Seven Successful Open Innovation Practices
Last year I had the opportunity to visit or speak to 24 organizations around the globe, for my research on open innovation practices. These companies included Philips, Kodak, Nokia, Telefonica, Siemens, Xerox and Dupont, but also highly innovative Brazilian firms such as Natura (cosmetics) Embraco (world leader in refrigeration) and Petrobras (one of the largest energy companies in the world) that have been implementing very successful innovation practices. When doing such research one always looks for good practices common between the companies, but also for the practices that make them stand out or be very successful through open innovation.
Here I am sharing seven successful practices that resulted from this research and I would highly recommend implementing:
- Open innovation strategy should be result of business strategy. Just like any other type of business operation, open innovation practices should support business and innovation objectives in the short, medium and long run. Many companies do not deliberately define an open innovation strategy and this way open innovation practices are a result from isolated actions;
- Location of open innovation activities should be based on open innovation objectives. Different objectives lead to different decisions. For example, when the objective is to use open innovation for incremental product innovations, one should locate close by operations or clients, to understand needs better. When the objective is radical innovations, your open innovation structure should be close to best competencies around the globe;
- Partner portfolio management is essential. Managing helps not only finding and selecting the right partners for different open innovation objectives, but also help you to improve partner effectiveness and keeps the company guarded against concentration of investments in and innovation dependency on specific partners;
- Establish partnerships with a wide range of partners. Companies should search for more different types of partnership and not limit themselves to, for example, only universities and research institutes. Different types of partners are better in helping you in different stages of the innovation process. Also, make sure you prospect potential commercialization partners when starting your research and see if you can involve them from the beginning.
- Use Intellectual Property (IP) rights intelligently. Strategic IP should be protected or used as an asset in strategic co-development negotiations, but less strategic IP could be profited from by your partner network. Why protect something that could bring results to your partners and make them more loyal that way?
- Support your partners to help you. Services in IP, investments in your partner´s infra-structure or helping your partners to obtain venture capital, strengthen the tie with your partners and might make an enormous difference in their ability to bring you the results you need.
- Stimulate collaboration in your innovation network. Bring your partners together to talk about your business and innovation challenges, share practices between them or help them to work together. An open innovation strategy is different than an outsourcing strategy. In open innovation you should balance corporate direct benefits from partnering with benefits that come from a strong network of loyal partners that are able to profit from their relationship with you as well. And stimulating collaboration between your partners can bring much more benefit for them than just developing projects with you.
These are just a few practices, but to make open innovation bring you results, one should act strategically about it and see beyond individual partner relationships.
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Caspar van Rijnbach is a specialist in innovation management and partner at TerraForum Consulting in Brazil – www.terraforum.com.br and www.terraforum.ca. Co-author of “Innovation: Breaking Paradigms” and “Management 2.0’’ (in Portuguese).
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Excellent article! Thanks for sharing.
Caspar – Great set of bullet points, and I’d just like to build on a few items.
3. Partner portfolio management is essential.
I have a firm belief that certain types of partnerships make more sense for certain objectives.
For example, if the objective is to “keep a pulse” on what’s emerging, having a large number of lightweight relationships with universities and the SBIR funding organizations makes sense.
If the objective is short-term, filling a crucial gap, then tried-and-true suppliers in your existing ecosystem can help solve critical short-term issues.
For the mid-term, when commercialization of something new is the desired outcome, a handful of strategic partners may make the most sense. These relationships require open and candid communication — that is deep relationships — and having too many makes a program difficult to manage. Build relationships with companies that you’ll want to do business with more than once.
5. Use IP rights intelligently.
Amen. If a company wants to be the partner of choice in their industry, they have to be smart enough honor their partners’ business.