The Trash of Open Innovation
I recently had my first post on BusinessWeek. It was titled Open Innovation’s Champs and Also-Rans. In the post, I mention that open innovation is a hot topic at almost every company that is serious about innovation.
Why? Because the idea of combining internal and external resources to increase innovation productivity and prowess is just too good a value proposition to miss out on.
I also argued that only about 10% of all companies are adept enough at open innovation to get significant benefits today. Another 30% have seen the light and are scrambling to make open innovation work and provide results that are worth the bother. I call them contenders.
The other 60% are pretenders—companies that don’t really know what open innovation is and why or how it could be relevant for them. Some might figure out how to follow the leaders one day, but today they’re mostly going through the motions.
Michael Fruhling made an interesting comment to the post. He argued that “a key distinction that I would draw between the serious players and those who are not as sophisticated is that the successes in OI are generally NOT coming from external submissions on a web portal.
By and large, the majority of the thousands of submissions received by these corporations are trash. The real movement comes from a company knowing what it wants and proactively identifying external solution providers to fill these capacity gaps.”
There are a couple of points to be made on this. First, I agree there can be lots of incoming trash from portals. This does not mean that portals are useless, but the trash must be minimized by setting adequate strategic filters as Michael Soerensen also pointed out in a comment to the BusinessWeek post.
More important, such portals – if they are thought through and executed well – offer significant benefits that tend to be overlooked. I am thinking about the messages such portals can send internally as well as externally. Is the company really serious about open innovation? The focus given to such portals tells a lot and this make them important vehicles for corporate change. They should be treated as such.
One small is example is the Connect + Develop initiative from Procter & Gamble. This portal is not only well-executed. It also gets great exposure. Take a look at the corporate website of Procter & Gamble. Not many other companies “mess” up their fine corporate sites by doing this.
I also agree with Fruhling that companies get most of their results on open innovation from behind-the-scenes initiatives. This includes scouting teams that use their networking capabilities to find external links that can make internal corporate resources even stronger and more use-full.
Let me know what you think.
Hi Stefan: Thanks for citing my comments. I agree with you that the use of a corporate portal sends a powerful message to the public that the company “is open for (external innovation) business”. Kraft and Glaxo Smith Kline also have good public sites that do this.
Keep up the good work,
Michael
Hi Michael,
It should also be a powerful message to the employees stating that we are serious about open innovation and this will be an important future element of our innovation strategy. This helps deal with corporate antibodies who could have many reasons for resisting a shift towards a more open culture.
Stefan
I appreciate and believe you are right on the money about the percentage of companies using open innovation. I beleive the 60% you called pretenders are not only pretending at open innovation, but I am not even sure they are embracing any innovation practices at all.
Stefan, I continue to be impressed with your analysis of the Open Innovation arena. Not only does one need to have a strong portfolio of behind the scene open innovation initiaitives, a great set of strategic filters to get the gems out of the submissions at the portal, but also strong leadership commitment to proactively deal with corporate antibodies. Leadership setting the example is key.
There is solid research data on this point so we need not bandy about personal opinions without supports. What happens, and this is a pattern in all network systems, is initial interest, so people explore (the outsiders explore posted problems wanting expertise/solving and the internal guys explore what they get when posting certain problem types). However, within six months, the payback for the amount of time needed to survey posted problems is so low no external people any longer wish to participate; and, the payback for internals posting problems in terms of how much trash they have to paw through before a gem appears is so low their motivation drops to below zero. Within 18 months participation rates are astonishingly low on the part of all parties except dummy business press reporters late to the game and dummy business school professors in love with ideas (that they do not bother determing the viability and actual impact/use of).
Open Innovation is a fad, a fashion, a wave of enthusiasm, latched onto by technology vendors in the hope they can use the emotions of men in companies to foist expensive unneeded computer systems onto them. They have done this successfully for generations so there is little reason not to think it will work well now too.
This is how entire civilizations die—when everyone knows phony-stuff is going down but no one quite has the umpf to stop it and get real. When entire civilizations fill up with unrealities, they die, very very expensively and painfully.
I have a tough time on the word ‘trash’ -which means worthless or rubbish. You cannot over simplify this by being so dismissive. The very shift taking place from an internal understanding to providing a more open awareness takes its time and has to be equally balanced with different concerns over what you can ‘freely’ provide or not in knowledge in these early stages. It is like any open funnel, you have lots of ideas, some often whacky and you begin to match these to what you are looking for. Of course if you can provide clear ’signposts’ of interest as P&G try to do so you can reduce and shape the speculative approach. Over specifying has equal dangers though.
Sifting through all the submissions made I would certainly believe does often feels like they are of little value but in the old days of gold digging, you panned in the thousands to find that nugget of gold.
We are only beginning to understand all the right mechanisms and protocols for open innovation to become more effective in matching search and solution and the more the company strengthens its description of needs the better the submissions back will become. Like panning for gold, you begin to understand the fertile regions this is likely to be found and the ideal concept of “open” will become more closed.
As for a fad or a fashion- I do not think so. We are only just ‘crossing the chasm’ on this for it to evolve in its adoption- it is discontinuous and will go through different progressions over time.
Keep championing this Stefan it is to valuable to growing through innovation to not be in a clear and constant ‘line of sight’ for all involved in development
before i answer the question at hand: i am still very worried about the continuing tendency to equate open innovation with crowdsourcing ideas. this is a serious misunderstanding of what open innovation is all about.
as far as i know, no so-called “open innovation” internet portal has delivered on expectations. this has to do with several factors:
- people misusing the system (deliberately inappropriate input)
- people misunderstanding the system (inadvertently useless input)
- poor execution (website is hard to find or use, or doesn’t provide motivation to participate)
- the difficulty and effort needed to evaluate the input obtained
much is known and has been written about the first three points. regarding the last point i would claim that anyone who is actually able to recognise a genuinely good, innovative idea while sifting through thousands of items is much too valuable a person to be allowed to do it!
even in a dedicated environment such as a professionally led ideation workshop, the quota of truly good ideas is only about 1%. how much smaller will it be in an uncontrolled setting where anyone can submit whatever they want without any guidance whatsoever?
this type of event is fine when a company wants to promote an image of innovation and customer-awareness. for simple B2C applications it may even yield a few good ideas (assuming that they are recognised.) however, for substantial innovation goals and for all B2B innovation, crowdsourcing is (to me, at least) obviously inappropriate.
i predict that – as with all fads – it will continue to thrive as long as the media (and the vendors making a profit out of selling it) can sustain the hype, after which it will either …
- be reduced to the niche for which it is in fact appropriate
- be replaced by something more efficient
- disappear completely.
Graham,
Based on several of your comments, I think you tend to underestimate the skills and mindset of at least some of the companies that work hard to understand and successfully implement open innovation.
Yes, there are issues on equating open innovaton with crowd-sourcing or user-driven innovation, but lately I have seen some maturity on this.
Companies are getting more sophiscated and there is a lot of behind-the-scenes activity that shows some pretty good development on this. My referring points are interviews done with General Mills and other companies, talks with many participants at the recent Open Innovation Summit and comments as above.
I believe portals done right will be important vehicles in the future as well. No doubt they need to improve just as many of the above comments indicate. This maturing phase will also lead to a shake-up of the many companies trying to sell services and systems on this. This is just a natural phase of companies trying to position themselves for a market that could become quite interesting.
I agree with you that many companies tend to focus too much on the quantity of ideas rather than making sure they have the right settings for idea generation and the subsequent follow-up work in place. Hopefully, this will change as well in the future.
Stefan
well, i guess it depends what you mean by “innovation” and what you mean by “portals”.
obviously portals such as innocentive.com are very targeted, and presumably have a “trash” rate which is close to zero. certainly they will not get thousands of trivial ideas, but fewer well thought out ones. but i don’t think thats the kind of open innovation you mean.
perhaps we need some good examples. i would be interested to see examples of breakthrough innovations (either product or business model) which were obtained from a public portal. does anybody have one?
i don’t doubt that there are areas in which the public portal type of open innovation is applicable, but i suspect that in a few years, when it has been thoroughly studied and evaluated, that we will find that it is much more limited in scope than is currently believed.
here are two arguments – perhaps someone can refute them.
1.
look at idea management. this is basically the same idea (invented in 1872, by the way). the only difference is that it is applied internally, rather than externally. with few exceptions, idea management has totally failed to live up expectations (for reasons which are well understood.) if this type of open innovation is to work, it will have to solve all the problems that are still prevalent in the idea management world.
2.
has anyone found a way to negate henry ford’s observation “if i had asked the public what to build, they would have told me ‘faster horses’”.
Another way to re-frame the word trash (which can turn some people off) is to think in terms of signal-to-noise. One way to minimize noise (useless responses) is to spend as much time as needed in properly framing the request (wherever you may decide to post that request). That is one key variable for success in open innovation. If done properly, this greatly improves the signal-to-noise ratio. I have personally seen the benefit of properly framed questions.
I have just been reading an article (actually a Q&A) with Robert D Austin (http://hbswk.hbs.edu/item/5441.html). I think this provides an interesting ‘twist’ in this discussion.
“In 1960, Donald Campbell proposed that we think of creativity as “Random variation + Selective Retention.” That is, we need two processes, one to generate things we can’t think of in advance, and another to figure out which of the things we generate are valuable and are worth keeping and building upon.
In science, the arts, and other creative activities, the ability to know what to throw away and what to keep seems to arise from experience, from study, from command of fundamentals, and—interestingly—from being a bit skeptical of preset intentions and plans that commit you too firmly to the endpoints you can envision in advance. Knowing too clearly where you are going, focusing too hard on a predefined objective, can cause you to miss value that might lie in a different direction.”
Then he summarizies this with “On the other hand, if you think there is a very significant overlap between accident and important innovations, you’d design the innovation process differently. You might want to design in some “accidents,” and you’d want to nurture your capability for “selective retention”—your ability to know what to throw away and what to keep.
Interesting thinking as we learn perhaps?
Stefan,
Interesting discussion.
Just curious: Do you have data to support this statement? “By and large, the majority of the thousands of submissions received by these corporations are trash.”
Shyam
Shyam, just for the record: the reference made to trash was made by Michael Fruhling. Michael, do you have any date on this? It could be interesting to hear about surveys or research done on this.
Graham, I also would like to see some cases on this. Hopefully, they will come as this area of innovation matures.
On your point 1, we should keep in mind that we always need ideas to move us forward. Why shut down a potential source which can work if you set the right directions for it?
On your point 2, I believe we have to take into account that contributions made through such portals are only a part of the bigger picture. This can help find ways to new kinds of innovation that we have not yet thought of and it can help us make the connections needed to make it happen.
Stefan
Stefan–
Extremely insightful post. After having spent the last 10 years at Red Hat, I can tell you that, in the open source software world, most of the actual open innovation work doesn’t happen on web portals, but instead in the trenches between people inside and outside of our company who have developed networks of relationships over time. All of the normal tools of the trade are utilized: email, mailing-lists, phone calls, even social media tools.
Having said that, I do disagree with Michael’s depiction that most submissions coming in on innovation portals are trash. There is one audience for which they are definitely NOT trash: the people who sent the ideas.
If we approach the free gift of feedback from people with such a dismissive view, we risk throwing away one of the key benefits of an open innovation initiative: the ability to form deeper, more meaningful relationships with people who care about your company and its products.
Even if you do not use the ideas, it should be very clear that you appreciate every one you get. The simple act of listening is a very powerful brand strategy. And might be just the thing that encourages someone to submit an idea that eventually becomes your next big business.
Hi Stefan and others…
Allow me to discuss my use of the term “trash” which I used in an earlier post to describe the vast majority of unsolicited submissions received via corporate open innovation portals. I have a window to some of these unsolicited submissions through the work I do with corporate clients.
My point is not that the ideas have no merit or are totally worthless. Rather, by “trash”, I meant that they are discarded by the receiving company without their yielding any value to them. They are very often screened out without even getting past the administrative gatekeeper who is assigned to do triage and decide which of these to disseminate within the organization for further review. The technical reasons for dismissing a submission can vary: the idea is considered off-strategy, it lacks technical and/or clinical substantiation, it doesn’t offer a consumer-meaningful benefit, it caters to a niche that is not of sufficient size to merit business interest, there isn’t a reviewable prototype, it is not sufficiently developed to be reviewable, it is not protected or protectable…and more…
Companies should uniformly strive to demonstrate that they appreciate the unsolicited ideas that they receive. This should include being responsive to submissions by providing feedback to the submitter in as timely a fashion as possible. I have done consulting and training work to assist a major corporation to enhance their corporate processes and communications involving external parties who make unsolicited submissions.
One important footnote: occasionally, in the world of external innovation….one man’s trash may be another man’s treasure. A couple of years ago, a major company declined an unsolicited submission for strategic reasons and then referred the submitter to me as someone who could assist him in furthering his goals. I helped introduce him to another company…who acquired his company earlier this year.
Best regards,
Michael