open innovation

Businesses have increasingly realized that they can’t do innovation alone. Many have implemented open innovation programs to make it easier to bring in ideas from the outside world. As Nanako Mura from Kraft put it, “we recognize that we don’t know everything.”

A.T. Kearney wrote, “No single company is large enough or inventive enough to be an innovation leader without collaborating with an array of partners.”

This is a sea change from the traditional closed innovation model, which dictates that companies tightly control the creation and management of ideas (and own all the intellectual property).

Open innovation recognizes that businesses don’t have to originate the research to profit from it and that those who make the best use of internal and external ideas will win.

But for open innovation to mean more than lip service, collaboration can’t be one-sided. I remember one supplier road show when I worked at a large company. Fifteen vendors flew in from across the country and were each given ten minutes to pitch ideas based on a brief we had sent. We reviewed their presentations like reality show judges. We picked one winning idea, dismissed the others, and then browbeat the winning vendor on cost. This was a partnership in name only.

Many businesses bring this type of closed silo mentality to open innovation. They welcome ideas through an open innovation portal, but force Draconian legal agreements to participate. I know of one collaboration between a large company and a startup where the legal costs alone of the IP licensing agreement ran into the hundreds of thousands of dollars for the smaller company.

I’d love to hear your idea of businesses that are executing open innovation programs well.

Open innovation is not only about process. It’s about mindset.

(Marketoonist Monday: I’m giving away a signed print of this week’s cartoon. Just share an insightful comment to this week’s post by 5:00 PST on Monday. Thanks!)

  1. Srinin says

    “Open innovation is not only about process. It’s about mindset.” Absolutely.

    My take on why there seems to to be seeming contradiction between invitation and acceptance is that large companies tend to look at anything from their own framework of vision, goals and processes. This is done subconsciously. So anything that ‘fits’ within that framework is acceptable but that defeats the very purpose!

    And this does not apply only to businesses but also to any set establishment. In the past one year one big idea of ours has hit blocks at a government agency which was established to promote skill development and is being twisted and tortured by an academic institution that invited us for bringing a fresh idea!

    Any flower as long is smells and looks like a rose…?

  2. Tom says

    I love it.

    I work in an Open Innovation group for new product development and each time our group tries to press forward with even consumer-validated innovations, we get shot down by the various other divisions. Whether it is manufacturing (too expensive with existing capital), Legal (“I’m not comfortable getting up on the stand to testify to that.”), Sales (“The WM buyer isn’t interested even though you’ve got consumer data”), Quality (That would require a completely different quality system), Marketing (We don’t know how to talk about that), etc.

    Instead of the knee-jerk “no” it would be much more helpful to have a thoughtful discussion about the possibilities of a new idea and the cost-benefit analysis of executing it.

  3. Kenriva says

    Open innovations sounds like a cost-effective method to enhance services and products using cutting-edge thinking and or technology. However the draconians that head major businesses in smaller economies are closed-minded introverts who believe only they know business and how to drive business. This is most notably in smaller countries often classified as third world, developing and or emerging. The foreign talents that are brought in to represent the interest of big business locally have no desire to be OPEN about anything. Their position is often I’m here to watch-dog and maintain the status quo…so rather than embrace ideas and inspire locals to think outside the box, to look for ways to combine international trends with local resources to produce new ideas, new products, new methods that can transform not only the foreign-based local business but also can drive new energy and insight into the country’s economy, their posit is “we OPEN to cash outflow back home (repatrition) we CLOSE to expending opportunity locally to grow both the local economy and our business Glocally”……

  4. Ganesh Jayaraman says

    Great cartoon – in today’s innovation co-creation are buzz words bandied around in sales collateral, marketing pitches but driving an innovation program requires the following either in the employee perspective or vendor engagement
    -) Idea tracking, review and investments
    -) rewards and recognition
    -) fair share in patents and IP ownership
    -> importantly some slack in terms of resources and time to work on pet / non billable projects

    most firms are not truely open to address these 4 points but take a check box approach to run an ideation / innovation contest once or twice a year and hope to hit pay-dirt without investments

    That is why i believe innovation can work in forums like social enterprise, Open software movement ( i.e. Mozilla) or start-ups and not hardnosed Fortune 2000 firms

  5. Mary L. Cole (@euonymous) says

    I swear, Tom, there are times your cartoons make me laugh out loud. I just got off the phone from setting up a meeting between folks who can do a complex job and the lukewarm municipality which needs the work done, has a vague commitment to do it, and has nobody raising their hand to spearhead the job.

    Doors closed. “Still no interest?” Wonder why the committee that is tasked to do the job is losing members and can’t get it done?

    There is much of the human condition here in our political world. It isn’t just businesses! (Love the banner!) Thanks for the laughter :-)

  6. DSprogis says

    Open Innovation comes in many shades. Perhaps the most open is crowd-sourced innovation; consider

    Threadless, makes money printing and selling T-Shirts. That is different than “inventing, printing, and selling T-Shirts”. The “invention” part is left to the consumers. Consumers upload their unique artwork and order some number of shirts for themselves and friends. They can make their artwork public and enjoy benefits if their design sells more broadly. Regardless of the message, Threadless gets orders and fills them for a profit.

    Somewhere between completely open and completely closed are a bunch of shades of grey where companies might hold contests or seek consumer comments or ideas. In fact, if companies treated their consumer relations group as an input to Product Development, they might be able to call it “open innovation” in a limited sense – that is, of course, if the company actually turns the complaints into constructive product development ideas and acts on them accordingly.

  7. Mike says

    No question it is a mind-set. In the oil patch there are always new ideas to produce more oil from an asset (i.e. reservoir) you cannot see and are uncertain how it behaves. When you try something and have success; sharing can benefit others with similar assets. However, “open innovation” is not the top of mind; competitive advantage is the typical excuse. Sometimes it may be justified but most often it is not.

  8. Nanako says

    Great cartoon. This brings up an important point of being careful of what you ask for. It’s critical to be specific about needs and make sure there’s business pull. A lesson learned is to be well set up to thoroughly vett the ideas through several filters and have a mechanism in place to respond promptly to the ideas. Otherwise to the innovator, it will feel the doors are closed.

  9. Stephen Johnston says

    Great cartoon! Made me think about when open innovation was the same, and when different, as crowd-sourcing. To me the former is top-down – bringing in some new flavors to spice up an innovation process. The latter is bottom up – asking the world to create the content and structure that you’re working in.

    Companies should decide which game they want to play, as each has its own management approach. If you go full-on crowd sourcing you may end up with things like Dub the Dew campaign (Google it – hilariously awful). Hindsight is 20/20, but my takeaway – if want to fully “lower the drawbridge” feel free, but don’t also give away the keys to the castle.

  10. Susanne says

    Like many of your cartoons, it hurts to laugh at this. 😉
    But even sadder are the many “change” and “innovation” programs that many management teams, more or less forced by consultants, initiate within a firm.
    Employees are invited to participate, each idea is then explained away, because, while “it’s a great idea, but…..”. And those beyond the mote are then not customers but staff.

  11. Tony says

    As you point out Tom, collaboration, indeed, cannot be one-sided. But I see two ways this applies, as both demand-side and supply-side collaboration as important

    Demand-side collaboration can come in many forms in the digital age. Crowdfunding, for example, combines dispersed interest in some common cause, monetizing that interest for mobilization of ideas at a scale we haven’t seen before. Kickstarter and the other crowdfunding websites are steps towards enabling this. Social media has some tendency to capture dispersed interest as well, but generally a “put your money where your mouth is” mechanism serves to capture this demand better.

    Supply-side collaboration, of which crowdsourcing is a key component, is also important for the future of innovation. Business such as Innocentive, Threadless, Tiwtter-ernabled apps, and even some big corporates like IBM and Accenture recognize this trend. In an age of decreasing costs of both material goods and information, we really do need to have a cultural shift about where we expect unorthodox and cost-effective solutions to come from. They might come from places and people we least expect, and we need to find ways to harness this power.

    So, I humbly suggest that the key question into the future will be how to combine this supply and demand side innovation in new institutional settings and new marketplaces which can foster the trade between those who want a future outcome, and those who can provide that future outcome. I strongly feel that this “meta innovation” will come from small start-ups who try to create better and more efficient online marketplaces. More thoughts at Cheers, Tony

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