The Future State of Open Innovation
Paul Hobcraft, the #3 guy on the Top 40 Innovation Bloggers of 2012 list, recently asked me about my opinion on the future state of open innovation.
I think his questions can fuel a great discussion so here I share his mail and at the end of this post, you can find some of my thoughts on this.
This is what Paul wrote:
“I fear, that OI has moved on. It has closed down in many ways and been superseded by broader community platforms. This is a worry as many of the corporate champions feel they have extracted the ‘juice’ from the known OI and are exploring different collaborative models. This means we are entering a fragmenting and searching time, arguable this is a maturing state, going beyond OI.
Increasingly I see platform innovation becoming the future and are we getting caught up in the rapidly diminishing past of OI, as it stands today? Are we in real danger of looking in the rear view mirror while the need is to keep our eyes on the road ahead. But can we see the signs pointing us to this road ahead? Or are we stuck on the same road, simply looking in the mirror watching as we attempt to get away from others behind us?”
Evolution like this is a good thing. I really believe that the future winners of innovation are those that make (virtual) communities work. This is a natural development of the physical ecosystems that drove open innovation at the earlier stages. Platform innovation, which can be used internally as well as externally will be a powerful element of community-driven innovation.
External input is key. No one really cares about open innovation per se. What really matters is how companies get more external input into their innovation processes in order to bring better innovation to market faster. There is no need to get caught up in semantics.
Open innovation as a term is disappearing. Open innovation is a buzzword, and we are not even going to use the term in 5-7 years time. It will merge together with this term: innovation. If we have in mind that innovation is difficult to define, then it actually becomes perfect for constant evolution like this. One of the key differences between innovation as we know it today and innovation in the future is that we will have a much higher degree of external input to it.
Most corporate innovation champions are playing catch up. To be honest, we lack visionary innovation leaders and champions. Too often, they are playing catch up rather than trying to make their organization competitively unpredictable by using the innovation toolbox. If some are already moving ahead of open innovation, this is actually a good sign that they are getting more progressive and more committed to experimenting with their innovation processes. But most are still catching up…
What are your thoughts on this?
It's all about tinkering, the more populated the tinkering, the faster the rate of advancement… It's a zeitgeist "thang", man…. It's very threatening and scary to those that are insecure and spend a disproportionate amount of time protecting their reputations…
I agree that the term "open innovation" is a poor catch-all to describe a host of collaborative approaches that involve participants from outside the host organization. I believe that many companies are discovering that the original vision of "everyone can and should be allowed to participate" is severely flawed because while everyone has the right to participate, not everyone is qualified to make useful and viable contributions in a business-relevant sense.
I believe that the core current operating model within many companies is to do a combination of "closed" open innovation approaches: (1) we qualify you and you can participate and (2) we find and select you and where appropriate, try to integrate your inputs into our processes. I believe that this approach has sturdy legs and will continue for a long while, irrespective of whatever other social inspired collaborative frameworks are devised.
Too much is made of "open" innovation, when too little is actually occuring. Most organizations we work with are still trying to get their internal innovation capabilities in order, before considering "open" innovation and the challenges and opportunities it brings. I agree with Stefan, soon we won't talk about open innovation, just innovation.
Most organizations already do some form of partnering or external scans, but don't have a strategy in place or exercise open innovation in a consistent, repeatable way. Eventually, the best innovators will be those who find, assess, implement and commercialize the best ideas and technologies, whether those ideas and technologies originate within their four walls or from an external partner or community.
We have a long way to go for open innovation to fully flourish, and in many ways it can't become compelling until organizations have strong internal innovation capabilities. We are simply at the point in the hype cycle where the discussion and promise of open innovation has been larger than the results, and soon the benefits of open innovation will be recognized and far more firms will join in.
Good points. I usually argue that companies should not bring in guests when they do not have their own house in order (strong internal innovation capabilities). However, as we are starting to see some industries in which open innovation is becoming a key differentiator, companies might have to do both at the same time in order to catch up with the industry innovation leaders. This is a challenge, but it can be done. It might even be a good thing as it forces companies to have a more holistic approach to innovation in which internal and external focus merge together.
So it seems OI is simply a way of doing innovation? The reason I believe much is made of OI is the very critical fact it signals "we are going open", "we are seeking external opinion" and I don't think you would have got the momentum achieved so far if this aspect of innovation had not been singled out.
I'll echo the sentiment that "open innovation" is a fading term, but the concept is still an important part of "innovation." I hear a lot of people mention things like, as Paul points out, "we seeking external opinion." There's a big difference between seeking opinion and truly collaborating. That's the benefit we have with new platforms and rise of engaged communities; we can really treat consumers or potential customers as "external stakeholders." They can engage earlier in the process and actually contribute to driving innovation instead of just reacting to or validating new innovation.
Good points. I don't even think half of the bigger companies (established, beyond startups) are beyond the "seeking external opinion" phase. In some ways, this is a good thing as it tell us that we are still have lots of potential in the open innovation movement.
Open Innovation (OI) is more a motto, a declaration of intent to become a better innovator and collaborator than a specific, content defining concept. So everybody means something different in detail when talking about OI. The term will stay with us for quite some time but will become more and more general and indeed morph into the term innovation. Innovation on its own is so general that it gets about 400 million hits in Google. And OI will fit into this spectrum easily.
Net, as innovation thought leaders and practitioners let's stop talking about OI and get more specific on how to innovate how to innovate.
I am not sure we should stop talking about open innovation just yet. It is one of the best contributions on how we can innovate on innovation that we have seen for years – maybe decades – and we need even more push on this. Of course, we need to be careful about not being caught up in semantics here. Getting things done is the key thing.
Interesting points to consider about Open Innovation. Perhaps new terminology will replace it but the concept might remain the same? Seems a lot of people recycle these days.
Recycling and constant improvement is not necessarily a bad thing
Agree with your comments.
It is too early to say if OI has moved on. Most companies still struggling with innovation as such. They lacking formal process to tap talent within organisation. Once everything is tapped internally, then probably they will look into OI. Also everything going social which supports OI. So I beleive, OI is here to stay.
You've read my mind! I have been framing a post entitled: "Open Innovation is Dead, Long Live Open Innovation."
In short, in my years of working in OI as both an adviser and more recently as the CEO of a startup technology venture, I have seen very few cases of the successful passing off an external innovation to a corporate innovator. My thought is that many of us working in OI have been trying too hard to force round pegs in square holes. A corporation cannot take in someone else's work product effectively unless it is clear that there is a successful business model to be wrapped around the externally derived innovation–why would someone take a career risk if the upside to the risk does not far outweigh the downside?
I also think too little pressure is put on the external innovator (the round peg) to do the front end work needed to establish the likelihood that a validated business model will exist for the corporate innovator (the square peg). We used to blame this on "NIH Syndrome" on the part of corporate innovators, but now it is becoming clear to me that much (most?) of the blame is due to people like me who wish to get paid for my company's bare idea (albeit a broadly patented idea) without going through the effort of validating the fact that there is a profitable business model associated with my idea.
In every case I have reviewed where a technology was taken from the outside into a corporate environment for successful product introduction, someone had first done a great deal of validation work. Usually, the external company had at least demonstrated that a significant number of consumers would pay for the technology if it was available in the market. To put this simply–and in the form of incentives–it must be readily apparent to the corporate innovator who greenlights the bringing in of an external innovation that they will not only NOT lose their job if they take a risk, but that they might get fired it gets out that they passed on the innovation. This degree of clarity requires much effort, skill and expense by the outside innovator who wishes to sell or license her technology. There are no shortcuts.
I look forward to fleshing this idea out more as I prepare to speak to a group of MBA students about technology licensing in the next few weeks.
I think we have got some consensus here, OI is valuable, it is going to be around because it becomes the catalyst to go outside. It still has mileage as many firms still do not truly embrace the 'collaborative' nature and all this entails.
So far so good
But what's in the future? Do we see changes taking place within OI to lead it into something else, an extension, a new movement that extracts what OI offers but builds on it from better technology, improved collaborative platforms, growing best practice for managing OI.
Why are a number of leading OI practitioners leaving their (large) organizations. Retiring, taking early retirement packages, feeling the time is right to move on or being pushed out to be replaced by the next big thing to offer innovation its new impetus?
Are the antibodies creeping back out sensing OI has been pushed to its limits and want to claw back the activities outsourced to rebuild different centres of collaborative excellence?
Are we seeing large organizations settling on returning to a wider closed network, demanding that the concept be fully proven, has been piloted and just looking to be the global leveraging source to make this a billion dollar brand.
Are we faced with a different landscape due to the continued downturn in many of the economies forcing OI and innovation to become more selective, more cautious to undertake?
Are we seeing a 'set of forces' coming together to alter our thinking. A new emerging intersection within innovation where new ideas, concepts and cultures are coming together or perhaps present ideas, concepts and cultures wrapped around OI are refroming to give a new momentum to OI?
Lets push out in thinking here- it might be there are a combination of "weak signals" and "stronger ones" coming into play.
Any thoughts?
A very interesting thread! A key consideration is the concept of collaboration. Far too much of what large companies do, reflected in how they are organized, is about the maintenance of control. This impacts negatively on innovation, whether internally generated or externally accessed. It hinders internal collaboration in companies that are too heavily focused on silos. If your focus is on meeting your cost budget, you won't spend as much time collaborating with colleagues in other departments or geographies if there is no recognition or reward to engage in efforts to grow the top line.
Therefore I think open innovation is more about getting collaborative innovation working. If companies work well across their own internal boundaries they will be good at working externally.
Next, the tone of a lot of comment above is surprisingly negative about open innovation. Could it be that the results are disappointing because it isn't being done well? I don't believe there is a flaw in the concept or reasoning, probably just in the execution. For example, ROI calculations often omit the hidden cost of generating the technical competency you access by working with an external partner who already has it. Incremental cost to get started is often relatively modest, involving scouting headcount. Deals can be done on a royalty or supply basis, minimizing up front costs. ROI for OI seems to get more scrutiny than adding headcount to existing initiatives.
So I think open innovation is still a great opportunity if done well, it won't go away yet, but in those companies who do it well it will be seen as a manifestation of their ability to collaborate. They will have the mindset to be open to ideas, whatever the source; to collaborate with external partners on development; and to work with partners on launch and growth. The laggards will struggle with innovation, whether internal or external.
Ultimately, it's about having more innovation choices; open innovation gives you that, and makes you more competitive.
Additional prompter for us to move beyond perhaps the present position. There are always (or should be) different discussions when you look towards predicting or working on things in the future. I call these the three horizons.
1.The present position where I think we have captured its 'essence' and identifying the current challenges- this establishes the case for change. (Horizon 1)
2. What is our desired future state from more open innovation? (Horizon 3)
3. What are the tensions and constraints to stop us from moving from H1 to H3 and what are the signs of real change that give us encouragement about moving towards the desired state so we can manage these in H2 to take us through to our possible H3 desired state
This is where I'd like us to go on this discussion as I see what is around me and in the rear view mirror but I'd like to anticipate the road ahead a little more.
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