Open Innovation From A Practitioner's Perspective


What Went Wrong With The Crowdsourced Ideas For BP Oil Spill?

BP has received a lot of criticism for failing to respond adequately (or in a timely manner) to the thousands of ideas that it received, both solicited and unsolicited. If they (BP) would have followed a few key elements of open innovation and crowdsourcing, perhaps this would have had a better result. As of this post, I am aware that BP is currently reviewing the submissions and hopefully they’ll glean something of value to prevent future disasters of this scale.

Where did they go wrong?

1) Asking the Question: Trying to present a single solution that addressed all of the challenges facing BP is like trying to cure cancer with one experiment. What BP should have done is break the challenge down into various key categories (containment, recovery, clean up, etc) and posed a series of requests in each category. That would have directed the crowd to focus on one area or another.

2) Collaboration: To my knowledge, both the solicited and unsolicited ideas were brought forward by individuals and/or companies, with no ability to see each others ideas and build or improve them. A more collaborative process would have gone a long way to improve the quality of ideas and perhaps even reduce the total number of ideas (since people would find other ideas to build on before entering their own).

3) Filters: clearly with this number of ideas you need filters. Again, with a truly crowdsourced and collaborative process the crowd can act as a filter. Not sure how BP is filtering / analyzing the ideas submitted but I’m pretty sure that at this point the crowd isn’t involved.

Perhaps one thing they did achieve (not by design, I might add) was diversity. It looked like they were getting ideas from all over the world and from a diverse group of participants. What a wasted opportunity.

Lastly, perhaps there is a chance for BP to open up these submissions to the global community and see if they can salvage some ideas to prevent this from happening again in the future. I’m sure there are a few diamonds in that pile of information.


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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:–-intuit-entrepreneur-day.html

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Getting to the Right Question

(I posted this originally in the Clorox Open Innovation Site). As companies prepare themselves to enter this new world of open innovation and bringing in the best ideas from the outside, they need to become proficient in several new skills (at the company level and the individual level). Let’s start with individual skills, two of which I’ll highlight here. The first is developing the ability to properly frame questions. Individuals need to remove all unnecessary jargon, acronyms, application(s) of the technology, in order to provide a diverse group of solution providers the ability to solve the problem. Many times I have seen people rush directly to problem-solving mode without pausing for a minute to think about what question they are trying to answer.

The second key skill set for individual contributors to develop is perhaps more difficult to achieve, and that is the shift from being a problem solver to a solution finder. We were trained and rewarded on the basis of our ability to solve problems. In the new open innovation paradigm, your value should be determined equally between your ability to solve a problem yourself and/or your ability to find the solution.

And, of course, the better you become at framing the question the easier it is to find the solution in an open innovation environment!

Two points I left out intentionally (which I will address in future posts): how can/should companies re-work their reward/recognition programs to encourage these new skills and how will these new skills help/hurt in managing confidentiality/IP?

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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.







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:


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):

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Open Innovation Leaders Gather to Share Best Practices at NineSigma’s OI Leadership Summit 2008

NineSigma is plugging away and expanding their biz model to include these kinds of conferences. Smart move, it establishes them as a thought leader, gives them a chance to interact with existing customers and gives them a chance to invite prospective customers.

Link to the announcement.

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