How to approach open innovation: With lessons from P&G
As you start the evolutionary process of adopting open innovation to your organization, always remember that open innovation is just a tool, not a goal. The goal is to grow your company and make a profit. Some companies might also have the goal of changing the world to a better place.
Understand that open innovation is only a piece of an overall innovation strategy. To begin, look for opportunities to develop overall open innovation capabilities out of the pockets of open innovation you may already have in your company in areas such as key partnerships, supply/value chain, and selected employees with the right mindset and toolbox.
In my Leadership+Innovation community on LinkedIn, Chris Thoen, a R&D director at P&G, started a spirited discussion by asking which elements are needed to create an open innovation culture. The community suggested that open innovation requires these elements:
• People who can manage relationships with customers and partners. This requires agile and flexible people who have the “soft” skills of emotional intelligence—fundamental social skills such as self-awareness, self-fulfillment, and empathy—in addition to traditional intelligence skills.
• Willingness to accept that not all the smart people work for your company or even in your department, and a corresponding willingness to find and work with smart people both inside and outside the company.
• Willingness to help employees build the knowledge and understanding of how an idea or technology becomes a profitable business, perhaps by developing a job rotation program that could even engage partners and customers.
• Understanding that failures represent opportunities to learn, and a willingness to reward those efforts and that way of learning. Failure is a fact of life for companies that pursue innovation seriously, and a leader’s response has a huge effect on company culture and therefore on future projects.
• Dismiss NIH (Not Invented Here). If we make the best use of internal and external ideas, we will win. We don’t need to own everything ourselves and keep it under tight wraps. We should profit from others’ use of our innovation process, and we should buy others’ intellectual property whenever it advances our own business model.
• Willingness to strive for balance between internal and external R&D. External R&D can create significant value; internal R&D is needed to claim some portion of that value.
• Willingness to be a risk taker rather than being risk averse, while using common sense to balance the risk level.
• Accept that open innovation does raise intellectual property issues. Your legal team can either choose to play offense or defense. Hopefully, they’ll adopt a constructive approach that supports progress toward the company’s business development goals.
• Understand that open innovation requires open communication. Work around the confidentiality and intellectual property rights issues to create an environment build on trust.
• No need to always be first. Building a better business model is better than getting to market first.
Finally, recognize that it is no longer enough to just be a good project manager, researcher or engineer—or leader. As you will learn in this book, open innovation not only requires a different mindset, but also requires new skills that include:
• Networking. Open innovation is all about networking, so the ability to build a networking culture is an essential role of an innovation leader as companies move more toward open innovation.
• X-vision. If you want to create significant innovation, you must be able to work across business functions and with many types of innovation to turn ideas into profitable products, services, or business methods. I call this X-vision. This is actually more of a mindset rather than a skill, but it’s extremely important to develop.
• Managing stakeholders. You do not need to have everyone on your side, but you need to generate adequate support to champion your ideas and enough leverage to overcome major hurdles.
• Making an effective elevator pitch. You need to be able to craft compelling messages to the stakeholders you want to influence.
It would be great to hear your comments on this.
Awesome Stefan. I would add a couple more items to your list.
First, it’s great to think big, but starting small is imperative. P&G’s Connect and Develop program did not arise from a large team with massive resources. There was a tremendous amount of education, listening and experimentation that happened during its evolution. And it all started, according to its creator Larry Huston, with a small team, in a small office. It took three years of concept work before the program was formally launched.
Second, and this is particularly true for large, established organizations, leadership is key. In 2001, CEO A.G. Lafley publicly proclaimed that P&G would source 50% of the company’s innovation externally. Such a major challenge for an organization that historically invented 90% of its innovations internally.
Would love to get Chris Thoen’s thoughts on this, but in interviews with both Larry Huston who helped develop P&G’s landmark Connect+Develop program and Roger Martin who profiled Lafley in his book The Opposable Mind, my understanding is that many of the company’s R&D people HATED the idea of open innovation when it was originally presented. What a massive cultural shift to go from not invented here to ideas can come from anywhere. Of course the twist at P&G is that they didn’t have a choice.
Cheers! Chris
Chris, thanks for your great comments! They definitely add more to the post. I will see if we can get Chris to respond to this. Other P&G employees reading this – your comments are highly appreciated!
Stefan
Hi Stephan,
The first step is setting in a culture for innovation in any Organization. Rewarding unconventional approaches to problemsolving,
hollding periodical brainstorms, reading from other disciplines and borrowing concepts to applications in one's own domain are required.
Starting with a Creativity workshop for all employees in batches with
entertaining practicals, games could spark off the path towards open innovation.
Rgds,
Sandip
Involving external people in your brainstorming sessions fuels new ideas but also has a positive impact on the internal people who join those sessions. There they really see the added value of external people & still they the perception they contributed to the the idea ! So the level of involvement is not unimportant. If people get convinced that they can come up with ideas which they heard somewhere else, they still feel part of it. In case these ideas would have been pushed from mgt, there would be resistance.
I have found that in organizations that practice open innovaiton, even among those that are thought leaders, that there is no substitute for experience to ensure that everything works as it should. Unfortunately, I fear that many companies practicing open innovation are "open for business" before they've thought through the various steps in the "end-to-end" process. For instance, managing the handoff from early technology assessment to product development.
I experienced a situation in the not too distant past where my client and I spent 6 months or more getting our technology "validated" in the early assessment phase of open innovation, only to find out that there wasn't a customer waiting to accept the handoff in product development.
This isn't intended as a negative reflection on the company involved or the participants…only that any process' weaknesses can become exposed when they actually are experienced in real time.
I'm betting that the company is able to handle these situations better now, but it was frustrating for me and my client at the time.
Net: companies must be willing and able to digest the learnings from their mistakes so that they happen only once (if at all possible).
Good Read.
For open innovation to contribute to the profitability, it is important to lead such efforts around some themes which are aligned to strategic goals of the organization.
I enjoyed reading all of the posts. I would like to add to (or emphasize) Dirk De Boe's post the point that most innovation does result in fact from an accumulation of insights from many sources. It's important for organizations to recognize this and support it. To Michael Fruhling's post I would like to add that cross-functional collaboration seems to be the key to successful innovation. If practiced, it can side-step the hand-off issue, since the key people will all have been involved from the beginning.
Regards,
Chandlee
I enjoyed reading all of the posts. Very interesting discussion. Thanks, Stefan, for kicking it off. I would like to add to Dirk De Boe's post the comment that most innovations do seem, in fact, to result from people building off of each other's insights and ideas. So it is to an organization's benefit to encourage opportunities for conversation with a variety of "stakeholders". And related to Michael Fruhling's post I would like to add that cross-functional collaboration seems to be the key to successful product development. When all of the relevant people have been involved in the process from the beginning, hand-off issues can be avoided.
Regards,
Chandlee
Open Innovation is all about Trust and Respect.
Any "Giant" should allow to have specialist own their developed proprietary technology. If somebody is specialized in a certain area let them keep and market that with an exclusive head start of the Giant as benefit of Open Innovation.
What has to be avoided at all cost is that after "Open" cooperation the Giant patents the technology of the partner or tries to re-engineer this and do it themselves…You will get Open Innovation only once. An yes these things have happened in real life…
Agree with all comments especially the one about it being a tool. Working with small manufacturers, and inventors the potential with open innovation especially the web-related sites levels the playing field to expand the knowledge base. Unfortunately, it can also drive the small enterprise away from developing a robust internal process for innovating the "low fruit" exisiting within their own organization. It becomes easier to get a concept up and wait by the phone (or email) for a response from an interested party. I think it's a both/and process. Expecting to "curve jump" through an open innovation process may ignore the incremental innovations lying in wait on the doorstep.