve on this?

SUCCESS / FAILURE / METRICS:

• Can you mention one or more success stories on open innovation for X COMPANY?
• Can you share a couple of mistakes that have you made as you implement open innovation?
• Can you share examples on how open innovation has helped create new business areas for X
• Can you mention five metrics that you use to track open innovation?
• Does open innovation really work? Can you document this?

PEOPLE:

• What traits and skills are you looking for in the people working with open innovation at X COMPANY? Do you have special training programs for them?
• What would be the key requirements if you were to hire an open innovation manager?

CULTURE:

• What have the biggest obstacles concerning corporate culture as you implement open innovation?
• How do you get your business units involved in your open innovation initiatives?
• How do you defeat the corporate antibodies that oppose open innovation?
• What incentives worked best to break down the “not-invented-here” syndrome among your researchers? Can you share other ways in which you can make the corporate behaviour more open to external input?
• We often talk about small wins. Can you give some examples of small wins that helped build momentum for your open innovation initiative?
• What can be done to better facilitate knowledge sharing in your company – and with your partners?
• Which steps have you taken to ensure that open innovation is not just about your key products or technologies?

IPR:

• IPR is a big issue on open innovation. What have been your key lessons on this?
• Can you share some insights on how you use your patent portfolio in open innovation projects?
• Which resources can you point to if someone wants to learn more about IPR and open innovation?

EXECUTIVES:

• How do you get your top executives to buy into open innovation?
• Can you give examples on how your top executives have been supportive of open inovation?

INDUSTRY:

• It seems as if fast moving consumer goods companies have taken the lead in the open innovation movement. Why do think this is so?
• Open innovation seems to be hard to do in companies with a strong focus on services and processes. What can they learn from the open innovation leaders?

EXTERNAL PARTNERS:

• I have heard several large companies explain that their version of a win/win relationship is that they win a lot and that their partners win a little. What steps have you taken to create better win/win scenarios with your partners?
• Which actions have you taken to become the preferred partner of choice within your industry?
• To which extent could you use your current alliance management systems and processes in your open innovation setup?
• It is generally better to build long-term partnerships rather than just doing one-deal engagements? What do you do to make your partners want to work with you again?
• What are the key differences in working with other companies versus universities or institutions?
• Can you share some insights on how you reward and recognize your external partners?

COMMUNICATION / BRANDING:

• Which steps have you taken to make your open innovation program known inside as well as outside X COMPANY?
• Have you involved your communication department in your open innovation initiatives? If so, can you explain why and how?

INTERMEDIARIES / CONSULTANTS / SYSTEM PROVIDERS:

• Have you worked with intermediaries such as NineSigma, Innocentive, YourEncore or Inno360? If so, can you share some learnings on this?
• Have you worked with consultants on building your open innovation capabilities? If so, what did they bring to the table?
• What can of idea generation / management systems do you use at X COMPANY?

I look forward to getting your input on this.

Which Company is the Open Innovation Leader?

by Stefan Lindegaard

I just created a poll on LinkedIn in which I ask the question: Which company do you view as the open innovation leader across industries and geography?

I could only add five response options. They are:

• Procter & Gamble
• General Mills
• Apple
• Nestle
• Other

You can vote on this link: Open Innovation Leader. Please also feel free to add your comments here.

True/False: B-t-B Companies Are Slow Adaptors of Open Innovation

by Stefan Lindegaard

As I am about to write a short post on why fast moving consumer goods companies such as P&G and General Mills lead the open innovation revolution, I keep getting back to an interesting question: Are business-to-business (B-t-B) companies slow adaptors of open innovation?

I think this question works well for another True/False discussion that I can kick-off with a couple of remarks.

• B-t-b companies are actually just as good as consumer goods companies on open innovation, but the latter are just more visible when it comes to open innovation initiatives. I have a hard time finding great b-t-b cases on open innovation, but perhaps this is only because the products and brands of consumer goods companies are better known and thus we hear more about these companies. 

• B-t-b companies have longer development cycles and thus it takes longer for them to adapt to open innovation.

• B-t-b companies have more engineers working on innovation relative to fast moving consumer goods companies that have a more holistic approach that to a higher degree include other functions such as sales, marketing and supply-chain in their innovation efforts. This could lead to a stronger focus on traditional, internal focus for b-t-b companies.

Personally, I lean towards the view that many b-t-b companies are slow adaptors with an untapped potential on open innovation. They are just beginning to realize this. What do you think?

Good Reads, Videos and Discussions on Innovation #10

by Stefan Lindegaard

Here comes a list of reads, videos and LinkedIn discussions that I have enjoyed in the last couple of weeks. I hope you will enjoy this as well.

You can follow me on Twitter: @lindegaard

GOOD READS

Internet Future Driven by User Reputation Scores by Hutch Carpenter
http://tinyurl.com/ycas42o

The Friction Between Capital and Ideas by Ben Dupont – comps that embrace open innovation get rich
http://bit.ly/caBucm 

Don’t Demolish Your Own Innovation by Paul Williams
http://su.pr/2dHter

Apple’s Hidden Disruptive Innovation by Braden Kelley
http://su.pr/1SnEd4

Lack of innovation clouds Samsung’s future in Financial Times
http://ow.ly/11NjD

Cisco’s I-Prize – the Next Wave of Open Innovation by Hutch Carpenter
http://bit.ly/bu8OzC

Innovation Management Wiki – help define what all the innovation buzzwords mean
http://bit.ly/bvcL99

Barbie, Bratz, and the Employee Brain Battle by Rosabeth Kanter
http://bit.ly/6hkofQ

Is This Innovation Too Disruptive for My Firm? by John Sviokla
http://bit.ly/8Cj71s

The Apple Paradox: How A Company That’s So Closed Can Foster So Much Open Innovation by Wade Roush
http://bit.ly/4rHwbR

New Business Model Innovation – Lego Returns to Core Competencies by Raff Viton
http://bit.ly/6N1u6C

India’s take on innovation… Jugaad: fast and cheap by BusinessWeek
http://bit.ly/4OlqGZ

How to Accelerate Innovation by Andrea Meyer
http://workingknowledge.com/blog/?p=1112

Part 2 – Three Innovation Distinctions by Steve Shapiro
http://tinyurl.com/yc2msgt

Black & Decker grows and survives because they constantly innovate by Gregg Fraley http://tinyurl.com/y9fbgsu

Innovation Can’t Wait by Jeffrey Phillips
http://bit.ly/8qjQqz

Apple, Walmart, Google > Disruptors of the Decade? Results of Scott Anthony survey http://bit.ly/4rLPoK

10 Initiatives Using The Crowd to Generate New Ideas by Anders Sundelin
http://bit.ly/60UrId

VIDEO ON INNOVATION

P&G executives on innovation (click on link, see transcript)
http://www.pg.com/annualreport2008/investing.shtml#/investing/

Chris Thoen shares aspects of P&G’s C+D open innovation program (video by Chuck Frey)
http://bit.ly/a0r3XN

Jeff Bellairs provides a closer look at General Mills’ G-WIN open innovation program (video by Chuck Frey)
http://bit.ly/9I1iuZ

Gene Slowinsky shares insights on open innovation alliances (video by Chuck Frey)
http://www.youtube.com/watch?v=7fIU1vztnSk

Open Innovation Success Factors by Stefan Lindegaard (video by Chuck Frey)
http://www.youtube.com/watch?v=QvDqslJET5o&feature=related

Cheryl Perkins, CoDev Conference chair, shares advice on open innovation (video by Chuck Frey) http://bit.ly/ds5o2q

Key Learnings from day 1 of the CoDev conference by Chuck Frey
http://www.youtube.com/watch?v=dVA54A8APJs&feature=related

Key Learnings from day 2 of the CoDev conference by Chuck Frey
http://www.youtube.com/watch?v=b9HSnzeRFVg&feature=related

Discussions on LinkedIn

What is the difference between an inventor and an innovator? by Dennis Grogan

Innovation: Piss People Off – The Benefits of Pissing People Off by Grant Morgan Czerepak

Is innovation teachable? by Richard Lipovsky

What should an innovation strategy look like? by Stefan Lindegaard

True/False: Companies Should Forget About Radical Innovation

by Stefan Lindegaard

Welcome to a new format on my blog! Here I will present innovation issues and challenges and ask whether you believe this to be true or false.

The intention is to generate some good discussions that can provide new insights for all of us. I hope you will join these discussions as well as suggest topics for future posts. This first issue is an update from an earlier post.

Most companies should forget about radical innovation because…

• Radical innovation is too difficult for most companies and they should play it safer when it comes to innovation. If companies succeed with radical innovation, luck has a lot to do with it.

• It usually takes 5-7 years before you see results on radical innovation projects. Consider the typical process of such projects which takes 3-5 years: you start a project when times have been good for at least a couple of years (you dare to invest), you hesitate as good times come to an end and you shut it down when we hit a crisis like now. This gives you heavy investments without results and frustrated employees.

• Only few executives, leaders, managers and employees have successful experiences with radical innovation. They need the experience, mindset and skills needed to make radical innovation projects survive beyond 3-5 years and thus be able to prove themselves.

• Innovation projects that range between incremental and radical innovation are more likely to succeed making such projects more acceptable to risk-adverse executives and managers.

• It is not only difficult for big companies to create radical innovations, it is often contrary to their best interest and culture. Big companies have no incentive to change their markets.

• Many will think of Apple as a company that successfully – and repeatedly – makes radical innovation happen. OK. But where are the other good cases? And what about the hundreds of failures we never hear about for each of these successes?

Companies should do radical innovation because…

• Successful radical innovation projects is possible and some consulting companies have developed processes that can be learned and adapted. Check out Innosight and Radical Innovation Group for inspiration on this.

• When radical innovation is done successfully companies can create new industries and receive huge pay-offs.

Should companies forget about radical innovation? Is luck a big element on this? Is the potential pay-off so big that companies cannot afford not to do radical innovation?

I look forward to hearing your true/false views on this.

Why Communication is Key to Successful Open Innovation

by Stefan Lindegaard

Here are three reasons why communication is a key element if you want to succeed with open innovation.

• “We are in the matchmaking business.” This quote came from Chris Thoen, P&G during his presentation at the recent CoDev conference. Chris also stated that one of the key objectives of open innovation is to become the preferred partner of choice. As with any kind of matchmaking, we strive to find the best possible partner and in order to do so we must be able to articulate our propositions in an attractive manner. This is very much about communication.

• Open innovation needs to become top of mind within organizations; not just within innovation teams. By now, many innovation teams understand the value of open innovation and those that do not will soon learn the hard way.

It is a tougher challenge making the rest of the company fully understand and buy into the value in open innovation. Nevertheless, this has to happen in order for them to change mindset and behaviours and thus be able to fully support open innovation and benefit from this. This is very much about communication.

• Find and be found. In a previous post LINK, I advised companies to communicate more and better. Let the eco-system in your region – as well as globally – know what you are doing. Tell about your open innovation initiatives, share your learnings and ask for input.

Messages with substance move very fast within such eco-systems. This can help companies to be perceived as a preferred partner of choice or at least as a company with a potential for this to happen. You need to find the right partners, but it would be great if they also came to you, right? This is very much about communication.

What can innovation teams do to communicate better?

• Work with the communication team to develop clear messages. I do not know of many innovation teams that work closely with their communication department. These people know how to communicate and they should be able to almost any kind of message including those from an innovation team. Get them involved!

• Develop elevator pitches and train your people on how to deliver them. Some companies develop elevator pitches – very short pitches aimed at getting to the next level of customer contact – for their products and services. Why not do the same for the messages and propositions used towards potential partners as well as the colleagues you need to turn into backers of your open innovation initiatives? Check this link for further inspiration: Elevator Speech

• Develop a common language on innovation that everyone understands – internally as well externally for your partners and those that could be. This starts by developing a corporate definition of innovation that everyone should learn and you expand by developing innovation tools and processes that can be adapted by the entire organization – and external partners as well.

Can you add other reasons why communication matter and/or suggest other ways on how innovation teams can communicate better?