Why open innovation is not just hype…
Innovation has been a business buzzword for years. The word is tossed around so often and in so many different contexts that it’s meaning and value have been muddied, but innovation is here to stay and it will be one of the tools that will get us out of our current economic mess.
Open innovation as a term is even more sensitive as it has not yet fully developed – and is not yet fully understood by most companies. Nevertheless, I believe there are several signs why open innovation is more than hype:
Open innovation rides on two global megatrends.
The first one is that innovation has become a global 24/7 operation. Many companies have setup R&D and innovation labs outside their corporate headquarters. This stretches the mindset of how innovation is done, and it will make it easier for companies to take the logical next step of opening up their innovation processes to external partners.
The other megatrend is the transparency of knowledge. We all know that what really matters in our companies is knowledge. Where does it reside? You’re right. It is inside our heads. It has been very difficult distributing knowledge within an organization, and it becomes even harder when you have to reach outside the corporate boundaries as well. This is changing as Web 2.0 tools such as wikis are being adapted by companies that also begin to see a professional value in social networking platforms such as LinkedIn and Facebook. This is also driven by a younger workforce, who were raised with the Web and are adept at using it for business purposes. Check this article/book review: Grown Up Digital: How the Net Generation is Changing Your World
Innovation as a discipline is maturing
Executives might still not get open innovation – or innovation at all. They like to talk the talk but they do not always walk the walk. This is about to change as innovation as a discipline is maturing and boards and top executives begin to understand that they cannot just outsource this important part of the business to their innovation managers.They need to get their own skin in the game. As they start to look more into innovation they will stumble upon the open innovation framework and they will embrace these generally accepted benefits of open innovation:
- Speed the development of new products and services and thus increase revenues and market share
- Shorten time to market for new products and services and accelerate profits
- Reduce direct spending on R&D
- Improve the success rate of new products and services
You can read more about the benefits of open innovation this in this excellent paper from A.T. Kearney: Innovation Management: Strategies for success and leadership
The number of LinkedIn profiles grow fast
The number of LinkedIn profiles with the term open innovation is growing fast. This could be a sign of hype, but I have checked many of these profiles when I invite new members to our Leadership+Innovation community on LinkedIn. LINK There is real substance behind the profiles and if you dig further into the profiles you understand that many companies have started interesting open innovation initiatives.
Companies do not have to start from scratch
Open innovation pioneers such as Procter & Gamble and Netflix started to look into open innovation in a systematic manner 5-8 years ago and they are now reaping the benefits of leaping in early. They will win big when they improve even further and continue to get this right. But most companies have done some kind of open innovation or co-creation with their partners and customers over the years and these pockets of open innovation can be used to ramp up their open innovation strategy and initiatives.
This is my take on why we should take open innovation seriously. What do you think?
Do you imagine a free culture of innovation, with little entrepreneurs from over the world working connected to develop and spread new technologies? or maybe a world ruled by big corporations looking from a safe place how several small investigation groups fight for developing a successful new technology and waiting to buy the winner?
Guillermo
I think the answer to the question why Execs don't 'walk the talk' is that they buy into the 'jam-tomorrow' talk about better products and results but that too many 'innovators' don't deliver. Scott burken has put his finger on it in 'the myths of innovation': true innovators don't like being called innovators, they just gEt on and make it happen; as simple as that. I also recommend Burken's article entitled 'debunking the myths of innovatio' the link to which you'll find on my blog @ http://visionarymarketing.wordpress.com
Hi Guillermo,
It will be a combination and hopefully with a large majority of entrepreneurs and smaller to mid-size companies. I do not think many people like the idea of having the world ruled only by big corporations.
The theory of disruptive innovation developed by Clayton Christensen will also make sure big companies will always be challenged by smaller ones. This is one of the reasons most big companies eventually fail.
Stefan
Open innovation is more about sharing knowledge, hybridation and searching of free spaces to build new concepts and business oportunities,Is more about small companies and profesionals workingtogether to find and develop oortunities, is more about new ways of building business, is more to work as in film production with diferent roles and actors, is more about no to reinvent the wheel.
Carlos
I totally agree with you! Open Innovation is not just a hype. But still, it is very unclear what open innovation exactly is. The term "open innovation" established by Chesbrough is totally different from what many practioneers see in open innovation.
My second point is, that despite all the good & positive from open innovation, there is still a negative sides of open innovation – which isn't completely forgotten right now. I refer to the classic Not-Invented-Here / Not-Sold-Here, but also to big strategic risks of opening up the company.
Cheers, Alex
The question is whether 'opening up' at once is necessary.
I believe it is also a matter of asking the vast pool of innovators The Right Questions, step by step, within the right protocol. At first the 'Request for Ideas' can be broad; in following steps communication and the the relationship can be made more specific and close. Finally moving on to formal non disclosure agreements protecting the interests of parties involved.
As I see it, 'Open Innovation' tends to be more and more identified with User Innovation. I would prefer to call this User (Product) Optimization.
Then the term Open Innovation can be reserved for the process of tapping into a vastly broader and diversely motivated and talented innovative resource.
But you still have to start with The Right Questions. That implies a proactive and strategically founded stance by the problem owner. To be succesful also an ethicaly sound protocol is required including the guiding principles for the possibly evolving Innovation Dialogue.
Daan
Just wanted to say thanks for your good article and comments on this issue. I'm currently writing my master thesis about a large corporate innovation platform and try to shed light on what open innovation REALLY is. the concept of gradually opening up the innovation process as well as the effects of open innovation on leadership and business strategy are – in my opinion – incredibly interesting topics.
Greetings,
Matthias