A call for a more open collaborative innovation consulting framework

We are coming up to nearly 10 years since Dr Henry Chesbrough wrote his first book on open innovation as the necessary business imperative.  There has certainly been considerable progress in many business organizations to embrace this open collaborative principle.

“Open innovation is a paradigm that assumes that firms can and should use external ideas as well as their own internal ideas, and explore both internal and external paths to market. Firms need to look to advance their technology, resources, their knowledge and understanding through innovating with partners by sharing risk and sharing reward”.

Isn’t it strange that the very consultants expounding ‘open’ for innovation are as closed as ever? Why is this?

I would argue that the consulting industry specializing in providing innovation services is its own worst enemy today, by not being more open themselves. It is actually failing to recognize that this is inhibiting their own long-term prospects. Nearly all within the innovation consulting industry seem to be resolutely staying very internally driven, self- promoting, still trying to convey the story of their mastery, when clearly this is so painfully lacking from the results in growth by many of their clients from their existing innovation activities.

Due to this lack of openness they are failing their clients by not offering them leading and emerging practice advice. Yet the client is increasingly requiring more complete or holistic solutions, not from a ‘piecemeal of innovation offerings’ they are presently receiving. These separate pieces currently being offered by one group of consultants often don’t dovetail into a complete innovation system because they are supplemented by a variety of different service providers, all having their own ‘pet’ approaches, methodologies, techniques and tools.

Why is it when many clients who are actively working on increasingly open complex innovation challenges and working through a more diverse range of collaborative platform solutions, that the innovation consultants working alongside them, are still such a different story of being closed up? Consultants seem so reluctant to open themselves up and embrace this more open collaborative culture and gain from embracing that essential more divergent thinking that innovation often calls for by the use of external collaboration.

Innovation consulting is a fragmented consulting industry unable to achieve scale to match client needs.

Today innovation management advisory firms are mostly small, loosely organized, some highly specialised, that have a flourishing complexity of activity but often spend inordinate time reinventing many aspects of innovation management that are not necessary and serve little value for the client.

While client’s requirements for structuring innovation are often claimed as unique and distinctive, they are in many cases, actually not. What they really want is to acquire is a common, repeatable, scalable innovation structure that allows them to manage their distinct innovations on a consistent basis. The understanding of the innovation process is basically common or should be. Until this point of difference between what a client’s wants is a common, scalable process and yet the providers want to offer, their own versions, innovation in general will face many disadvantages in not advancing, as it is not formed around a basic set of common standards.

Consultants are ignoring the richer places of competitive advantage or doing a poorer job of exploring variability, diversity and within the organizations building capability as it is people who offer the real value within innovation. Managing the intangibles is certainly far harder and messy but it is the ‘sweet spot’ of innovation, where the multiplying of the degrees of connectivity, interactivity and sharing, offers the new innovation equation point.

Consultants are far too cautious for their own good

Consulting firms on the other hand are moving far too cautiously to any form of collaborative engagement; it is far too ad hoc. Wherever possible consultants want to manage as much as possible internally to ‘keep’ the fees generated inside. This is not a recipe for building lasting relationships that have mutual value in growing understanding. They stay’ in-breed’ and are not reflecting the commonly held view today, “that all knowledge does not reside within your own walls”; they still reluctantly hang on to the closed system of  ‘invented only inside here’.

How do we resolve this? Should we? Are Disruptive Forces Around?

Combining all these islands of innovation knowledge into some form of combined force would be a healthy step. Innovation is consistently ranked among the top three strategic imperatives by business leaders yet it is not recognized by consultants with the same strategic commitment.

Of course there are some big challenges facing innovation consultants today:

  1. How do you break out and resolve this fragmenting industry of many niche consulting players certainly not matching the clients’ ideal profile of global span and support?
  2. The inability to offer broad innovation experience or depth in capabilities is another negative working against many consulting firms.
  3. Forward thinking innovation centres within consulting are rare so there is little fresh ‘knowledge stock’ being added to tackle increasing complex issues around innovation.
  4. Sophistication & specialization is highly sought after but expensive to keep around. And having this expertise sitting on the bench within one consulting company as it is regarded more as a cost liability and not as a valuable asset to leverage.
  5. Strategic understanding in fast changing, complex markets and organizations is extremely hard for outsiders (consultants) to grasp in the detail required to be able to contribute into clients with the impact often justified by the fees demanded.
  6. Limited experiments are currently being undertaken in the innovation consulting practices, yet clients are actually crying out for this, it is a massive unmet need or job-to-be-done.
  7. Lastly consultant partners should change their remuneration models that drive their consulting business to actively seek more ‘win-win’ solutions in collaborative partnerships.

A bolder, more open collaborative model is required.

  1. Consultant companies should become the host and potential ‘orchestrator’ of platforms for the ‘best’ to gather and collaborate and offer this to clients as a real value benefit.
  2. Clients are learning how to collaborate and to openly network.  So shouldn’t consultants embrace this and seek out the places of complimentary knowledge by recognizing they can only, as they stand today, make a limited contribution and cannot claim ‘total solution expertise’ without active collaborations themselves.
  3. There are growing sources of advice alternative- clients are recognizing this and seeking it out so why not the consultant through being the platform provider for this ‘clearing house’ in diversity, thinking and understanding.
  4. The appeal of bringing together experts that can come together and work on specific complex problems and then disperse has great value for all concerned providing it has a retaining clause and gives all involved their own specific returns on their business model.
  5. The need today is to have real access to great quality thinking and this does not reside within the walls of one consulting firm. However large a practice of consultants they are repeating the same solution set, mindlessly pulling down their ‘best’ practice from their internal knowledge and then, attempting to apply this to someone else’s unique circumstances, failing to evaluate this sufficiently and eventually failing the client.
  6. Consulting practices need to address rework. Much of the profit comes in reworking what has previously been delivered, selling it time and again. This would need changing but is not so radical a change as first thought. It is extracting the repeatable parts intelligently, evaluating the points of difference in a more forensic way from ‘available’ expertise.

A revolution for innovation consulting comes from opening up.

The resolution or (salvation) of innovation consulting is to build transparent networks of expertise, brought together on platforms provided by the nominated host or consultant, so clients see and value the access to broader, best available expertise that is working through their own, often unique challenges, not being felt as ‘cookie cutting’ recipients.

Complexity, uniqueness and expertise need to be addressed in more customized ways and that challenges the existing global consulting model of maximizing repeatability. Applying the best in knowledge application for innovation consulting services offers the client a real value for accelerating growth and job creation based on more radical and breakthrough thinking.

So what I propose requires us to think through a new model that can combine the best available expertise on a given client platform, hosted and orchestrated by the innovation consulting firm, pulling together the best advisory and thought leadership around to solve unique client challenges. We need to alter our ways to achieve this.

What will it take to shift the existing practices? Possibly clients demands better support or simply keep voting with their feet by investing in their own experimental learning themselves, as they don’t feel the consulting advice available gives them much they don’t or can’t find out themselves.

The alternative is someone sensing the opportunity to disrupt the existing consulting model and bold enough to make that fist mover advantage and take innovation consulting up a level or two of engagement. Actively working on finding ways in their value offer, so as to position themselves with clients as a critical ‘must have’ for working alongside them on their current and future problems in richer collaborative ways. They share the joint objective of achieving a higher level of innovation growth and return that the client can’t achieve in their current approaches to innovation management.

Striking the balance for exploitation across different innovation horizons

Nobody said innovation was easy and I was reminded of that recently. Innovation can certainly be, without doubt, fairly complicated in larger organizations. What must not be forgotten is that we must manage the innovation activities across all the three horizons of innovation and that adds even more complexity.

What is ensured from this complexity is that you can expect innovation does get very entangled in balancing out the resources that are available and needed, to handle all the conflicting, competing demands placed within the innovation system. For the innovation teams involved in the multiple tasks, getting this balance right and also trying to justify further support to keep all the activities progressing on time, is tough.

Each of the innovation horizons can demand different management’s attention for allocation, response and focus.  Horizon one represents the company’s core businesses today, horizon two includes the rising stars of the company that will, over time, become new core businesses, whereas horizon three consists of nascent business ideas and opportunities that could be future growth engines. This link takes you to a series of discussions on the three horizons http://tinyurl.com/d97bkhh for a deeper explanation.

Dual needs are often conflicting

How often do you face the real difficulties of striking the right balance between those dual needs of meeting what is important to service in today’s business for short-term performance and targets, with the other critical aspect of pushing the performance into the next horizons of innovation? Those future horizons that offer the space for the new concepts and ideas that eventually lay down the expected foundations for your continued growth.

Managing across the different horizons really places a complexity for constantly juggling and balancing out different sets of high-yielding performances, often from the same team. To help we need to have a much clearer understanding on the aspects that make up innovation management.

Grouping the necessary activities

Here I’ve attempted to group into what I feel are the four critical focal attributes and their activities that are needed to be managed, planned out and pursue across the innovation horizon mix to deliver on the innovation expected . These need a fairly advanced organization structure to be managed effectively.

I feel there are four critical activities to balance out across the three innovation time horizons.

  1. Strategic planning, portfolio management to manage the growth management pressures
  2. Project productivity, execution and disciplines to drive the system
  3. Managing relationships, increasing more external through open innovation and emerging new platform management techniques and collaborations to accelerate activities
  4. Securing, anchoring and developing the talent to deliver the innovation needed.

These are not so easy to work on simultaneously, it needs some deeper thinking through and management skills to balance the many conflicting pressures found within the innovation system. Here I just discuss the concepts and activities within each. These need to be thought through individually by each organization to balance out which is not an easy task, often not as well-considered by external observers or advisors as they should be.

  • Strategic planning, portfolio management

The balances here are focused more on evaluating emerging opportunities; ensuring portfolio consistency and demonstrating where the portfolio returns lie. Then strategically and tactically working to exploit and combine any cross-over projects, updating on a constant on-going prioritization the impact of the different growth platforms, and finally monitoring the activities that are working themselves through the innovation system for communicating their changing value.

  • Project productivity and execution

Here the focus is far more on the disciplines within the system. The optimization and appropriate allocation of the necessary resources for embedding project management disciplines, demonstrating constantly the validity of what you are doing, reducing rework, demonstrating the value of the activity to meet the required end result going through the innovation pipeline.

There is a growing need is to build up clear prototyping and scaling techniques, plan to ‘inject’ dedicated specialists into projects to drive and offer appropriate advise where needed and be constantly ready to show viability from the work progressing through the pipeline . Finally, there is the need to find the right balance between customization and standardization techniques to provide the optimum yield from these activities.

  • Management across external and internal relationships is complex.

More and more open innovation seen as accelerating the innovation activities is placing a real increase on the demands for exploiting and promoting different collaborations platforms. As there is an increasing need to attract different partners for working across often very diverse platforms this is placing increasing demand in the management of a complex set of dynamics across new and ever-changing relationships with outside parties.

There is a need to explore different techniques here that involve discovery syndicates, venture networks, deploy absorption teams and seeking out a range of idea and technology sourcing networks to feed into the internal organizations process and systems. Each plays its part in providing focus and exploring new yields to accelerate the innovation activities.

  • Managing the talent needed for innovation

Firstly securing, then anchoring and developing the diverse range of skills required to manage in a complex innovation system is increasing hard to complete. Not only do you have to map out workforce supply and demand, analysis and account for many different career preferences to meet personal circumstances, you have to leverage the skills across different needs and these three horizons. The growing importance of sharing knowledge, both tacit and explicit, that can be fully absorbed and exploited requires an absorptive capacity structure http://tinyurl.com/crtdv86 needs consistent attention and re-fuelling.

Four aspects that offer increasing value are, developing up a system for assessing the impact analysis of where resources can offer the best return, exploring where you can work to improving faster cycle times, building technology and knowledge libraries, and finally exploring different portfolio scenarios, all need to be simultaneously developed and exploited.

Lastly, the structuring of effective teams always needs that consistent attention. The ability to constantly build up the competencies and capacity for more ‘responsive’ and depth in skills. These are increasingly required to meet the changing innovation activities that are expected over the complete innovation development life cycle, where fresh discoveries are always occurring and you can reposition resources to capitalize on these ‘breaking’ opportunities.

How are you managing across these four?

Each of these four critical attributes is certainly placing increased demand on those that are managing within the innovation system. It requires for some advanced planning and attention within the management of innovation. Of course this grows in complexity by the size of organizations innovation activities and need.

Recognizing each of these four and being able to balance the often conflicting demands across different innovation horizons and competing for scarce resources within organizations is far from easy. It needs dedicated focus within innovation management.

How are you tackling this complex need for different high-yielding management within innovation? This is not an easy task and sometimes we external commentators forget when we keep layering on more ’timely’ advice and poking around with our innovation sticks. It is always very different when you are in the ‘eye of the storm’ than being the observer.

Certainly a ‘tip of the hat’ to those that manage within this complexity, it is not easy to balance out all the competing, often relentless demands placed on innovation’s exploitation needed across the three different horizons.

Thanks to the Research & Technology Executive Council for their past benchmarking in these areas.

Managing roadblocks within open innovation

I always find thoughtful lists as extremely helpful to prompt my thinking on different issues. It often helps to unblock my own thinking. This one is for open innovation.

One such list I compiled from mainly two sources on roadblocks to open innovation. The main source was Dr Brian Glassman. He wrote a paper “Open Innovation’s Common Issues & Potential Roadblocks with Dr Abram Walton. (http://www.innovationtools.com/PDF/OI_issues_and_roadblocks.pdf) and different thoughts that I found as well worked through. The other source to make up this list was from P&G’s experiences gleened from different sources. Together I feel they make for a solid list of roadblocks or issues to think through. Let me share these:

Firstly the core need or use of open innovation

  1. Generating ideas for new products and services
  2. Solve technical problems that are vexing or to complicated or expensive to solve internally
  3. Co-development of difficult problems, services, products, technologies

Issues & Potential Roadblocks

  1. Internal buy-in- quick wins, types of motivations- how to tackle this?
  2. Changing the culture is a big challenge. Shifting from inventing everything internally and owning all the IP to an open culture, with shared risks and rewards is a huge leap. You find that not everyone embraces open innovation at the same speed, or to the same degree.
  3. It is important that employees realized that any open innovation was not another name for downsizing and outsourcing jobs but instead, a strategy to ensure sustained business growth for the Company. Leveraging open innovation as a way to increase capacity for our internal researchers makes sense as a key message
  4. Recognise early  to concentrate on what we do really well internally and look to partners externally in instances where they can either do better or faster to bring products to market more quickly
  5. Build rewards and recognition into the career development related to open innovation recognising its value to the organization and its learning.
  6. Change the mindset of open innovation as a ‘threat’ to open innovation as an ‘productivity enabler’.
  7. You have to champion the early adopters. Whether it’s an individual or a business, you take those who are on-board, passionate, and have embraced open innovation and you make heroes of them to the rest of the business.
  8. It’s a process that begins with networking and building relationships, and grows into productive business transactions that benefit both participants as well as consumers.
  9. Approaching ‘partner understanding’ in a similar way to consumer understanding. To become the ‘partner of choice’ requires being outwardly focused to understand partner’s needs, concerns, expectations, goals, etc. and finding ways to delight them at the first moment of truth (their initial contact as a potential partner) and the second moment of truth (during the collaboration).
  10. And at the monetary level, ensuring that partnerships are truly a win/win for both sides.
  11. Set out to coach internally and ask the question “Would you sign for either side?” In doing so, we increase the likelihood of repeat partnerships. And we build a solid reputation as a true partner of choice.
  12. Establishing trust with your open partners- reputation, honesty,  avoiding overly aggressive negotiations, prompt and clear communications, IP openness
  13. Intellectual Property-  complex and often central, full ownership tussles, limited disclosures, fair split on inputs, commitments, resources, capital
  14. Corporate lawyer blocks- core beliefs in potential conflict with open disclosures, at what point involve them, oral agreement stage or before, required buy-ins
  15. IP category blocks- the class the IP falls in, open, who benefits, competitive positions, weapons of defence to block future options, issues of internal security
  16. Payment systems- typical payment process large vs. Small, how and when to pay, pay on milestones, be clear on this
  17. Communications- central capability in finding, evaluating and working, the types of person as communicators, champions, connectors, the mindset needed and determination required to break down barriers, knowing the different channels to answers to unblock.
  18. Structure of the initiative- a web page of officers, connection details, spamming, unlisted hot numbers, availability and response mechanisms, extroverts, mindset based on a deep desire to connect and communicate, proper, active and trustworthy statements of intent
  19. Clear & Stated Agreement Established at the Beginning of the Relationship- establish a clear understanding and broad agreement on vital issues, the ‘up front work’ is critical
  20. Clear, Descriptive and Motivating RFP- these communicate the corporate needs to the open innovation network. RFP’s usual sections- opportunity area, problem statement, detailed information where possible (costs, pressures, priority, value, numbers) and anything felt to be relevant to improve submissions. Not too tight, not to lose, easy to read, well structured and financial rewards potential options
  21. Limiting Participation – often more work examining the proposals than resources to complete this. Pre-qualify partners through screening, widen criteria if needed later.
  22. Unfocused open innovation programmes- go off in any direction, benefits of quick wins, create wish lists of clear wins, based on core area of use (application), great potential areas, vexing problems, high value solutions, finding valuable new capabilities or new resources
  23. Facing the unknowns- no journey is without problems, face these squarely on and admit to shortcoming quickly. We are no longer islands of knowledge, we need to learn.
  24. The skills needed to succeed are their adaptability to change, entrepreneurial skills, sensible risk taking behaviours. Being able to identify and remove organizational roadblocks to open innovation. Continual questioning of status quo and looking ahead to find new solutions. Actively working internally to drive culture change, while remaining laser focused externally at consumer needs
  25. Encourage a more active involvement in real life work settings vs. in the lab.
  26. Provide settings to give as many people as you can real life business experience, and provide jobs to students and faculty in different imaginative ways. A great example could be strong university collaboration partnerships that over time work really well.

These do provide a good working-through type of list, to help get you into a better open innovation shape and be more prepared to tackle issues as and when they come up. Hope you find it useful, I do

Open innovation stands at the crossroads- where to next?

Although open innovation has been around for some years, it is 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:

  1. The potential benefits of OI are recognised and receiving management attention
  2. The OI approaches taken vary according the business context, resources and maturity of the innovation process internally within organisations. This can range from dedicated teams to ad hoc responding to a lead OI initiative where that company can contribute specifically
  3. The IT systems are catching up but still need in many cases a step-change to fully integrate the OI process
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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. We need to gather and formulate the leading practices to strengthen this stage of OI.

So we are well on our way- so what’s next?

This is the place that absorbs me. Consolidation or Exploration. My prediction is open innovation will slip out of use or be common place and be replaced by a more collaborative and co-creation framework on open innovation platforms.

I think we see these shifts suggested 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 1) co-creation with customers, 2) the absolute need to understand business models to be redesigned for OI concepts, 3) build these more on collaborative platforms and be far more open within 4) 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:

  1. Attracting across people to become engaged in co-creating, and then drawing them in and holding them
  2. The art of structuring the problems in the first place and then managing this
  3. The real need for clear governance mechanisms to facilitate this.
  4. 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 organisation- 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 realtionships.
  • Knowledge exploitation- absorptive capacity is getting critical
  • Marketing and customisation – 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 recognise 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.

Taking the Open Services Innovation Road.

I have been looking forward to this book; it addresses one of the most important areas of innovation that we have, the service sector. In this last week I have been reading Professor Henry Chesbrough’s new book “Open Services Innovation: Rethinking your business to grow and compete in a new era”, published by Jossey-Bass, released last week on 18th January.

Services are critical to understand and focus upon, for our continued economic growth, for the ability to offer often distinct and unique competitive advantage, as well as provide much of our future employment opportunities, especially crucial in the Western economies. Services today comprise roughly 80% of economic activity in the United States, and 60% of economic activity in the top forty economies of the world (source OECD).

Mixed Emotions

After reading this book a couple of times I must admit I had a set of very mixed emotions. His argument and business case for services is certainly compelling. He outlines a four key conceptual framework which can serve as a broad roadmap in thinking how to tackle services in a more open way but, and it is a big but he leaves an awful lot of ‘open’ questions to fill in and this is where the book disappoints.

His four foundational concepts that drive his framework

The four foundational concepts are bold and certainly radical in their strategic implications, although on first glance they may not seem that way.

  1. Think of your business as an open services business in order to create and sustain differentiation in a commodity trap world
  2. Invite customers to co-create innovation to generate (new) experiences they will value and reward
  3. Use open innovation to help you turn your business into a platform for others to build on.
  4. Transform your business model with Open Services Innovation to profit from building a platform business model so you can gain from others’ innovation activities as well.

The escape from the commodity trap is one of his biggest arguments for change

He talks a lot about escaping the commodity trap. I’m not sure I buy this argument yet. I feel too many organization don’t differentiate enough, do not recognize their often unique position. They spend far too much in time, effort and money on benchmarking others, copying and mimicking best practice. This is often the easy route and eventually it can take you to commoditization but the case for opening up your thinking to new ways of service needs exploring more before many are really at todays point of being ‘trapped’. It is more the present fixed mental mindset than being already at the commodity trap.

He ‘hits’ the right area of focus in Service Innovation

I can accept all the arguments put forward in the book about service innovation and one could certainly add even a few more to support the business case.  I agree throwing open your innovation thinking to engage with the customer as central is absolutely right but does this conceptual framework go deep enough in exploring this and explaining the consequences?

The Shift to catch more ‘open innovation’ winds.

Are Services the next natural step of open innovation or does this book simply float a balloon to gauge the existing and future winds and the ‘open movement’ is just catching the winds that already are in force? We are at risk that the lack of necessary detail within this book to support this fundamental framework will allow for more ‘hot air’ and expanding the gases that surround open innovation already?

In my view we should be tackling existing problems before we move on and introduce another layer of open complexity. It certainly will throw open the debate about how open can an organization become with its stakeholders and especially its customers.

Open questions abound

There are many, I mean many, open questions that Professor Chesbrough introduces that are within themselves significant concepts. These are for me, dealt with in a ‘light’ way and do not have the detailed examination I would expect.

Let me provide a couple of examples where there was a need of greater depth and structure to tackle these

1)       The Customers Experience

Just engaging with customers to provide them with more complete experiences has a huge body of existing work behind that in its impact, strategic needs and what is required to do this correctly yet these are not really discussed in the difficulties, risks or rewards. A ‘complete experience’ is seemingly dangled there.  Much is left to be investigated. Equally co-creating with customers as part of your development process is seismic in managing this sort of change at all levels of any organization.

This move to engage the customer and provide her with a complete experience is such a strategic decision, perhaps no different from opening up the R&D to outsiders, but I would have expected more on the problems this might entail for any debate the board and organizational will need to conduct to understand the implication for such a  changes as this. The level of structural, process and relationship change this would bring is huge.

2)       Understanding Tacit Knowledge

Another example where you really wanted more was the level of explanations around tacit knowledge. Tacit knowledge is very difficult to capture. I felt it was dealt with in a very light manner.

Professor Chesbrough is right, knowing more about your customers than anyone else does offer a potential strategic advantage, you can potentially get closer to tacit knowledge but is this for the few who can invest in this sort of information database (ie Amazon) or for the many that simply can’t make this type of database or research related investment?

Tacit knowledge of clients’ experiences is still a major challenge to capture and interpret but I certainly didn’t get as much help here in this book on how to go about it yet it is stressed that it is most important going forward for this framework.

One insight on tacit knowledge really worth sharing for our thinking.

There is one wonderful insight on this though, that I found excellent and must share- “the ability to manage tacit information effectively can create competitive advantage….as the globe moves ever faster…it is precisely the knowledge that doesn’t move fast –the tacit knowledge- that becomes increasingly valuable”. I loved that observation.

The risk of non-adoption in organization is higher when you lack the necessary detail.

The success of this book will be in its adoption; the taking up of this conceptual thinking and how it prompts ‘reactions’ and seen by different organizations that are facing service challenges, for it to resonate with them. Will “Open Service Innovation” be recognised as essential to adopt for the required growth and improvement needed to stay competitive will determine whether this book has the same impact as his first one, “Open Innovation”?

It will be a tough sell to this opening up of services to C-Level executives for many, that I’m sure, it will be difficult on just this book ‘s conceptual approach and limited guidance.

Service innovation- can it become more open?

For better understanding of what makes up service innovation we need to fill in far too many gaps at present. I’m hopeful that the forthcoming book of Henry Chesbrough: “Open Services Innovation: Rethinking your Business to Grow and Compete in a New Era”, published by Jossey-Bass and being launching officially next week, 18th January 2011, will go some of the way to be a lightning rod to bringing this up in many people’s agenda, if it is not already! I felt with his past books on Open Innovation and Open Business Innovation they were the catalysts for deeper thinking. He provided the stimulus to find better answers with his many reflections and case studies through his solid research work and his ‘open’ and questioning thinking to prompt community ‘reactions’. This galvanized significant innovation movements and this time hopefully, it will be to open up and manage service innovation more effectively.

I will be completing a book review on this latest open innovation thinking by Dr.Chesbrough for www.innovationmanagement.se as an early February publication and I’m certainly looking forward to reading the final edition of this book when it arrives. I’ve glance through different early teasers, complimentary pages and seen some advances to raise my expectations on this but understanding service innovation has been poorly understood and documented to date. It is a complex and needs some different perspectives and thinking.

Dealing with the service side of innovation seems to have always been tricky. As the more ‘advanced’ economies or the ‘developed’ world extracts knowledge, its future understanding and extraction seems tied to really understanding and delivering service. Increasingly goods being produced is flowing east, service experience and delivery will not be far behind unless this becomes the critical focus of Western countries to master and own for the next few years.

I’ve read a significant amount about the subject of service innovation, often it is been very fragmented and poorly connected in many different lacking ways; in its empirical evidence, analytical and theoretical frameworks and laying out a cohesive design. Let us hope Dr. Chesbrough’s book gives us a more solid basis to build upon and extend out.

For me we have different focal points within service that need to be thought through some more, these are

  1. Centred on People- how we set about consumer services for example, how we enable engagement and develop these connections to build a sustaining business around individual’s needs is critical to understand
  2. Centred on Business- again what connects the parties into a service relationship and what ‘transforms’ from this dialogue and set of exchanges into something that gives value to all the participators and builds on the existing to transform it into something of new worth.
  3. Centred on Products- where design becomes more critical to gain appeal and attention but then how to build from this ‘sale’ to operate, maintain and grow further services around these products sold
  4.  Centred on Information- the creation of knowledge and them being able to adapt it, leverage its utilization and diffuse it in new and valuable ways.

All of the above four require different understanding, a different science of service. All have a very high social- organizational need; all are lending themselves to being opened up.

An urgent ‘call to action’

We do need an urgent’ call to action’, we need a science of services to understand how this needs to evolve, what the different types of service focus requires look, how the service systems should evolve and scale.

The call to action does need to be a concerted effort-

a)      it needs to take increasing Governments attention to remove barriers and promote service,

b)      it needs businesses to give the necessary ‘weight of emphasis’ service deserves as service relevance to the organization is increasingly faster than producing products and this call to refocus internal resources needs to be recognised;

c)       academics need to make service an increased priority for studies, for educational productivity and providing the platforms for research understanding and

d)       Societal impact needs a better service understanding.

Also knowing how to measure service is another big challenge.

Then we need to improve our level of measures for service. The growing need for measuring networks, interactions and relationships is extremely relevant to this area of innovation. Also the ability to measure operations and delivery excellence and thirdly the service value chain, the partnerships needed and the service excellence points understood from the client/ final consumer’s point of view.

There are seemingly many challenges and unknowns for service innovation today. We do need to get systematic about service innovation and make it more of a dynamic evolution.

Optimism and openness to fresh insight is indeed needed

I hope Dr. Henry Chesbrough’s book is the catalyst for this. Like his 2003 book, Open Innovation, it kicked off a whole new way to manage outside those internal organisational borders, let’s hope he ignites the open touch paper again in this book for service innovation. A further work of his around the importance of the Business model is very much in the present minds of many and some excellent frameworks are presently help us in thinking these through like Alex Osterwalder’s Business model generation and its nine exploring blocks, or Mark Johnson’s and his four-box business model framework. Both of these you will find comments within this blog or the book reviews I have previously made for www.innovationmanagement.se.

We really need a better acceleration of service innovation and its greater understanding for regaining growth in the Western economies and if it is throwing services open then let’s go! I think service innovation is going to be very topical, highly critical in the coming months and years to grasp, tranlate and perform  as we need service excellence to thrive and in the West, survive from service’s increased contribution in wealth formation to the economies and its role in necessary job creation.