I recently gave the below interview to the Irish news service, Business & Leadership, in which I get into the state of open innovation, why communication is important and how and organizations should deal with open innovation failure.
Here it goes…
Bringing external input into the innovation process is crucial for any business that wants to stay on top of its game, according to author and strategic advisor Stefan Lindegaard.
Whether it’s labelled open innovation, crowd-sourcing or co-creation, bringing some kind of external input into the innovation process is vital for organisations that aspire to be in leadership positions in their sectors. So says Copenhagen-based author and strategic advisor Stefan Lindegaard, an expert in open innovation, intrapreneurship and identifying and developing those who drive innovation.
According to Lindegaard, companies are learning that they must embrace this paradigm shift in the innovation process to keep up with the competition. Those that are lagging behind, he says, will find themselves in big trouble in the coming years.
Lindegaard favours the term ‘external input’ over open innovation. “I work with companies to make them understand it’s more about the mindset they need to embrace. It’s okay to use open innovation as a term but the real one would actually be more something like external input. How do you bring external input to your innovation process?
“Some of the main elements would be crowd-sourcing and then open innovation, where you have more defined partnerships between companies, or between companies and academics and entrepreneurs in which you work together on the innovation process. People tend to put this in the same category and that can lead to some confusion.”
He says that open innovation, or external input, is no longer really about the ‘why’. “Executives, open innovation leaders and employers kind of get it that they need to open up their innovation efforts. Now it’s much more about the ‘how’.
“Something you learn is that it’s easy enough to set up a portal where you source external input, whether it’s crowd-sourcing or more idea partners; the real work happens behind the scenes. That means that you are consistently ready to not only get external input into the organisation, but more importantly, make that input work as part of the innovation process, and go from ideas and projects to create real products and services.”
The real challenge, he says, is to implement this throughout the whole organisation and to not just have a few people in the innovation department having total responsibility for driving innovation through external input. “How do you get this throughout the entire company? That’s a real challenge and it requires a mindset change that starts from the top and needs support all the way down.”
Importance of communication
Certain things can be learned from change management in this regard, he says. “Communication is extremely important. And communication in terms of corporate innovation capability is something that’s been overlooked. It used to be that communication when it came to innovation was all about the products and services, but now it’s also very much about the capabilities.
“This communication is both internal and external. So companies need to build excellent communication strategies on what the goals are with the innovation efforts and how they’re going to approach these goals and what their expected outcomes are.”
Lindegaard also stresses the value of starting the process with projects that will allow the organisation to learn through experimentation and sometimes even failure. It’s vital to pick these projects carefully, he says. “Go in and find some fairly small projects that allow you to get some quick wins, but also allow you to learn and experiment without risking losses that are too big.”
These losses are not only financial, he says. “You can really be set back if you set up a high-profile project from the beginning and it fails, because then you’re going to have lots of people internally saying, ‘Well I told you this is not going to work in our company or in our industry’.
“So you need to tread a little bit carefully and make sure the project you start off with can give you some good learnings and some successes. What you do not want in the early phases is that you give good ammunition to the sceptics – and there are lots of sceptics within a corporation as to whether you should open up or not.
“They might get it that they need to open up the innovation process in theory, but doing so in practice which means different ways of working and bringing other people in to areas that normally you kept very secret, it’s going to take some time for employees to understand this.”
As a sector, the fast moving consumer goods industry has been doing this quite well for as long as 12 years, says Lindegaard. “Procter & Gamble started out quite strong with the Connect + Develop programme, but that’s actually falling a bit behind. Another company that’s doing quite well and has also won some prizes within the industry is General Mills. They have a very good dedicated team that’s been working on this for five to seven years now. You also have Psion, which I like.”
An element that is common to all of these initiatives is that they are headed up by very competent people, he says. “All of the successful projects out there are very dependent on one or two key people making this happen.
“One of the key elements is communication in a broad sense. They know how to work with internal stakeholders. Innovation today doesn’t really happen just at the innovation unit. It has to happen at the business unit level. So, if you want to bring open innovation external inputs into a company, you need to have a good relationship with the business units that are about to get this input and create new products and services based on this.
“These people are very good at going in to build consensus around an idea and helping to change the mindset. They’ve spent lots of time managing internal stakeholders and they realise that managing the internal elements is more important than reaching out to external partners. It doesn’t really matter when you reach out to lots of external partners if your own people are not ready for it when you bring their contribution into the company. These leaders understand this and they spend lots of time on building this internal understanding of how this works, how it’s going to happen and play out.
“They need to be fairly visionary because they are about to do change management, both within the company but also around the ecosystem of partners. Even though they’re visionary, they’re also people who can get things done and they can get things done through other people. You need strong leadership skills here; you need someone who can be followed by others. You need someone who’s willing to experiment and is not prepared to sustain the status quo.”
Dealing with failure
Lindegaard says there are two approaches organisations can take to perceived failure around implementing open innovation. The first of these is to give up after a year when it doesn’t bring results. “Doing this is one of the biggest mistakes you can make. It takes two to four years at least when it’s done successfully to go in and start having this open innovation mindset and having some internal processes that begin to work and produce results.
“If you start this and you have some early obstacles and roadblocks and you say ‘Well then we just conclude, this is not something for us’, that means you’re stopping the progress you need.
“You need to take the other approach which is, ‘This doesn’t really work but this is very much about organisational innovation. We need to change some of the ways we’re organised around this. We need to change how our organisation views innovation in general. How can we change things, how can we experiment with the set up we have in order to make open innovation work?’.
“Companies that take the option of quitting altogether will start seeing that some of their competitors are suddenly cranking out better products and services faster and that they are starting to do this on a continuing basis. They’ve opened up their innovation efforts and now they have much more opportunity to innovate faster together with their partners, together with their ecosystems.
“And now these companies start scratching their heads, saying we actually we tried this two or three years ago and it didn’t work. Maybe we can try again. But at this time, they’re already two to four years behind their competitors.
“If you make the mistake of quitting altogether when you have some early failures, you are very much in a position where you will not get that important innovation leadership position. The term we use in the open innovation community is about becoming the preferred partner of choice within a given innovation ecosystem. And you lose that if you decide to shut down your efforts early because of some early mistakes or failure.”