Our longer term winner is clearly open digital innovation

Open digital innovationIn my last post I was discussing the effect digital would be having on our innovation activities, be these presently opened or closed. The impact of digital innovation changes the innovation paradigm significantly.

Organizations can stay digitally closed in their innovation activities, moving beyond simply developing innovation solutions themselves into a connected (closed) network, where the platform becomes the enabling force and those that join share common ground or purpose but are pursuing separate value propositions that required this ‘extended’ collaboration to achieve this position.

These ‘closed systems’ can give a level of competitive advantage but these are increasingly transitory depending on the complexity and uniqueness of the eventual value proposition. Collaborative platforms are clearly the way to go to open-up innovation that allows more radical and complex solutions to be provided.

We will see a new wave of open digital innovation Continue reading

Are you going all digital on me?

Going all digital on meWell then, are you going all digital on me from your innovation activities?

So there we all were, getting really very comfortable in our open innovation activities, learning to collaborate and co-create outside our organizations. Even our management has got “open innovation”.

We are encouraged and allowed to collaborate outside our four walls of the organization as the penny has finally dropped that “not all knowledge resides within the company”.

We had worked through some of the cultural stuff, shifted around the team who like to collaborate, pushing others less collaborative to the back; the conflict points, we had established the process, practice and tools.

We even have our legal teams on board helping sort out all the conflicting positions that open innovation can mean when it comes to dividing up the IP spoils and even had our leadership tuned in, singing our praises and even (heavens forbid) getting engaged in the process.

When the world shifts, we all need too.

Continue reading

Where are the new feeding grounds of innovation?

Credit Wildebeest migration, Kenya, by Bonnie Cheung

Wildebeest migration, Kenya by Bonnie Cheung

I am presently reading an early release draft of a book written by Mike Docherty of Venture2, on innovation, and I would certainly recommend the read when it comes out. The book Collective Disruption will be available as of February 2015.

The book as Mike wrote to me, is aimed at corporate leaders, both in large and small companies, charged with new sources of transformative growth and makes the case for co-creating new businesses with entrepreneurial partners. It builds on a foundation of open innovation, but is focused specifically on new business creation (vs core business support).

I know that Mike is passionate about the intersection of corporate innovation and entrepreneurship for co-creating new businesses and business models. As CEO of Venture2, a consulting and new ventures firm, he works with leading brand companies and start-ups to commercialize breakthrough new products and businesses.

Mike has experienced disruption many times.

Continue reading

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 Continue reading

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.