Open Innovation And Intrapreneurship For Small And Medium Sized Companies
I have been asked to present my views on how small and medium-sized companies can move to the next level by implementing open innovation and intrapreneurship.
I am still working on the presentation, but below you can see some bullet-points I plan to include in the 3 hour-long session. What do you think? Am I missing something important?
Besides hearing your comments here, it would be great to get out and share this with other companies, organizations and event organizers around the world. Let me know if you would like to discuss this
• The challenge. Growing a startup is very much about executing on a great product, idea or technology. However, as the company grows focus tend to shift towards control rather than keeping the visionary thinking and bold approaches that build the company. This must be re-ignited. Understanding open innovation and intrapreneurship can help do this.
• All the best people do not work here. One key reason for Procter & Gamble to initiate open innovation programs was that they learned that for each of their 7,500 R&D people there were 200 people outside the company with equal skills and competences. An ignorant – and arrogant – company would ignore these 1,500,000 million people arguing they do not matter as they do not work for us. P&G did not ignore this. They understood they should connect their own organization with the best and brightest from the outside world. Given the size of smaller companies, this mindset becomes even more important.
• People matter more than ideas. Innovation is not only about finding the right idea or developing a great technology. A company must also be able to identify and develop the right people who can be matched with these ideas at the right time.
• Innovation is about more than just products. Check the Ten Types of Innovation framework developed by Doblin. It is a great tool to broaden people’s mind on innovation.
• Think in terms of eco-systems. Today, one company does not compete against another company. Eco-systems compete against other eco-systems. Check this article by Hagel / Seely Brown to learn more: How SAP Seeds Innovation.
• Control or contribution? Big corporations can split their open innovation efforts on projects in which they are either are in control or just contributes with IPR or other resources. Smaller companies should only get involved in projects where they are in control or where their contribution is important and valued. The project should also fit the overall strategy of the smaller company.
• Big corporations can drain a smaller company. Signs of this include long planning periods, difficulties in identifying and working with the right people and too much time spent on patent lawyers too early in the process. If these tell-tale signs appear, a smaller company need to evaluate whether this will become a drain of valuable resources that could be better spend elsewhere.
• Where to look versus how to be found. Smaller companies need to be more active looking around whereas big corporation can focus more on being found and becoming a preferred partner of choice. Companies can look for projects and partners in their own networks (such as customers, suppliers and partners) or in external networks (such as universities, intermediaries and consultants).
• Is the company ready for open innovation? Any company must ask themselves why open innovation is relevant to them, how it should be defined to their situation, how it links with the overall strategy and how it can be implemented. Smaller companies must also prepare the organization for a cultural change, develop and implement a networking strategy and train their employees on innovation, stakeholder management and how to work with external partners.
• Open innovation is about communication. Companies must understand the importance of communicating internally as well as externally. New social media tools such as Twitter (search and share information) and LinkedIn (identify the right people, search and share information) must be understood and leveraged.
I am looking forward to your comments.
Good points, Stefan. In addition I suggest you add "FOCUS ON THE END RESULT". If the company culture is geared towards the ends and not the means, they are less concerned with where the solution is coming from. Let's face it, no consumer or customer ever bought a product or service based on how it was developed, so why should companies place such a priority on it?
Small and medium sized companies should also be more agile and make decisions faster, and they should use this characteristic as part of understanding why they can be a partner of choice in an Open Innovation relationship.
Best regards
Stefan: Great start, and I would love to see a more finished product, as well as help you if you want this presentation to go out worldwide to various organizations and companies. Also, as you spent some time on P&G's "outreach" because of the sheer volume of innovative thinkers they could reach, might you also spend some time on the premise that most innovations come from the fringe and not the core of a technology/product, from non-traditional users [or at least non-traditional "observers"]?? Encourage the lunatic fringe because they are the ones that leap the chasms while the traditionalists are laboriously building a bridge across it.
Great start in a very interesting area! I would also include a discussion about costs as a starting point, as Open Innovation to a large extent is about developing and/or distributing value at lower cost for each involved actor. To determine what components of the business model to open up, the cost side of the equation is one way to start.
How can an activity or resource be performed or developed differently at lower cost? How can we lower the cost in reaching a certain performance level? What companies are focusing on low-cost alternatives in this particular business model component but perhaps in another industry? Do we have something to bring to the table to lower our cost of in-licensing? How could collaboration with another actor lower or eliminate our costs?
For small and medium sized companies the cost side is of major importance as Open Innovation also involves transaction costs. For P&G that can scale up an external innovation into a billion dollar brand the transaction costs are small, but for a SME the transaction costs can be substantial.
I think the real power within sme`s is that they can utilize the fact that they don't have as much bureaucracy as large corporations…Decisions are made fast and efficient, so actually their chances of succeeding with open innovation is better than a bureaucratic "besserwisser" organization…! If they are able to continuously culture their startup "mojo" they will benefit by going into open innovation programs….On the other hand – if we in the industry – offer them services and consultancy fitted for large corporations they wont adopt our visions! So we need to fit in financially as well as offering clear measurable solutions in order to encourage them to get started.
I completely agree with your views on open innovation and i see that becoming a more and more real with lot of companies waking up to concepts like social networking, partnering with customer and suppliers , creating a culture of disagreement
We all fall prey to our success and that blinds the thinking and action.. open innovation can help us to see it differently.. to see the mistakes that we are now calling as processes.. and procedures.
I also completely second the view the future lies in collaboration and not in competition.. competition has resulted in false promises, over hyped concepts, and sub standard products.. if we combine our resources to increase effectiveness of products.. customer experience or cost of goods.. we would create a world that will sustain itself for longer period of time rather then depleting the world resources too soon
Great conversation and timely for me and my company. The statistic about how many innovators there are outside of corporations is astounding. We all know it is a crowded playing field for innovative "outsiders" trying to secure innovation work with corporations and there isn't enough work to go around. Independent innovators, consultants and smaller companies need to find each other and band together to get great ideas off the ground and innovations into the world.
Corporations have IP lawyers and can afford them; most small companies and independent innovators don't have that kind of capital especially right now when so many have been laid off from corporate jobs. And, without a lawyer there is a lot of fear about losing control of ideas and inventions in the open innovation paradigm. It is extremely important to the open innovation cause to address these fears and remove them because they are a barrier to having the first conversations with potential collaborators.
We need a free or low cost legal agreement that works to protect these exploratory conversations. It will change the world if we can popularize the open innovation paradigm and facilitate the creation of trust networks among independent innovators and global ad hoc innovation teams.
We need a practical guide to legal agreements in the open innovation world and we need to be able to access agreements we can use. How is this for an innovative idea? We could create something like the creative common's licenses to protect ideas; you write up your idea and stamp it with an "open innovation" license and all the people who participate in the open innovation project "put their stamp" on it. That way, everyone gets credit for the part they play and there is a legal trail to follow.
Any lawyers, investors, designers out there who would care to team up with me on this one?
And one more thing I think independents and small companies need to know about open innovation. I know my comment will be controversial but that's what I want. Beware of the contests. Like the economic stimulus grants that so many thousands of people are now competing for, there is a lot of time and money being wasted on trying to "win." Artists have been pouring their money and hopes down the drain on these contests for years; now scientists, engineers, innovators who are bootstrapping their efforts and need an audience are doing the same. We need to think critically about these "opportunities" and protect the integrity of the "open innovation industry" we are becoming. We need to create the open innovation industry we want and to me that means consciously creating as much individual, social and economic value out of it as we can, for everyone.
All the best,
Cynthia DuVal
Founding Director, Pacific Ethnographic Research Center
Find a way to get stronger!
It may seems bizarre but the concept that came to my mind while reading this post was “heterozygous”. This concept I associate to characteristics of “developed” societies.
In this case, Open Innovation and Entrepreneurship, the term (greater variety of combinations) can become useful if we apply the binomial dominant / recessive.
If we understand that a dominant is the one who sets the aspects or paths that should be disclosed and that recession is present, but doesn’t manifest unless it combines to another recessive entity, we can predict that:
1. In a situation, dominant company /dominant external do not enriches by diversity. It focuses on known threats and does not prevent the unknown (external and internal). Their people are at risk of developing their entrepreneurial potential in environments to much comfortable and limited.
2. As a dominant company and if the outside is recessive they have the control of threats and incorporates solutions. Their employees are subject to a healthy competition.
3. As a company recessive and external recessive they are subject to all the threats and overtake only in controlled environments. They are not allowed to explore others environments. Their employees can only grow with "finite horizons”.
It is therefore important that the company develops itself in a dominant / recessive way. That will be the best way to strengthen and motivate their resources internally.
Agree with all your points and above comments.
SMEs should also take advantage of their relative size to attack from the sides. Avoid taking on the Big Boys head-on. Instead be inventive. Be disruptive. Expose weaknesses in the competition by being awesome on service and delivering exactly what your customers want. Make it a WOW experience from beginning to end.
Easier said than done? Develop these disruptive, game-changing services by constantly micro-testing new ideas. Try stuff. Take forward the good stuff and further refine – elicit feedback from customers throughout. Bin the stuff that fails. Don't be shy.
Small company's weaknesses towards innovation should be written down and more effort should be paid to turn them into something like strengthes. It is a sector that extra care should be taken to achieve that factor that leads to a good company.
I like this discussion, very good thoughts in original post and comments. One thing that comes to mind is that SMEs often are not setup to manage strategically. They lack the dedicated people, processes and management structure to look at their company strategy, whether it's products, marketing, operations or whatever main drivers of growth.
So, one thing that has to be considered, and Stefan mentions this, is whether a company really has the ability to take on something as significant as open innovation. Clearly, it could be used as a competitive advantage. The question in my mind is whether a small company has the management and people foresight to recognize where it can be applied, how and at what cost.
In short, it seems like open innovation needs to be woven tightly into the culture of the organization, and seen as a source of competitive advantage in order for it to succeed in any company. For SMEs in particular, they need to already have a common company dialog and consensus around what makes them unique, their 'secret sauce', in order for them to move to the potentially more organizationally demanding world of open innovation.
Small businesses need to be very clear about what they are good at and how they bring value to their customers. Anything not directly linked with that competitive advantage is an area to consider open innovation. This is one way to get others to help fill gaps, especially in an area where you don’t need to strictly own the ideas.
Another angle for small businesses is to look for ideas that will help to grow your industry. This can work if you have a new business in a niche market. For example, if you sell supplies that are used for advanced basket weaving, then it would be in your interest to work with others to help grow the basket weaving industry as a whole.
Stefan, some good points here, especially about ecosystems.
re:intrapreneurship though- I think you'd have to be very careful in small
businesses with how far you go with this. If the general work culture just become more entrepreneurially minded, then I could see it being productive.
However, if the notion is that champions will be encouraged to spring up and drive new initiatives inside small companies – I would question the feasibility of this from many angles – size, resources, focus, internal conflict etc etc.