Monday, November 4, 2013

What "Isn't" Open Innovation?

When I first presented Open Innovation to my colleagues at a Fortune 500 R&D organization in late 2009, I got booed out of the conference room. It could be that I presented a definition that was so expansive it meant all things to all people and therefore, meant nothing to anyone.

The accepted definition of Open Innovation, a term coined by Henry Chesbrough in 2003, is this one:

“Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.”
                        -   Henry Chesbrough, Open Innovation: Researching a New Paradigm (2006)

I reproduced the definition and the infamous swiss-cheese funnel diagram. Here’s a pretty variation (thanks to a recent blog post): 

I then added that the sources of external collaboration may include: 
  • Customers
  • Vendors/Supply Chain Partners
  • Competitors
  • Researchers/Universities
  • Users in current, future, different markets
  • Small Businesses/entrepreneurs

I guess that’s why people felt it was so expansive. My colleagues had many questions:
  • How is that different from what we are already doing with our university partnerships?
  • How is it different from open source?
  • Where’s the evidence for the claim that it helps get to market faster, build better outcomes, save R&D costs?
  • How can external people possible understand the deep complexity of what we do?
  • Won’t this compromise our IP?
  • Isn’t this just an internal force reduction in disguise?
  • This can be anything and everything. What does it mean for us?

In my benchmarking, I found technology companies, CPG firms, universities, and consultancies each touting their own “Open Innovation” initiative, yet the tools, techniques, and applications varied. For some companies, Open Innovation meant posing a technical problem to the community via an intermediary or their own portal. For some it meant hosting a prize competition for the next great idea. Some launched an open data challenge. Some developed product platforms that allowed customers to create variations and then offer them to the community. Some co-located their R&D labs at university campuses. Some companies called their internal company innovation programs “Open Innovation,” as they were open to all internal employees.

Each approach seemed to produce successful results for their advocates. This begged the question, “What does it mean for us?” We addressed the question in two ways. We tried a few approaches with willing internal sponsors who had significant challenges that could be resolved with external input. And we attempted to lay out a comprehensive “If-Then” table to show that “If this is the need, here is the open innovation technique to use.”

We never really completed the ultimate, ideal, comprehensive “model” for open innovation.  We did, however, achieve success with a hybrid approach. Here’s an overview of the open innovation program we built:

Most important, we learned three important lessons for bringing Open Innovation into a large corporation:

1) Open Innovation requires an open mindset. All the money, tools, and consultants in the world will not be effective if your internal company culture does not accept outside insight. On the other hand, once you are willing to be open, opportunities for growth, acceleration, and solutions to dilemmas expand.  As Albert Einstein said, “The mind that opens to a new idea never returns to its original size.”

2) Try many approaches until you discover what works for you. Just as with innovation itself, if you are creating a new way of working for your organization, you may have many missteps or “failures” on your way to a successful business model. As Thomas A. Edison said, “I have not failed. I've just found 10,000 ways that won't work.” 

3) A hybrid, evolutionary approach may be best.  It’s easiest to go with one system, one vendor, or one model for Open Innovation. But it is probably more effective to create a menu of approaches to meet your complex needs. As Roger von Oech said, “It's easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date."


Ivy Eisenberg is founder of Our IdeaWorks, an Innovation and Lean Customer Research™ consultancy that helps companies connect to customers and other stakeholders to discover business opportunities, accelerate growth, and build and deliver successful products and services. Ivy has more than 25 years of experience in the Front End of Innovation, user interaction design, and software product and project management. She has worked in healthcare, financial services, B2B, consumer goods, and telecommunications sectors. Ivy is also an award-winning humor writer and storyteller, with an MBA in Marketing, Entrepreneurship and Innovation from NYU’s Stern School of Business.

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