3 Open Innovation Failures: Boeing, LEGO and Pharma
We are seeing lots of open innovation progress and companies are keen to share success-stories. We do not hear much about the failures, but here you get three examples.
Boeing 787 Dreamliner:
I think it is now fair to say that Boeing has a solid failure at hands when it comes to the building (and innovation) process of the otherwise great aircraft (well, once they fix the safety issues that is).
Just consider this quote from Boeing: “More than 50 of the world’s most capable top-tier supplier partners are working with Boeing to bring innovation and expertise to the 787 program. The suppliers have been involved since the early detailed design phase of the program and all are connected virtually at 135 sites around the world.”
Given their many delays and now the safety issues, I think the conclusion is clear. They failed.
LEGO Universe:
I really like how LEGO embraces open innovation in general, but they also had an early failure with their LEGO Universe project, which you can read about in this post.
The pharma industry:
As it might be unfair to mention LEGO above, it might be a bit premature to include the pharma industry here. The reason for doing so is that they have not yet succeded in finding a way to change their blockbuster approach and their best bet sofar has been the open innovation-like approach with biotech companies. The pharma industry still needs to convince me that they can beyond buying projects and actually set up an open innovation process.
It is actually hard to find specific cases on open innovation failures. Can you help?
The issue in pharma is not about open innovation. The issue is with ageing populations and chronic diseases we need to go from treatment to prevention. Hence it is not about finding better bio tech companies.
The pattern of the issue that Boeing has is fairly well known. Whatever happens, Boeing is
responsible for the total integration, which is the most complex task of all. I have seen failures in the development of simple devices as mp3 players, so in something complex as an airplane it can happen easily. Looking back at some of the problems with the latest airbus, they had the same rootcause.
Finally a striking exaple of failing open innovation is the colaboration between Coca Cola and P&G on softdrinks in 2001, which lasted 8 months. The two multinationals announced they were setting up a new company to sell brands such as Pringles potato chips and Minute Maid juice in a $ 4.2 billion venture. Not open innovation in the sense of technology, but combining strengths of both companies to develop “good for you” healthy beverages and distributing salty snacks.
Thanks for your views! In relation to pharma, you wrote: "The issue is with ageing populations and chronic diseases we need to go from treatment to prevention." Here open innovation and business model innovation could be interesting elements if big pharma would truly embrace this. With regards to Coca-Cola and P&G, this sounds more like a joint venture sales company than innovation….
Opn innovation in pharma can be usefull, but what we need to realize that we should move from 'treatment' to prevention in the care cycle. If we do not take our drugs properly or even do not take it at all, that is another problem.You get to behavior change and open innovation now needs psychologists and game designers. That is rather different and conflicting with today's (big pharma).
With respect to the Coca Cola venture, indeed everybody expected a joint venture or an aquisition, but it was a partnership. I chose the example deliberately, not to have a technology example. it is really an interesting example.
Pharma is big. I guess you are talking about the big pharma companies – like this is the usual discussion taking place. Big pharma has to completely reinvent themself as we have seen it in other industries already in the past. They have to change culture, mindset, values, business models and the way of working and thinking as such.
What I see is that big pharma companies are more and more outsourcing development (as well as manufacturing) activities, that is open innovation… They do it becasue of two reasons:
1.) cost saving, streamlining/ focussing internal resources and competences
2) They have realized that external, small companies will be able to be much faster and more cost effective in product development
But I agree, this will not be sufficient. Big pharma has to change mindset and become more open for ideas, competences, technologies, products from outside.
But, beside the well known big pharma companies there are many small, medium size and even start up companies which are doing a lot of open innovation.
Why would you call the Boeing example a failure? Maybe there was a signficant deviaiton from the original plans (or hopes?), but is that not the nature of innovative projects of this size? Maybe you mean that (some of) the planes have technical problems, but that also happened to iPhone (remembert the antenna issue).
As you wrote yourself, Stefan " A third lesson is that you need to take chances". I do not think that Open Innovation as such is a safe way of working where you never can fail. On the contrary, we are learning as we go and if you are not prepared to fail, you can never, ever win. So I would say this is fully natural. But we can learn from thse mistakes – to contsnatly be better at it….
I feel bad for LEGO. However, not all innovation is successul. Best of luck to them in the future.
Any issue with Big Pharma is twofold. To say that Pharma needs to embrace Open Innovation forgets about the extremely strict regulatory bodies that govern (and to some degree structure the funding of) R&D, the Approval Process, Marketing/Promo, and actual Delivery of Care. Additionally, these regulatory bodies can be extremely cautious in how they implement any changes to their process or guidelines, and rightly so when billions of lives are potentially at stake.
As an example, after FaceBook being in market for almost a decade, the FDA still hasn't provided guidelines on how Pharma can reach, support and communicate with patients via social media.
Any lack of uptake in Open Innovation is not solely at the fault of the business – it's a systemic issue, and one that deserves a bit more recognition for the benefit it holds and what the impact of any major change to current process may actually be.
Hi Stefan,
sorry – but this post seems to me like a constructed text around historical events. People who visit the museum and see a picture of a famous painter and tell the world around them in the same room, why the painter painted the painting that way as if they were 200 years old and knew the painter personally.
Nassim Taleb wrote in his book about this bias of "describing the world without really understanding the happened story" when he mentioned stock exchange comments in the TV to be put off with the "Silent Button" of the TV. – Same stuff like the above described museum visitors.
I think you should concentrate on insights about OI, which are labeled by the sources itself as "Failures" if you want to write about them instead of searching examples to write a posting, "you wanted to write with a specific opinion". Think about it. And read Taleb! (great book)
Don't take my post personal. I think you are able to manage constructive criticism.
Thanks for your views! You raise some good points here, but I do have an issue with this statement "which are labeled by the sources itself as "Failures"". I think it is fair enough for others to judge whether a company succeeds or fails. If this was to be done only be the companies themselves, I don't think there would be many failures at all. The outside perspective is often more direct and harsh, but this can also serve a purpose as you sometimes need this to open your own eyes. By the ways, failures within innovation are OK – as long as you learn from them.