Reflections from an open innovation session
I had the pleasure of giving a session on open innovation in Silicon Valley yesterday. It was a small, but highly capable group of innovation leaders and consultants with a mixed experience on open innovation. Some were in charge of open innovation projects in large organisations, others were curious on how to approach open innovation within their company, others were trying to figure out the small company perspective and others viewed open innovation as an important skill they should learn for their consulting business. It was a quite diverse group reflecting the broad interest in open innovation.
Two things in particular struck me after the session:
• Open innovation should of course be approached differently from industry to industry. This became very evident when we went into a discussion on intellectual property rights (IPR) which also turned out to be the biggest concern for most innovation leaders. The higher barriers to enter an industry the more important IPR becomes in relation to open innovation.
We agreed that issues such a speed to market, globalization and transparency of knowledge have an impact on IPR but we did not reach a consensus on whether the importance of IPR is declining because of the above reasons or whether trade secrets will become more important than patents. To be honest, I thought so before the session, but I am not so sure anymore. I will definitely look further into IPR issues related to open innovation in future blog posts.
• I gave several examples of how companies such as Procter & Gamble and Netflix use open innovation. This is still inspiring for an audience, but there is a growing need to see hard facts on the effects of using open innovation. Such documentation is hard to get by, but hopefully we will see more of it as more companies dives into open innovation initiatives.
On a more personal note, I was once again reminded how broad a topic open innovation is. It was a two-hour session in which we went full-circle on the topic. I will probably focus on just two or three key topics next time rather than five to six as each of these topics can turn into hour-long discussions. There is simply a lot of interest in this and everyone has issues or experience to share with others.
When it comes to giving such sessions, the broad scope of open innovation is both a challenge (where do you start and how do you keep focus) and a delight (it is very easy to get everyone actively involved in the session). Innovation leaders using external facilitators for learning sessions should have this in mind and it should also be a constant reminder to facilitators such as myself.
Just some reflections…
Excellent article Stefan! Thanks for sharing! I’ll be sure to continue following your work.
Stefan,
Thank you for facilitating this great stimulating dialogue! As you said, the possibilities of open innovation are infinite and overwhelming. Those with clear focus, purpose and drive will lead us into new economic territory, maybe even a new civilization. As I drove home from the forum, I couldn’t help but dwell on the possibilities of an economic system built like biological systems where innovators continously synergize, create, evolve and catalyze new economies. A place where every cell is valued, engaged and produces for the overall good. A new civilization is being born and today’s generation is at the helm. This is a dialogue not to be missed!
I agree with your comments on industry relevance. I also presented to 20 people from various industries the other day – and even after what I thought was a generic presentation, people often are unable to “join the dots” themselves to understand how Open Innovation is relevant in their specific industry
Differences between industries on attitude and application of open innovation is an interesting avenue to explore. A discussion I had last week with a contact working in the european areospace sector suggested that open innovation was more applicable in large diverse markets with high consumer focus (P&G) whereas in sectors with high technology and a relatively small group of large market players (supplers and clients) the IPR issue is so dominant that open innovation has little chance.
I’m not so sure, I think open innovation can work in high tech (after all open source software is a high tech sector) but only where the problems are so difficult and held in common that the amount of creative brainpower is beyond the boundaries of indiviudals or single organisations to find solutions. This category could cover some high tech industries/problems such as environmental issues.
Thanks for your comments! I appreciate them and they inspired me to write a post which I titled The Dinosaurs of Open Innovation.
Stefan
Stefan,
Clearly you are a champion of open innovation and for good reason but taking some companies or industries into the dinosaur category because they might be struggling from within is perhaps a little harsh. Moving from championing to being a reactionary might be doing the opposite of what you ‘see’.
Is it so simple that “they just need to find a definition and a use of open innovation that fit their company…….and you cannot miss out on this”
It is certainly as you say “I believe the main idea behind open innovation – identify and use valuable external resources to make innovation happen – is just too good a value proposition”
Surely stopping and thinking through where open innovation WILL FIT and WHY beyond the current (and growing) users will help bring more into the fold.
Clearly there is considerable struggles going on around this concept and until people like you (and me) can clear the path a little more, to separate the wheat from the chaff, and separate the various theories, hype, different offerings and clarify in a well laid out, logical thinking through process what open innovation can clearly help to resolve their barriers or pain points and we might be guilty of being the old fashion medicine man (http://en.wikipedia.org/wiki/Medicine_man) offering cure-alls and over simplifying.
I wanted to add to my comments that your “actions to take” from your dinosaurs of open innovation article begin the thinking through necessary but with the broad universe of innovation types (Geoffrey Moore’s Dealing with Darwin) can also be helpful in this.
At a conference of the Licensing Executive Society earlier this year, I presented on why IT/communications/electronics companies are much slower to adopt Open Innovation than several other industries. I spoke from Product Manager perspective and we had a top-tier IP attorney and a very successful biz dev/commercialization consultant. Happy to share presentations. A two major points were the focus of most of the discussion. Patents in this field are usually only a small piece of a complex product, but in other fields like pharma/biotech or consumer goods, the patent’s subject matter is nearly the entire product. This makes valuation, deal motives, and deal making more complicated. Also, connected to the first factor, the process for product definition/management, market requirements management, and many production-related processes for the rest of the product *must* operate with some consistency and efficiency for the company to thrive and the OI deal and actual tech transfer has to fit into those processes. It can work, and does, but it’s more challenging in these segments.
Stefan,
Where I actually remain unclear upon in open innovation is the losers in such a ‘competition? Can you imagine working on a project worth a ‘grant’ of US$ 500k to 1m, be in the last three for final consideration and find out you are not selected. The issue is what protects the intellectual capital, how is the considerable work put into this compensated?
People talk of win-win’s in these, but these are the winners, what happens to the many people that don’t see their idea adopted?
In your experience what mechanisms should be in place so this effort, and it can be significant, end up with a little bit more than nothing?
Appreciate your thoughts on this as the ‘game’ of open innovation is stacked a little towards the bigger company wanting ideas, often well resourced but seemingly at a greater distance from the market .
I can recall one typical example where a small company had a great idea, that seemed to fit with the Multinational. An exciting match.
The resources from the MNC swamped the small company and the small company got deflected from building other interesting concepts. It left relationship difficulties on both sides, let alone a extensive decision process on the MNC side with deep pockets and a small business on the other struggling with all the difficulties associated, expecting the process to be agile. It really highlighted the natural gaps between MNC’s and SME’s.
Paul, thanks for your comments.
With regards to competitions, I believe it is very important for the company to communicate the terms of the competition and make sure every participant know the rules. The company then really needs to live to the expectations set forward. Things should be so clear and straight-forward that no one shoud be left feeling “cheated” or mis-used by others. Unfortunately, I am sure many people have felt so but hopefully they are grown-ups who can make their own decision and get out if they feel mis-used. In cases like this, I really hope the image of a company with bad ethics gets a big rap within the specific community and as such a tarnished brand.
I plan to write a blog post soon on the relationships between smaller companies and MNC’s on innovation. I doing some research, but it is in general the MNC’s that have the upper hand and there are not really any way to protect the smaller ones from cases as you describe. Again, this goes back to being able to make your own decisions and if a MNC does something wrong hopefully the community and media will pick up on it.
In the ideal world everyone would get along and if needed there would be a referee to keep things fair. This is not an ideal world and I fully understand that the consequences of a tarnished image for an MNC might seem insignificant for a smaller company that feels mis-used. I just do not see any other way of “punishing” abusive MNC’s – as long as they do not break the law, of course.
What do you guys think of this?
Stefan
Hi Stefan,
Great post. I have been working on IO and co-creation for some 7 years now as a consultant and your reflections I fullt share.
On a positive note though, I see that the IP discussion is largely dealt with in our work, through NDAs. We do expert co-creation sessions in many industries, and we have had one person not joining beacuse of that. Companies are willing to share their latest concepts and do the trade-off getting great ideas vs. risk of disclosure.
I am happy to discuss this with you if you want.
Also, I recognize the need for solids results on new and fresh OI initiatives. P&G alone is not enough.
Martijn
Stefan,
I think it is opportune to raise these ‘red’ flags in risks and rewards and look forward to your thoughts on the ‘gulf’ between MNC’s and the smaller guy.
Communicating the terms and the rules is absolutely right. I’ll take you to task on your comment of hopefully all grown-ups. So many smaller companies go into a process without clear ‘stop’ points and come out the other side wiser but poorer. Negotiations give the edge to the MNC, deeper resources, broad specialised groups also againest ‘thin’ resources on the other side but often the smaller guy hurts more than you can imagine. I’ve seen it in different circumstances as part of the ‘heavies’.
If we reflect where the supply chain collaborations came into main stream was through good practices. We need some MNC’s to lead on setting these ethical and governance standards so they settle the fears of the smaller company as the basis premise still stands good- they need each other as no one has a monopoly on good, valuable and highly commercial ideas
We need to also look ‘hard’ at the numbers of actual signed up deals. I think the middle man, the open platform providers should provide even more in numbers, size of deals, quality of deals, participant numbers, guidelines for suggested participation so this does truly open up and start flowing as the potential currently indicates it can offer.
I wonder who will take a Open Innovation lead on these steps? Someone should
Referring to Paul’s last comment.
Let’s assume that the MNC’s do not hold up to the ethical behaviours we would like to see – and expect – from them. What should smaller companies then do? If the risk of getting out on the other end wiser, but poorer is too high then it seems quite disencouraging to engage in open innovation with MNC’s.
Clear “stop” points can help, but what else can smaller companies do?