How to Avoid Open Innovation Failure

Make sure your internal innovation capabilities and processes are in order before you open up your idea and innovation strategy to the world.

“I would rather have a mind opened by wonder than one closed by belief.” ~ Gerry Spence

Open innovation – or expanding the pool of brains thinking about your business problems outside of your organization – is a concept that has gained significant and recent traction. The concept is very sound:

From Wikipedia: “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.”

The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (e.g., patents) from other companies. In addition, internal inventions not being used in a firm’s business should be taken outside the company (for example, through licensing, joint ventures and spin-offs).

It used to be that innovation was something that happened deep in the bowels of corporate R&D departments. Secretive folks lurked there and lived by the code of NIH or “Not Invented Here” – a motto that held that if R&D didn’t think of it, then it didn’t exist or wouldn’t work or should be ignored.

Except a funny thing happened: the ideas started drying up. Game-changing ideas became few and far between. More of the same survived and less of the unexpected was developed. And then another funny thing happened: organizations started asking people in other parts of the company for their ideas and some of them were good! So they tried asking their suppliers and vendors for some ideas, ad some of those were good too! So they asked local universities and civic groups for some ideas, ad a few of those ideas worked!

These organizations learned that the larger the pool of thinkers, the better their odds of success. Open innovation, as defined above, took off. But, as corporate exuberance tends to breed carelessness, some organizations began to grab for “brass ring” of open innovation. They were led astray by management consultants that reckoned that you can’t get too much of a good thing. Open innovation was cheap, easy, and the next big thing! They convinced executives to gut their internal R&D functions and launch “idea markets” (crowdsourcing) to the world. Give us your ideas – whatever they are – we want them all!

What happened? Idea campaign after idea campaign became flooded with ideas. More ideas than you could possibly imagine. More ideas than people within the organization could properly consider or keep up with. They found themselves sifting through thousands upon thousands of ideas. Wonderful – at first. But as they dug deeper, they noticed hundreds of duplicate or similarly-themed ideas. They found hundreds more that were simply useless.

Even more curious were the ideas that just might be valuable. But there were hundreds upon hundreds of them. How to choose the most promising? They were all promising. They had no way to filter them, compare them against others, develop them, find markets for them. And so, after much fanfare and money, the “idea markets” slowly began to fade away.

But now, these organizations had a bigger problem: their R&D functions were gutted by the recession, and their idea pipeline was plugged with thousands of undifferentiated ideas. Soon, these organizations realized that open innovation is but one branch of a well-rounded and comprehensive innovation management program. And for open innovation to truly work, you must have a solid and well managed internal innovation capability before seeking ideas from the outside world.

What does this mean?

  • Having a strong executive sponsor engaged in the innovation strategy of the organization
  • Having a proven set of processes, tools, techniques and training for moving ideas into prototypes and, eventually, products
  • Having enough resources (human, financial, time, space and capability) to adequately support the idea and innovation management system you are putting into place
  • Treating innovation and idea management, not as some singular event, but as a true business discipline and strategy for growth
  • Developing a list of problems and/or opportunities that the organization wants to invest money and effort into finding solutions
  • Developing a strategy for seeking ideas from inside and outside of the organization
  • Developing a clear and communicated set of selection and filtering criteria for idea submission and consideration to ensure the idea pool is manageable
  • Determining the utilization of the closed innovation system for the research, development, prototyping, portfolio management and launch planning that you don’t want your competitors finding out about
  • Developing a workable system for protecting the intellectual property rights of all parties in the process.

This is only a representative handful of key capabilities for a successful innovation management program, whether focused internally or externally. To be a truly successful innovation-focused organization, you will:

  • Recognize the need to excel internally and externally.
  • Begin to learn that the outside world can help to solve your organizational problems.
  • Begin to learn that you’ll need some very talented internal people to manage those ideas, and the relationships with the idea generators, to fully realize the benefits.
  • Start to recognize properly focused problem statements that serve as pre-built filters against many of the more useless ideas.
  • Recognize areas of weakness in your internal development areas and growth strategy that can be “covered” using outside help.
  • Carefully move the most promising ideas back within the secrecy of the R&D areas so that further development can continue free of your competitors’ “spying eyes.”
  • Begin to see global trends faster.
  • Appreciate the uniqueness that your talented team brings to the ideas that are developed.

In the end, you’ll avoid opening yourself up to innovation failure. You’ll have an open strategy, a closed strategy and an strategy in between. It won’t matter anymore where the ideas come from, it will only matter how to you exploit them. You’ll become a true “innovator.”

So, get your internal house in order first, then figure out what you want the world to help you solve, and then become educated on how best to leverage those billions of fertile minds! Good luck!

Photo: business challenge from Shutterstock.com

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