Not invented here. It’s a phrase that has been used pejoratively to describe companies that refuse to look outside their own walls for innovation and ideas that can give them an edge. But the truth of the matter is that’s the way most businesses have operated since the industrial revolution. Even today, most companies have an innovation program that is a closed system based on this process: Generate the idea. Develop the idea. Market the idea.
That’s not surprising. Business has always been seen as a dog-eat-dog, winner-take-all, meritocracy where only the strong survive. From the earliest days to recent times– we have celebrated the lone pioneer, innovator, entrepreneur like Edison, Ford, Firestone, Kroc and Jobs: visionaries who after blazing new trails carefully guarded their secrets.
Technology moves too quickly, consumer attitudes shift too fast, economic conditions are too fluid, and competition is too intense for any one person or company to go it alone anymore.
No longer can you wait until you develop your technology on your own in a vacuum. No longer can you and your company assume you have all the talent, all the ideas and all the answers.
Adopt a “not invented here” attitude and chances are, you won’t be here for very long.
Open Innovation is a global term for a number of strategies that enable companies to tap into various knowledge bases around the world. Whether it’s harvesting ideas from customers, collaborating with other companies, or finding new ways to generate value from key suppliers, there are a number of ways to start down the path into a more open future.
In his groundbreaking work, Open Innovation. Henry Chesbrough presents a model for profiting from technology and intellectual property. In it, if you’re a developer of technology, you can profit by licensing it into markets that don’t conflict with your core business. The licensing companies benefit by creating a superior business model around the licensed technology, entering markets more quickly and often with less capital expenditure had they been lucky enough to develop the same technology internally.
Apple has generated millions of dollars of top line revenue by opening up its App Store to other companies and charging them for access to both iPhone and iPad users. This ingenious business model not only adds directly to the bottom line through licensed revenue, but also makes the two devices more valuable than competitive offerings.
Co-Creation is a term that covers a wide variety of open innovation platforms, but at its highest level, businesses with complementary resources partner to open new markets and bring new customers to both entities. More than just co-production or co-marketing, Co-Creation engages customers, innovators and other key stakeholders in varying ways throughout the innovation process. An early example includes OnStar, where Hughes Electronics, EDS, and General Motors came together to deploy the first satellite-based communication and monitoring systems for automobiles. By understanding the value of each other’s technology and markets, then putting them together in a unique way, they were able to add significant value to GM’s vehicles and eventually create a standalone product that can be installed in any vehicle.
Crowdsourcing is a subset of Co-creation that taps into and leverages customer communities to help generate ideas for new products and significant innovations for existing products. Harley-Davidson is famous for attending events like Bike Weeks in Daytona and the huge rally at Sturgis to see what their riders are doing to modify their motorcycles. These field trips have led to everything from the development of aftermarket parts the inspiration for new motorcycle designs. Not limited to product innovations, Frito Lay has used crowdsourcing to increase consumer engagement by creating contests where its customers have the opportunity to produce a commercial for the Super Bowl. Often maligned, like any tool crowdsourcing has its purpose and when correctly used can be an effective source of innovative ideas.
Their broad experience brings continuous stream of new knowledge into your company through a filter that understands your products, your markets, and your culture.
Smartsourcing is a new spin on crowdsourcing. It involves partnerships with specially recruited experts, consultancies, and other independent resources structured in a way that provides complementary expertise when needed. This differs from traditional outsourcing and subcontracting in that the relationships are structured and ongoing. This allows expert partners to function with a deeper understanding of a company’s objectives and strategies while providing the benefit of a third party who works with companies in many different markets and industries. Their broad experience brings continuous stream of new knowledge into your company through a filter that understands your products, your markets, and your culture.
How important is opening your innovation system up to new resources? In GE’s recent Global Innovation Barometer – a survey of 1000 senior innovation practitioners from a dozen countries around the world – predicts that more future innovation will be driven by collaboration and partnering than traditional closed innovation systems which suggests now is the time to start reinventing your innovation system, or risk being left behind.
Harvey has spent over 25 years creating both award-winning communications and new products for such brands as Chevrolet, Pepsi, Kraft, Kimberly Clark, Mercury Marine and many others. He is a graduate of the University of Michigan where he prepared for this modern world by studying Latin. Harvey served on the Board of Directors of the Product Development and Management Association and has spoken on the subjects of branding, advertising creativity, and innovation at conferences across the country. Harvey is the founder and Director of Disruption of OBX Thinking, a product innovation and marketing firm in the US.