We are living in a world where Marshall McLuhan and Alvin Toffler said we’d be. Digital technology and the globalization of knowledge have changed everything. The world is an electronic village in which small groups have the power to disrupt the status quo, technological expertise is distributed globally and can be found using Web tools and response times are approaching zero.
This of course changes also the way in which firms innovate. 10 years ago, Henry Chesbrough studied several leading firms and found a “new imperative for creating and profiting from technology”. Now, new insights about the nature of the world – in particular the one mentioned above – and new management concepts aren’t picked up everywhere instantly. Like successful innovations, they are picked up in waves. First come the pioneers, then the Early Adopters and the majority and finally the Late Followers. Consequently, one finds that some firms have aligned their innovation management with Chesbrough’s new imperative faster and with more rigor than others.
Today, with more than 730 million hits on Google for the term Open Innovation, almost any firm claims that they are “doing Open Innovation”. True, every firm takes up innovation impulses from its customers or its suppliers, cooperates with research institutes or develops its new products and services jointly with other partners. However, there is a fine line between “Open Innovation” and true Open Innovation. This might at first view look like a fine, subtle difference. But depending on how you look at it, it has far-reaching implications for how your firm innovates.
This article firstly wants to work out the three fundamental differences between “Open Innovation” and true Open Innovation, secondly provide data on the level of true openness and thirdly give you some thoughts on how your firm could move to true Open Innovation.
Today no firm innovates in a completely closed mode. In the last 10 years, quite a number of firms also tried and tested new open approaches to innovation that are enabled by a globally networked infrastructure: They
These activities – and a number of others, (see InnovationManagement’s in-depth article – are open approaches to innovation. But if you look closer, in many firms these kinds of activities are not fully embedded in the firm’s innovation management approach.
True Open Innovation is embedded into the innovation strategy. The question is not “To be open or not be open”, to paraphrase William Shakespeare, for two reasons: Firstly, as stated above, any firm is already innovating openly to a lesser or a larger extent and secondly true Open Innovation is a deliberate choice.
A true open innovation strategy
In many firms, open approaches to innovation are driven by a group of open, entrepreneurial people. These people have a desire to work with the best and most brilliant and to pull in a lot of external ideas in order to have a multitude of options to choose from. But in most of the firms, openness is not woven into the organizational fabric of the whole firm.
A firm that does true Open Innovation builds on carefully balanced central and decentral organizational structures to make sure that openness in innovation is fully embedded. Typically, the roles of a “Open Innovation center” include:
This center ties in with the decentral innovation units that are responsible for running the relevant innovation agenda and identify (open) innovation White Spaces.
At the end of the day, innovation is a people business and so is Open Innovation. Yet, in many firms an open mindset is not pervasive and can be found only in some isolated Business Units.
True Open Innovation starts with an open mindset and an opportunity-based mindset. True Open Innovation is part of the corporate culture and present in all formal and informal cultural traits, e.g. In the metrics that are applied to measure superior performance, in the leadership style, in talent development processes and in the communication style.
A Member of the Board of one of my clients recently commented tauntingly on the Open Innovation activities at one of his Business Units: “To them, Open Innovation is like Christmas. It’s a welcome, once-per-year exception to the day-to-day innovation business.” While this statement may be a little bit exaggerated it reflects in some respect the way in which Open Innovation is seen in many firms.
Quite a number of firms turn to open approaches to innovation when answers to technological challenges can’t be found inside the firm or in the circle of trusted innovation partners or when they want to have a big heap of new consumer insights once per year to have some food for innovation thought.
There is nothing wrong with this way of seeing openness in innovation. True Open Innovation however has a proactive mindset. This proactive mindset manifests in the planning processes. Firms that conduct “Open Innovation” plan their roadmaps and R&D projects, allocate budgets and when R&D projects run into difficulties they turn to Open Innovation.
…firms that are doing true Open Innovation start the planning process with an opportunity-based thinking.
On the other hand, firms that are doing true Open Innovation start the planning process with an opportunity-based thinking. The key question is, “How much can we leverage our existing innovation manpower?” In the planning process, this wide option space is then explored and then turned into roadmaps and R&D projects. As an effect, the innovation volume that can be moved through the funnel is larger than if one sees openness in innovation only as a sort of last resort respectively a once-per-year exercise.
“The usual suspects” is not just the title of a successful Hollywood movie from 1995, it is also how many firms look at the global base of potential co-innovators. Quite often, openness in innovation is done within a relatively stable set of trusted external innovation partners.
There is nothing wrong with this way of seeing openness in innovation. But no matter how large your firm is more than 99% of the relevant smart people do not work for it.
Consequently, true Open Innovation has the ambition to extend the firm’s innovation ecosystem as far as it makes sense. True Open Innovation has the hunt for finding new potential innovation partners in its DNA. To achieve this, the firm communicates proactively its innovation wants and needs (after these have been defined in the strategic context, see above), uses its innovation partners as hubs for attracting even more innovation partners and communicates actively in all relevant channels success stories that demonstrate why it is the best destination for all relevant companies that might be interested in a win/win collaborative innovation.
In late 2011, Forrester conducted an open innovation study with 229 Open Innovation stakeholders via a web-based survey and via thirteen in-depth phone interviews with senior Open Innovation executives. A wide variety of industries were represented, including the public sector and government, with no single industry accounting for more than 12% of the total sample. By design, the survey was targeted at large organizations. Survey respondents included director/manager roles (69%) and executive/department head/VP roles (31%). Geographically, the study focused on the US (58% of participants), Germany (23%) and the UK (19%).
Forrester was interested in understanding how these Open Innovation stakeholders define Open Innovation, how and why they are investing in Open Innovation, how they measure success and how they drive the move from “Open Innovation” to true Open Innovation.
With such a broad scope it is not surveying that the study produced a number of interesting insights. One of these is supporting the thesis that actually Enterprise 2.0 and Open Innovation are becoming one:
To assess where firms are standing on their journey from “Open Innovation” to true Open Innovation, Forrester used an Open Innovation maturity model with four stages:
Now, if you agree with the theses presented in this article, what should you do?
According to the statistics, your firm is most likely in the Experimentation or the Commitment phase. If this is the case, your firm should
Doing so would help your firm in moving from “Open Innovation” to true Open Innovation and put it in a top spot for innovation leadership.
By Frank Mattes
Frank Mattes has more than 15 years of experience in managing innovation, change management and projects. He has worked for several specialized medium-sized consulting companies and for The Boston Consulting Group. He also worked at C-level for an IT and a professional services firm. Frank founded and runs the innovation catalyst innovation-3. Frank is the author of several books and a contributing editor to InnovationManagement, the number one platform for innovation management practitioners.