Open Innovation at the Crossroads
Open Innovation (OI) has been around for some years, in the past three to four years the notion of open innovation has accelerated and moved very much and becoming embedded into the structure of many organizations.
Presently most organizations are dealing with the roadblocks surrounding open innovation either internally within their own structures or with the potential partners that they want to work with, for a more diverse innovation portfolio.
Arguably open innovation will merge into simply a way of doing innovation, then into something more specific. For me that is more into a collaboration and co-creation innovative approach I touch upon further into this article
Today we are broadly at a maturing stage of OI. In summary you could say:
- The potential benefits of OI are recognized and receiving management attention
- The OI approaches taken vary according the business context, resources and maturity of the innovation process internally within organizations. This can range from dedicated teams to ad hoc responding to a lead OI initiative where that company can contribute specifically
- The IT systems are catching up but still need in many cases a step-change to fully integrate the OI process
- Although OI is spoken of increasingly it still has not achieved the alignment to strategy, anchored often still in the R&D lab OI is still not fully connecting into marketing’s view of the market or the customer needs.
- There are still numerous problems on IP, sharing know-how although this has made significant inroads of reducing as a roadblock by greater top management attention to OI’s potential.
- There is some levels of specific OI culture developing in thr larger organizations. People are learning the differences in external partnership, relationship building and creating levels of trust, governance and openness. This is still evolutionary though.
- The decisions being faced around OI opportunities is still a tough area to tackle. Besides the struggle always with building a clear innovation business case there are many more complex investments that have impact, let alone considering the other parties views that might see ‘numbers and opportunities’ in very different ways.
- Metrics have been a constant problem. The lack of an effective measurement is not from a lack of trying, it is the difficulty of the innovation beast. Ideas and concepts are most often going where no one has been before, and frontiers are notoriously unpredictable.
- The emotions of people are equally being more thoughtfully managed although downsizing does slip out a little too much to keep that concern out in the open. Increasing capacity, learning and knowledge seems a more attractive way to take OI forward. The value-to-me message needs a sharper focus.
- Clear, descriptive and mutually motivating RFP’s are getting more nicely structured around not to tight, not to lose, easy to read, well structured on who does what and why and financial potentials that share according to the contribution more than in the past.
There are others but I think you get the picture, we are on our way, OI is maturing.
So we are well on our way – so what’s next?
This is the place that absorbs me. My prediction is open innovation will slip out of use and be replaced by a more collaborative and co-creation framework. I think we see these even in Professor Henry Chesbrough’s latest book “Open Services Innovation”. He is more moving out of the R&D lab and has moved right to the other end of the value chain- the customers. He not only discusses limits of a product by only approaching OI in that way, he suggests the combination of co-creation with your customers is essential. The combining of:
- Co-creation with customers
- The absolute need to understand business models to be redesigned for OI concepts
- Build these more on collaborative platforms and be far more open within
- The use of a more ecosystem approach where collaborators move in and out using the platform for their own ends but recognizing they each need to interact and contribute to others in the OI space to get to their value creation point.
That does sound well beyond the existing OI many of us are still struggling to embed into our organizations. This is not so much as a possibility, it is crashing towards us through the innovation jungle.
Social networking also comes far more into OI in the future
Many organizations are really struggling on this. They are still treating ’social’ with rubber gloves, at a experimental stage. Gloves need to come off and fast. This is uncertain territory for many. You start drawing customers into the heart of your development process so well- who owns the resulting intellectual property even with early assignment rights. The customer gets wise very quickly and it becomes potentially nasty if you have not compensated them well with all the social network tools at our disposal today.
The delegation to more of mutually reinforcing networks or partners recognizing shared value in collaboration. Today many of the community to make a really powerful ecosystem community are outsiders or limited in their participation. This will increasingly open up. This will partly depend on the technology used and how it is being applied or allowed to roam.
Other places OI will seek to go
There is growing talk of distributed co-creation but there is this need to resolve intellectual property, managing the more open risks versus return and how the community is structured.
Participatory marketing is yet another open to innovation from the outside- this again requires significant restructuring to respond and extract the value. There are many experiments on this across different industries to read about and learn from but how you structure and relate to this is the tougher part of the problem at present.
Four aspects that need to be thought through for distributed co-creation are:
- Attracting across people to become engaged in co-creating, and then drawing them in and holding them
- The art of structuring the problems in the first place and then managing this
- The real need for clear governance mechanisms to facilitate this.
- The ability to hold focus, to maintain quality, to bridge different perspectives.
There is seemingly an evolution of OI coming – are you ready?
Let me finish with this further thought – exploring the innovation value chain.
As open innovation seems set to increasingly move out of the R&D lab and across the organizations value chain where will OI work and be a contributor?
Here is my take on this, it is about treating the innovation value chain like this set out below and setting about extracting through open innovation improved solutions knowing that the inevitable is coming towards you and that you will need deeper answers in the near term:
- Exploring the nature and drivers of innovation in the firm and sector context.
- The nature of the firm’s partners for innovation and the nature of collaboration you need.
- Skills involvement in innovation and skills shortages that need bridging.
- Knowledge sourcing mechanisms and idea generation to evaluate through different perspectives.
- Innovation management and organization- how it needs to further change and adapt.
- Teams and their role in the innovation process are altering in emphasis. Structuring these to reflect the new more open skills required in external relationships.
- Knowledge exploitation – absorptive capacity is getting critical
- Marketing and customization – knowing and working through all this means.
- Process innovation – the speed, the steps, the decisions are all changing. What can help?
- Barriers to innovation- the classic group has many ‘young’ usurpers coming up. You will need ways to recognize and deal with these?
These are where you need a depth of understanding across innovation. External collaborators should include experts in innovation management, people that focus 100% on the subject. It is their depth of understanding of the interrelated parts of innovation and how, where and why you can extract in more open innovative ways that might have some value to consider.
Moving across the value chain offers some fascinating opportunities that can yield as much to organizations as the present OI activities and that means more disruption so do this with someone who can offer you real value and expertise in innovation’s new impact in this changing world.
Paul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities.
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