Open Innovation From A Practitioner's Perspective

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Engagement In Innovation Networks

(The following post is an excerpt from a Global Innovation 50-page report I wrote for the University of San Francisco. It focuses on  engagement in social networks, but I believe that these same exact principles apply when building innovation networks).

Before any company attempts to leverage an existing network (or create a new one), they must understand the various levels of engagement found in online networks.  This is important knowledge that will help a company develop the right tactics to get the most out of a network strategy.  When launching a new network (internal or external) opportunities for participation should be focused and maximized.  By understanding that there is more than one way to participate (and contribute) in these networks, an appropriate strategy that utilizes all levels of contribution can be implemented.  In addition, it is important to select platforms and tools that are designed to make it easy for people to understand what is being asked of them.  Simplicity and clarity are key to entry participation at any level.  Too often companies will shut down what they consider to be an unproductive network without setting appropriate goals for engagement and contribution from the network participants at all levels.[1]

These levels of participation are often described as a ladder of contribution (Forrester) or a pyramid of participation (Altimeter Group) as illustrated in Figures 1 and 2 below.  Both models describe the various steps and stages of participation.  It is important to recognize that valuable contributions take place at every level of the ladder or pyramid.  Too often in social networks, organizations focus on the very top level of contribution.  But because these kinds of contributors represent a small percentage of the overall number of participants, many social networks are prematurely deemed failures because the majority of participants did not edit a Wiki, publish a blog, or write an article.  Regardless of whether it’s a ladder or a pyramid, the percentage of users who actually create this kind of content is smaller than anyone thinks.  Take this example:  using the engagement pyramid to assess Wikipedia, less than 1% of the user community is considered active contributors. The actual ratio is 85,000 (out of over 11 million registered users) who create content.[2]  Even with this tiny group of active contributors, Wikipedia remains an explosive example of an open innovation community.

In addition to nurturing participation at all levels, the other lesson here is that companies need to understand how their target audience wants to interact with social media.  It is important to consider that the media your audience interacts with also determines their level of engagement.  Some people may be active readers and may occasionally comment on what they read while others prefer to upload videos on video sharing sites (e.g. YouTube) or pictures on photo sharing sites (such as Flickr).  While value can be derived from all of these forms of engagement, it is important to understand who is in the community and what their social media interests are before assessing the “success” of the levels of network engagement.

   Figure 1.  Forrester Ladder of Engagement

              Figure 2.  Engagement Pyramid in Social Networks


[1] Most companies tend to focus only on one level of contribution, such as a blog post or wiki entry.

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Six Ideas To Drive Culture Change In Innovation

Ask any innovation consultant or innovation employee within a company and they’ll both agree that long-lasting success in new models for innovation boils down to one key issue: changing the corporate culture to embrace these new approaches.Without culture change you will not achieve long-term success. You may have an occasional win here and there, or an occasional breakthrough may occur but this is not the same as a sustainable, permanent change in your “business model” for innovation.

 

 

 

With than in mind, we did an informal survey of recommendations from several sources, added some of our own ideas, and compiled our list of top six recommendations:

1) Build Collaboration into Your Employee Evaluation System (source: Business Week and 3M)

 

From the BW article: “Reward employees not just for developing an innovative technology, idea, or process, but for spreading it. No company reaps the benefits of collaboration if their employees or managers are hoarding innovation in order to look good at the next quarterly meeting.”



2) Create Innovation Funds (source: Business Week and 3M)

As stated in the article, “Managers focused on core-related projects often don’t want to spend money exploring or developing innovative ideas. To overcome this common roadblock, companies should create an alternative source—3M calls these Genesis Grants—that employees can go to for funding of innovation projects that don’t fit neatly into existing departments.”


3) Innovation Events need to be part of an Overall Strategy

While contests and prize-based challenges can be important elements of an innovation strategy, these should not be your only focus. Look for ways to develop ongoing innovation activities such as allowing employees to dedicate a certain % of their time to unstructured thought and creative thinking. All innovation activities must be conducted in the context of an ongoing innovation strategy.


4) Encourage Risk Taking

While this is nothing new, what is needed are fresh approaches to encourage risk taking. One idea is to have employees share failures internally in order to learn from (and accept) unsuccessful projects. This can go a long way to developing a culture that encourages (and does not punish) risk-taking. Intel calls their approach Failing Forward.

5) Look Inside the Company First

Too often companies rush to drive external innovation without first considering whether they have fully exhausted all internal sources. Turning your innovation strategy inward (as a starting point) will not only ensure you have uncovered all possible internal sources of innovation but it helps companies practice the necessary skills that will serve them well when they go external – skills such as framing the right question, learning to collaborate, and driving transparency in the organization.

6) Top Management Must Show Support

Senior leadership must not only talk the talk, but they need to walk it too. And how can they walk it? By developing and communicating a clear strategy on what steps they are going to take to support new approaches to innovation. They could start with steps 1-5 outlined here.

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Key Skills for Individual Innovators

The conversation today on innovation tends to focus on the corporate level  – how can companies prepare themselves, how should they be organized, who are the best of the best, etc. It’s time we take a look at what needs to happen at the individual level (after all this is where “the rubber meets the road” when it comes to successful innovation).

The new innovation framework will require the development of new skills for all players.  These new skills will allow individuals (and ultimately companies) to thrive in this new paradigm.  A few critical skills that will significantly aid individual innovators are:

  • Learn to frame the question properly – When presented with a challenge, too often as individuals we focus immediately on ways to solve that challenge without taking into consideration whether or not it was a well-defined challenge to begin with.  Take a step back from the problem you are trying to solve and try to come up with new ways to ask the question. Become skilled in clear oral and written communication. Develop a “Frame and Connect” mindset – these new insights can go a long way to getting to the right answer!
  • Think of yourself as a solution finder – Most of us have been trained in a system that rewards individual achievement, however today’s achievements will be increasingly collaborative.  Instead of an individual performer solely responsible for a problem, think of yourself as the solution finder and utilize whatever helpful collaboration is out there.  Your value lies in defining the problem and identifying a valid solution rather than creating that valid solution.  Ask yourself how big and how good is the solution.
  • Learn to collaborate and share – Collaboration is taking on a new meaning; one where individuals freely contribute their thoughts and ideas without any guarantee of reciprocation or compensation.  For example, there are many open commons movements that are driving idea sharing and collaboration to new levels.  They are focused on topics such as open source software (Drupal), open science movements (www.sciencecommons.org), and open publishing communities such as (Public Library of Science, or PLoS), to name a few.
  • Stay informed with filtered information – With so many sources of information at our disposal, it can be overwhelming to attempt to digest everything we see and read.  Instead of examining the volume of information, examine how you filter it and manage information.  For example, limit the number of information sources you utilize to a select and relevant few.  Identify a handful of experts and thought leaders and read their blogs and articles regularly; let them be your filters and serve you up the most interesting information.

Any other skills? Please share your comments.

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Principles of Open Innovation

The new innovation paradigm requires a dramatic shift in the attitude of companies and individuals towards innovation. As discussed earlier, this shift in attitude is no longer an option for many industries.  The forces of change that come with globalization and more demanding customers are here to stay.  For many companies it is now a matter of survival.  Yet this new landscape also brings great opportunity, at a level never before imagined.  As you prepare yourself and your company, keep in mind the following seven guiding principles:

  1. Develop More Transparency[1] – starting with your own company, look for ways to share information and build trust with all of your employees and be sure to demand the same from them.  Make your organization as flat (and non-hierarchical) as possible. With your outside world of customers and partners, look for opportunities to open up or share information beyond the basic transactional exchange of information.  Intuit holds an annual Entrepreneur Day where they invite customers to spend a day with Intuit senior management in an open idea exchange.[2]
  2. Engage with networks – we live in a highly networked society and the employees (and customers) of tomorrow will have spent their entire lives in this networked world.  Be aware of the value of these networks and encourage your employees to actively participate in professional networks, blogs, and other social media.  There is a wealth of useful (and often) free information that is available.
  3. Embrace community – by definition, most successful networks have a sense of community or shared purpose.  This implies a certain set of norms and expected behavior for members of a specific community.  Interestingly enough, these communities can offer a great deal of insight and value to its members.  On LinkedIn alone there are over 3000 innovation-related groups.
  4. Competitors can be collaborators – this may seem a little unusual to some, but this new world of innovation should force you to rethink what defines a competitor and ways in which you can work together.  If you sell office productivity software, for example, are you competing against other software providers or is your bigger obstacle customer indifference towards your product?  P&G, for example, licensed a core plastic film technology to Clorox, a staunch competitor in certain markets, because P&G was no longer in the plastic film business.  This would have been unimaginable fifteen years ago.  Small companies can cooperate at certain levels to create entire eco-systems around new technology that can help raise the market opportunity for all involved.  Twitter is a good example of a recent innovation in social media that has spawned an entire ecosystem of new services, all benefiting one another.
  5. Discourage the “Not Invented Here” syndrome – nothing kills an idea faster than the belief that your company has all the answers and no possible expertise exists outside your company’s four walls. Time and again we have seen success stories that completely debunk this theory.  No single entity, regardless of size or scope, can legitimately claim to know all the experts in a given area. “Proudly found elsewhere” is a commonly used term to describe the new mindset you need to adopt.
  6. Engage with failure – failure is a reality and a necessary part of the innovation process. Failure today takes on a different context when you consider that one person’s failure is another’s success.  Use failure as an opportunity to re-frame the question or seek completely new sources of solutions.  Failure sometimes is the result of asking the wrong question or focusing your efforts in the wrong area.
  7. Get into the habit of maintaining a “memory” bank of successes/failures – the company should document all successes and failures to understand why something worked and why something else didn’t work. There may be opportunities in the future to bring those failures back to life.

[1] Transparency is defined here as: “Making the optimum level of disclosure for your partner to have all the information necessary.”

[2] For more information go to: http://smallbusiness.intuit.com/blog/where-small-is-going/2009/08/call-for-proposals-–-intuit-entrepreneur-day.html

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Open Innovation in Software

Open Innovation in Software

Jeff Howe, in his book Crowdsourcing, presents three forms (or categories) of crowdsourcing. The reason I mention crowdsourcing is because I believe open innovation is a form of crowdsourcing (or an example of crowdsourcing). I also think that a lot of principles of crowdsourcing (community, diversity, competitions, reward/recognition) apply to open innovation.

The three categories of crowdsourcing (according to Howe) are as follows:

1)   Prediction Market or Information Market

Such as a ‘futures’ market for a new movie release, these tend to have a set of fixed outcomes that participants choose from (success or failure, who will win, etc). Examples include Iowa Electronic Markets, Hollywood Stock Exchange, and Betfair.

2)   Problem Solving or Crowd Casting Network

Here you are looking for expertise in a large crowd to solve a specific problem, such as InnoCentive. You still need to share across the crowd (and a diverse one at that) because you’re not sure who in the crowd can solve your problem.

3)   Idea Jams

As the name implies, they’re much more open-ended and are less structured. Here you are brainstorming new ideas/applications for a given product or service.

What I like about this framework is that it works perfectly for open innovation. In other words, you can use open innovation in each of the above categories. For prediction markets, imagine inviting a network of suppliers, employees, partners, retirees to vote on a series of possible outcomes (or options) for a given product launch. What’s ‘open’ about this is whom you invite and how you frame the questions.

Problem solving networks are probably the most common examples of how open innovation is being carried out today. What’s important to remember is that in reality this represents only a portion of an overall open innovation strategy, yet for many companies they latch on to this approach and consider it their ENTIRE open innovation strategy.

Idea jams are very interesting because here’s where diversity can pay off in a big way. By bringing in people who know nothing about your particular business or product you can open up the possibilities to new and interesting uses for your products and new markets for your business.

One other key element of any open innovation strategy is the concept of community. It is important to incorporate aspects of social media and social networking in any open innovation activity (to the extent possible).

If we take the three above categories and map them in software, (both the service and the product side), one can start to see interesting strategies emerge for each grouping, as shown in the following table:

Table 1 – Possible open innovation tactics for each category of crowdsourcing
strategy, for software as a service and software as a product.

 

 

Service

 

Product

 

Information Market

  • Bring the crowd (new and experienced users) to vote on the top service improvements they’d like to see (using a form of prediction market or exchange)
  • Bring the crowd (new and experienced users) to vote on the top product improvements they’d like to see (using a form of prediction market or exchange)

 

Crowdcasting Network

  • Run prize-like competitions to find new applications for existing products
  • Allow user community to suggest new ways to deploy software-as-a-service business models
  • Post specific problems on other third-party innovation broker sites
  • Post specific problems that need solving on corporate site or on user community site
  • Topcoder programming competitions
  • Post specific problems on other third-party innovation broker sites
  • MATLAB is a good example:
    http://tinyurl.com/ygxacve

 

Idea Jam

  • Run internal/external idea jams or brainstorming competitions
  • Invite external power users to internal idea jams
  • Release part of code to general public; allow for modifications
  • Run internal/external idea jams
  • Open up an app store to allow for new add-ons to existing products

Here is a good example from BT and their shift from a product to a service-based company (and how open innovation was a major factor in this transition):

http://www.youtube.com/user/citrisuc#p/u/140/g7eRgHWQCZc

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