Monday, July 09, 2012

Why you aren't ready for open innovation

Yep, you read that right.  My provocative headline suggests that your team or firm isn't ready for open innovation, just as all the major publications tell you that open innovation is vital, or crucial, for your success.  Open innovation will be very important, and very soon.  In fact we believe that in the near future the winners will be the firms that are best at scouting, acquiring and commercializing the best ideas, regardless of their source.  That's a far cry from where things stand today.  Most firms have difficulty managing internal innovation, much less thinking about or shifting to an open innovation model.  Yet the consulting organizations and many publications are beating the drum for open innovation.  Here's why you aren't ready, and what you should be doing to get ready.

Paving the goat path

Yes, I've been in consulting long enough to have a lot of these sayings, and "paving the goat path" is one of my favorites.  It's long been the case that many firms simply want to speed up what they are already doing, rather than stepping back to reconsider how things are done.  This is true with many internal processes, and it is true with innovation.  The initial response is:  how can we repeat our few innovation successes more quickly, rather than what is the best approach to innovation and how do we tweak our capabilities to align to that approach.  Fast adaptation of existing models is preferred, even when those models are totally inadequate.

A bottleneck culture

Most organizations do a terrible job of managing the ideas their employees generate.  Ideas pool in various places, unable to move forward due to poor process definition, decision gates or a lack of market insight to decide which ideas are most relevant and valuable.  If your ability to manage ideas that your own team generates is not so good, why on earth would you think to magnify the problem with more ideas from external sources?


Many organizations have a difficult time defining internally what an "innovation" is.  We often start innovation projects by trying to understand strategic goals and competencies.  If internal teams have a hard time sorting this out, external partners will have an even more difficult time.  The external teams are more than willing to suggest ideas, but their definitions of innovations will most likely be different than your internal definitions, if they exist at all.  Getting everyone on the same page matters.

Not invented here culture

I used to work at a semiconductor firm headquartered in the Dallas area.  I'll let you fill in the blanks.  We used to joke that the phrase "not invented here" was invented at that firm.  The culture of the firm was so antagonistic to ideas from the outside that it was practically useless to suggest partnerships or ideas from the outside.  Many firms have great pride in their brands, their products and their intellectual property.  That's great, but that cannot be a barrier to the best ideas, regardless of their source.  Your culture must value ideas from external partners at least as much as it does internal ideas if you hope to succeed with open innovation.

No clear processes or metrics

Far too many firms talk about innovation as if it were black magic.  Innovation should be a business process or discipline - in other words, it is something that can be defined, taught and codified in the business.  This activity is hard enough when you think about internal teams working on internal ideas.  An occasional idea stumbling through a poorly define or ad hoc internal process is troubling but manageable.  It become onerous or unbearable when many more ideas must be pushed through an ill-defined process because...

Expectations are higher

If you ask a customer or partner for ideas, they expect that you'll recognize their investment and at least tell them what happened to their ideas.  The level of interaction and exchange when you ask for ideas externally goes up dramatically.  Expectations are higher, since customers and partners want to be helpful and want to know their ideas are recognized and appreciated.

Implications aren't understood

People talk about "open innovation" as if open innovation were one animal.  Open innovation is a zoo keeper's fantasy of animals.  Contests are open innovation, as are open suggestion boxes on the web.  Firms like Innocentive and Nine Sigma offer a different flavor of open innovation.  Partnerships offer another form of open innovation.  If open innovation were a dessert, it would be ice cream and you'd belly up to the 31 flavors.  What makes this even more of a challenge is that every open innovation approach has different implications.  Obtaining ideas from customers means responding to thousands of ideas - it becomes almost a social media opportunity.  Interacting with selected partners means much greater investment in business development, partnering and intellectual property definition. You must understand the different implications inherent in an open innovation approach.

Ready, Aim, Fire

The open innovation approach is one of the few cases where a ready, fire, aim approach makes sense in innovation.  Often we are trying to get our clients off the dime, to try something, take on a bit more risk, fail and repeat.  In an open innovation context many firms take on far more risk than they intend to, and since much of open innovation is much more public they don't realize until its too late how public their work has become.  This is the one area where we try to counsel our clients to take a careful, measured approach to innovation.  While the media may be proclaiming that open innovation is critical, be careful.  We wholly agree with the sentiment, but know that many firms simply aren't ready to embrace open innovation to its fullest.
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posted by Jeffrey Phillips at 8:10 AM


Blogger Todd London said...


I agree with all of your points and one add two more:

1- Culture: you spoke about the "not invented here," but in my experience, more companies seem to have the "been there, done that" attitude of ideation. I have worked for several larger organizations that were often to sight examples from years gone by of failed attempts in a similar effort, which was enough to have sponsors lack conviction.

2- Dominant Logic: Senior leaders often fall back on the past experiences that made them initially successful. Of course, executing things that worked in the past not only fail to necessarily emulate current success, but definitely restrains you from doing anything new.

7:46 PM  

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