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Open Innovation Happens Behind the Scenes

February 16, 2010 Open Innovation 5 Comments

by Stefan Lindegaard

John Hagel and John Seely Brown wrote a great post recently named Open Innovation’s Next Challenge: Itself. It got scores of retweets so you have probably already read it if you follow the open innovation community. In short, they argue that companies need to focus more on relationships rather than transactions when it comes to open innovation.

The questions raised in their post are valid enough, but I think Hagel and Seely Brown – whom I respect a lot – are a bit late on this one. The companies that are serious about open innovation are already ahead of the transactional model. They fully understand that what really matters on open innovation happens “behind-the-scenes” rather than through fancy idea-generation or crowdsourcing initiatives.

“Behind-the-scenes” is not about making innovation happen internally. I actually believe that you should be careful with open innovation if you are unable to make your internal innovation engine work. Open innovation is by no means a holy grail that instantly fixes all of your problems.

When I talk with open innovation leaders such as P&G and General Mills, we agree that sites such as PG’s Connect & Develop and General Mills G-WIN are important, but such initiatives are not the most important pieces of the puzzle.

It is far more important that companies have internal platforms in place that can handle the many opportunities that arise when they bridge their internal resources with external partners. This requires the right people, a proper mandate and good processes. This is too often not the case.

Initiatives that we can label as “behind-the-scenes” include teams that are very adept at hand-helding partners as they begin to work with the large company, special events with trusted partners and scouting teams as discussed in this great report: Scouting for Innovation

Companies like P&G, General Mills and Intuit know that it is very important to have such elements in place in order to achieve what Hagel and Seely Brown rightfully urge companies to aim for; long-term partnerships.

Actually, one of the biggest issues on open innovation in larger companies is to be able to treat their partners so well that these partners maintain an interest in doing business with them again and thus become long-term partners. This is not always the case today as some large companies believe that the definition of a win-win relationship is that you get to kick the little guy twice.

The next practices of open innovation will be about developing systems, enablers and processes that speed the connection to innovation parners in a repeatable, cost effective and quick way. The latter sentence is inspired by a talk given by Peter Erickson, who leads the innovation efforts at General Mills.

An idea portal that brings in lots of quick transactions will not make you the preferred partner of choice within your industry. This is nothing more than a ticket to get into the game and the companies that are serious about open innovation know this.

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SAP: How To Build Eco-Systems For Open Innovation

October 6, 2009 Open Innovation No Comments

by Stefan Lindegaard

I did some research on SAP and their open innovation-like initiatives. It was quite impressive and in particular I like their focus on building an eco-system through their collaborative websites.

In 2008, John Hagel and John Seely Brown wrote a great article on this. I have inserted some highlights from the article below, but you should read it in full and learn: How SAP Seeds Innovation.

Impressive Participation
Consider some of the stats (2008, red.). More than 9,000 companies participate in SAP’s various partner networks globally, and 1.2 million individuals participate in SAP’s online communities. Roughly 25,000 new participants sign up for the latter each month, and from 2006 to 2007, its number of page views doubled, to more than 150 million. Participants contribute some 6,000 online posts per day and create better than 60,000 wikis to handle ongoing discussions, while at least 1,200 bloggers comment regularly on community topics. More than 3.5 million posts have accumulated in these forums, and the pace of activity is accelerating. It took three years to reach the first million forum posts, nine months to reach the second million, and only six months to reach the third million. In total, 100,000 members have contributed posts to the online forums.

Advantage of One Boss
Unlike most technology companies, SAP has assembled all of its ecosystem components under one senior executive. Zia Yusuf is the executive vice-president of SAP’s Global Ecosystem & Partner Group. Yusuf believes that this organizational approach is critical to success. In a presentation, he observed that “when individual functions or business groups have responsibility for segments of the ecosystem, these segments tend to become silos and reflect the interests of the groups sponsoring them, rather than serving the needs of customers. By bringing all of the elements together in one place, we can more effectively focus on the customer and mobilize all of the resources relevant to the customer. We seek to improve the economics of our customers materially by accelerating value creation while at the same time helping them reduce costs.

This is what other companies can learn on eco-systems from the SAP case according to Hagel and Seely Brown:

• Effective ecosystems generate differentiation and specialization
• Ecosystems evolve over time, but the orchestrator plays a key role in seeding and feeding participant initiatives
• Robust ecosystems are helpful to individuals, not just institutions
• Robust ecosystems require mobilizing large numbers of specialized third parties, not just the vendor and its customers
• Ecosystems at the edge bleed into the core of the enterprise
• Ecosystems are not just about connecting to existing resources—they help provide platforms for distributed innovation and learning

You should also check out these articles on SAP and their alliance with and investment in InnoCentive:

Warren Wilson, Research Director from Ovum, comments SAP’s alliance with and investment in InnoCentive. Among other things, Wilson argues that SAP primarily gets visibility and thought leadership in return on their investment. This is quite good as it helps them become the preferred partner of choice within their industry.

Lane Dignan, Editor In Chief of ZDNet on the SAP and InnoCentive partnership. The article also touches on how companies and InnoCentive handle intellectual property rights issues.

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Good reads on innovation #3

August 6, 2009 15inno, Good Reads, Innovation No Comments

by Stefan Lindegaard

Here comes a list of reads, videos and podcasts on innovation that I have enjoyed and re-tweeted in the last couple of weeks. I hope you will enjoy this as well.

You can follow me on Twitter: @lindegaard

Markets or Communities? The Best Ways to Manage Outside Innovation - a must-read interview with Karim R. Lakhani

Winning The Contest Of Ideas – examples of cash prize contests to spur innovation from Netflix, X Prize and Cisco

How Does China Compare To Europe and US in Innovation? – podcast with Kevin Ryan

A Look Behind the Silver Lining – Boris Pluskowski’s honest and helpful review of The Silver Lining book by Scott Anthony

Buying, Not Making Innovation – good thoughts on Google by Joel West

Why Segway Failed To Reshape The World: Focused On Invention Rather Than Innovation – a post by Mike Masnick

Implement Open Innovation Strategy: Focus On Input – Rob Veldt urges you to focus on the input side of open innovation

The Open Minded Professor – Erich Von Hippel on open source, lead user and open innovation

Video With John Hagel On Innovation In Emerging Countries

How Customer Co-Creation Is The Future Of Business – Graham Hill presents a series of principles that guide our thinking about what co-creation is (good focus on life-time usage)

Why Creative Leaders Are So Rare – insights by Navi Radjou