Tag Archives: Open Innovation

The Problem with Open Innovation

A recent article by Randall Wright in MIT Technology Review discussed the problems with open innovation. There has been lots of articles recently about how open innovation is the next big thing in innovation. In a nutshell, it involves open up your innovation to a large group of people in order to find new ideas.  It’s popular, and has been adopted by lots of well known organizations, such as Starbucks, Coke, and Nike.  Coke purportedly used this methodology, and came up with ideas that were very successful.  However, most of the ideas were based on consumer marketing.  In other words, they got the people that drink Coke (a large percentage of the population is at least familiar with what it is), and had them design a campaign to more effectively sell the product.  The results rivaled the quality and appeal of ads produced by top advertising agencies.  But did they innovate?  No, they “reverse surveyed.”  Instead of surveying consumers with a set of questions, taste tests, etc., to determine the best way to market, they just asked a whole bunch of people to give them the best way to market.  This is similar to asking every customer who leaves a restaurant, “How could we improve our appeal/food/restaurant?” except you do it all at once.

I think this method works well for consumer-oriented organizations.  It can help you select the best new paint colors, catch phrases, and product packaging.  It works in areas where the problems are well known and understandable, i.e., what is your favorite color.  However, when you talk about ground-breaking innovation, you’re referring to areas where the average person has no experience.  Consider Linux, the darling of open innovation, is still outpaced by the commercial products.

According to Wright, “real innovation is always the outcome of ongoing discourse among a small group of innovators who truly understand the importance of what they’re working on.”  Read his article for more insight.

 

Innovation: Do customers really know what they want?

In an article by Tim Kastelle, entitled, “Innovation Opportunity: People Don’t Know What They Want” uses the example of selling Coke to demonstrate how people (when solicited) don’t really know why they are buying something. This hits at the heart of crowdsourcing which taps the knowledge of this same group of people to innovate.  You decide.

How to Kill Innovation

I read an article by Jason Hiner in Tech Republic talking about the 5 things that can kill innovation. Here they are:

  1. Don’t give ownership of projects
    His basic premise is that individuals do better at managing projects/ideas than teams. The old saying that “Too many cooks spoil the broth” is the acting principle here.  While it may seem “progressive” and socially acceptable to allow the team to make decisions by committee, in practice it just doesn’t work.   There is a difference between “working as a team” and being run as a team.  Consider the real world example of an airline cockpit.  Great effort has been put into getting the pilot and co-pilot to act as equals while managing the aircraft.  It’s called cockpit management, and resulted from accidents where one person–typically the pilot–acted without regard to the opinion of the other.  The pilot and co-pilot now work together, but ultimately, there is only one person in charge.  Consider the case of the USAirways flight that crashed into the Hudson river.  As soon as the birds struck the airplane and they began to lose power, captain Sullivan states, “I’ve got the plane” indicating that he is the one now in charge.  With that said, there is still an active collaborative dialogue as captain Sullivan asks his co-pilot, “can you think of anything else [to do]”.
  2. Create too many layers of management
    To create an innovative environment, Mr. Hiner states, “that you have to find ways to flatten your organization and create less hierarchy, while making sure every employee still gets a little bit of time with the boss on a regular basis in order to stay energized and on target.”  I agree completely.  Management is one of the most critical aspects of innovation, and in addition to his suggestions, you also need management that is supportive (and demonstrates their support) of innovation.
  3. Ignore brainstorming rules
    If you want to be innovative, he suggests that you keep good brainstorming rules, such as limiting negativity because, “some of the craziest ideas could morph into something amazingly useful.”  Unfortunately, the opposite seems to be true, as there is little evidence (in the research literature) that anything of industrial/commercial value has come from brainstorming.   There are plenty of examples of people coming up with a 100 different ways to use a paperclip, but commercially successful innovation almost never involves brainstorming.  It goes against our nature–we’re too competitive.    Nonsense, you might say, “everyone at our organization is happy to help others develop ideas,” and I believe this to be true.  But if you open an idea up to an entire group, you’re going to do a couple of things.  First, you’re diluting the inventors’ idea, possibly in a way that doesn’t make sense, especially if the group is trying to reach consensus.  Second, you’re removing a large part of the incentive for the inventor to push the idea to completion, because you’re reducing the impact of his/her reward. One of the best examples of this is in academia.  I used to believe that this was the most open and collaborative area around, however, this is not the case.  Researchers/Professors are extremely guarded with their ideas, and rarely “brainstorm” them with an entire group.  Why?  Because in most cases, their career, prestige, and funding are directly related to the number of successful ideas that they can come up with.  Sharing can be catastrophic.    Do they collaborate?  Sure, but usually with a very, very limited number of trusted associates.  These people are solicited specifically and are invited to participate because the originator believes that they’ll benefit. When I invent something, I hope (and expect) to be rewarded in some way, i.e., keep my job, get a promotion, get a raise, get a better position, etc.   There are very few people who freely give their best ideas to their colleagues.  More realistically, when people want to collaborate, they do so with some understanding of secrecy, such as NDAs and other agreements to guard their intellectual property.
  4. Rely too heavily on data and dashboards
    Innovation has a tough ROI.  Mr Hiner writes, “Beyond some of the basic data, such as sales and customer traffic, a lot of the data requires sophisticated analysis (because it’s so ambiguous) and many of the truths it contains are relative — or worse, they hide other truths.”  This is really true.  It’s hard to create a return on investment report for an idea.  If the idea is successful, the ROI could so high it would seem unrealistic.  On the other hand, innovation rarely lasts (beyond a 6 months to a year) without payback.   One of the best ways to generate payback and ROI is to innovate against specific problems/issues.  If you innovate against strategic issues, you already have a built-in ROI.
  5. Under-resource your hidden opportunities
    The article states, “Having too many resources makes people sloppy. When you have to get something done with fewer resources than you think you need, it often sharpens your wits, forces you to hustle, and leads you to break through barriers.”  Completely agree.  It’s a great mental challenge to find an answer with limited resources.  It reminds me of the story of the Apollo 13 mission where they had a catastrophic failure shortly after launch.  One of the pressing issues was that the carbon dioxide in the module where the astronauts were living was increasing.  In order to remove the carbon dioxide, the engineers at NASA had to figure out how to fit a “square filter into a round hole” using only the materials available to the astronauts.  They obviously did it and saved the astronaut’s lives.

A Fictional Example of Innovation

Tara had just finished visiting with her largest customer, a network of 13 hospitals in her county. She had met with many people that day, but one meeting in particular had stood out. She had met with Dr. George Freeman, chief of surgery, who explained the problem they were having with their aging set of surgical instruments.   Dr. Freeman explained that they have the budget and are prepared to buy new sets, but they have one major reservation with the ones that Tara’s company makes.  They are uncomfortable for left-handed surgeons, and George happens to be left-handed.  He goes on to explain that without something different, the sale will go to Tara’s competitor.

Tara knows that this is a major problem.  This hospital system is a major customer and purchases millions of dollars of products from her company.  Letting her competitor get an advantage like this could be devastating.  Tara takes her problem to her supervisor.
Tara works in the marketing department and presents her issue to the group.  She explains Dr. Freeman’s problem, and how they’ll lose the sale without a change.  Tara champions a suggestion made by Dr. Freeman, which simply involved moving the finger clasp about 20 degrees off center.  Tara is familiar with her company’s manufacturing capabilities and realizes that although this is a significant change, they can (and have) made this accommodation in the past.  After they talk with a few others in marketing, they realize that this is their only chance to make the sale, and take their issue to the engineering department.

A few days later, a meeting is scheduled with engineering, and they make their presentation.  The engineering group has assembled their senior engineers, and they’re joined by the company’s controller and manufacturing VP.  Tara prepared slides outlining the issue, and she documents how sales will likely increase substantially as a result.  No one else has instruments with this capability.  Engineering spends a few days and designs a new set of instruments, noting that the clasp should only be moved 19 degrees off center.   Preliminary mock-ups prove the point, and the change to manufacturing is estimated at $850k (a fraction of what the potential sales will be).  Finance approves the money and the project is started.

Tara’s company is responsive, voice-of-the-customer oriented, and innovative.  They addressed the need of a major customer, secured new sales revenue, and improved their product.  But did they really do the best that they could?

Tara’s company has repeated the missteps of many organizations.  They answered the question for an important sale, but they really didn’t innovate.  Find out how using MindMatters’ processes and the Innovator™ software system can make supercharge your organization.  Click here to request a copy.

Managing the Creative Process

Managing the creative process is daunting.  When enveloped by an organization, the organization knowingly and unknowingly forces constraints upon the process.  They look at the financial, market and manufacturing feasibility of ideas and ignore the ones that don’t fit into the model.  On one hand this is necessary.  Management is tasked with building wealth and creating profits.  Ideas that don’t match those strategic goals have to be eliminated.

The problem arises because creativity and profitability are not related.  It’s impossible to design a business process that yields a high percentage of quality innovations because high quality innovation is a lower percentage reality.  Psychologist Dean Simonton said it best when he wrote, “Quality is a probabilistic function of quantity.”

You get a few high quality innovations because you create many, many innovations.  An example of this is highlighted by Keith Richards (I hope everyone knows he was in the Rolling Stones) in his memoir,  about the origins of the song “Brown Sugar”:

I watched Mick write the lyrics. . . . He wrote it down as fast as he could move his hand. I’d never seen anything like it. He had one of those yellow legal pads, and he’d write a verse a page, just write a verse and then turn the page, and when he had three pages filled, they started to cut it. It was amazing. It’s unbelievable how prolific he was.

Eventually, Richards came to understand that one of the hardest and most crucial parts of his job was to “turn the f**king tap off,” to rein in Mick Jagger’s incredible creative energy.
This same creative energy was witnessed before in the likes of Einstein, Bach, Edison and others.  From purely a percentage viewpoint, they all created more “junk” than they did “good ideas”, but compared to others, they created more higher quality innovations.  What this causes for the organization is lots of spurious stuff to look through.  Processes need to be designed to allow creativity to be unfettered.

One way of getting unfettered creativity and meeting the goals of the organization is to use Challenges.  Challenges focus innovation in the areas that are most interesting to the organization while allowing for creativity.  The Challenge is simply to address the issue with a solution, there is no constraint on the solution.  This is a midpoint in the creative process with each side getting a little of what they want and need.

http://www.newyorker.com/reporting/2011/05/16/110516fa_fact_gladwell?currentPage=all

Another Look at Collaboration

It’s hard to find examples where large-scale collaboration has worked more successfully than either individuals or small teams. However, it’s also hard to find examples of even small teams that were able to maintain their creative success over an individual.

Having worked with many such teams, it seems that there is a “Familiarity Factor” that can make or break success. While I don’t have an exact definition for the Familiarity Factor, I think that it has to do with the relative connection that each person has to the other in terms of daily interactions, previous social connections, and personality. Since these connections constantly change (even by the act of collaborating), maintaining a team’s creativity is nearly impossible, because it requires making frequent changes to the team, sometimes difficult changes, to keep the connection-level of the Familiarity Factor the same.

Think about the last time you were a member of a new team. Assuming that your team had a realistic goal and a realistic timeline, you probably came together and accomplished your goals with some amount of success. You didn’t know all of the other team members very well, you probably even found yourself not liking some of the team members, but you pushed through the exercise to accomplish the goal. Now think about when they “got the same team back together” for another project. The familiarity has increased, you’re more comfortable, the other members are more comfortably, and your less likely to “bend” for the good of the team. The creativity and accomplishments decrease. Even for the best performing teams, over time, this happens.

As another example, consider musical groups. It’s hard to think of many groups that stay together for very long. In most cases, they come together for a few collaborations, and then inevitably split apart. My guess is that the familiarity increases past a point where creativity can occur, in part due to the original closeness, new social connections that are made, and of course, personality.

Brian Uzzi, a sociologist at Northwestern, analyzed the collaborations behind thousands of Broadway productions. He discovered that plays produced by people who knew each other well in addition to plays produced by teams who didn’t know each other at all were more likely to fail (as defined by the box office and critics). What Uzzi discovered was there was only a small window between the two extremes that produced successful plays.

7 Rules for Improving Innovation: #7 Customer Input

Improving Innovation: Customer Input.

To fuel the innovation engine, companies need to pay extremely close attention to their customers and form strategies based around everything they can possibly learn.

To accomplish this, most organizations spend a chunk on R&D, market research, focus groups and feedback programs, simply to gather insight and suggestions for “potential” innovations.

To survive and remain competitive, regardless of your industry, your company needs to be the first to market with new offerings. That means understanding what your customers are like. Naturally, customers’ needs and wants are ever-changing, but you need to do everything possible and know as much as you can about your users. Earmark the time, money, and people to find out how customers interact with every aspect of your product, service, company, delivery, support, and so on.

And ask their opinions. It sounds rudimentary, but so many companies fail to do it, and make the information they find out actionable. This devotion to the “voice of the customer” could set you apart and become the gamechanger for your business.

www.mindmatters.net

www.StepByStepInnovation.com

 

7 Rules for Improving Innovation: #2 Sharing Information

Sharing Information.

In order to innovate, information must flow freely and be readily accessible to employees and, in some cases, outside participants. First off, create a space, whether virtual or physical, where people can “get together” and share what they’re working on, project info, notes,etc.

While giving utmost respect tosecurity and intellectual property procedures, there are still lots of waysthatyour company can improve opennessbymakingknowledge bases anddocument directories open to everyonefor whom sharing is appropriate. (Note: We understandthere arecertainly groups for whom sharing sensitive details and data arenot areasonable request, and that’s perfectly understandable.)

The general population of yourcompany should know whattheir counterparts in other departments areworking on. More often than not,people are siloed and don’t know how to find info about projects that are going on elsewhere in thecompany. What you end up withis a lot of wasted research, duplicated effort, and disparate groups pursuingprojectsthat have alreadybeen implemented, or worse yet, have been proven to fail.

In addition to creatingthat “shared space”, there are innovation and idea tools that can track and archive ideas, suggestions, and projects. These are not only useful in real time to help you select the right initiatives, but you can also go back andmine themprior to launching projects to see if something similar has been suggested orattempted in the past.

Encourage collaboration by scheduling set times during the year when workers present their work to their coworkers. Better yet, integrate the use of collaboration and project tools into the culture of your company so people canaccess that informationas part of every day life,not just justmonthly or quarterly.

www.StepByStepInnovation.com

www.mindmatters.net

Building Your Own Market for Innovative Products

The more innovative andrevolutionary a breakthroughproduct is, themore likelythat you’ll have tobuild your own market for it. Customers don’t come running for products they don’tknowthey need yet. However the payoff is huge! If you can define the market from the ground up, chances areexcellentthat you will own that market for a very long time.

Back in the 60’s, scientists working atDuPont developed Kevlar – ablend of polymers with five times the strength-to-weight ratio of steel.Accustomed to their constant stream of success withinnovative products, the chemical giantnaturally assumed that the market would simply come to them. After all, Nylon, Teflon, and several other artificial fibers ofDuPont’s creationhad been adopted byscoresofindustries and usedin successful products that were selling all over the place.

Not so with Kevlar. It simply couldn’t find it’s place in the world. All of the uses and products DuPont had envisioned were not feasable and industries were just not interested in the revolutioary new product. The biggest failurecame when American tire makersrejected Kevlar. The companies optedtocontinue usingsteel belts in their radials, rather than switch to something new, even though Kevlar offered a significant weight reduction. After all, steel was reliable, easier to source, and still a bit cheaper than the new material.

It took some very creative thinking andmarketing on DuPont’s part to find a niche in which to sell Kevlar. The testing began to find out all the new uses for this new fiber. They knew they had amiracle solution, now they just had to find the problem it solved.They went out to some their largestcustomers askedfor their input and shared theirresearch data. The real breakthrough camewhen they found itcouldstop bullets. Once the US Government caughtwind of the findings, Kevlar became the go-to material for making things like bullet proof vests and army helmets.With the militaryon board,the police forces across the country came calling and the rest is history.

Because of thisclever market adaptation, Kevlar has since proven itself an extremely worthy material for all kinds ofproducts from better ropes to boat sails to protective devices that workers use.History has proven it to be one of the biggest selling products DuPont ever introduced. Quite miraculously,it also totally redefined how DuPont proactively builds a market space for it’s new products before they move forward with developing it.As a result, they control the markets they create. Can you think of a product that challenges Kevlar in its own market space? I’ll give you a hint: In the 80’s a very similar material called”Twaron” was introduced by a competitor. It neverput the “tiniestding” in DuPont’s “armor”.

Lots of companies introducegreat ideas and productsthat just can’t quite catchtheir stride, and many that could performmuch better if the company spent more time to understand the marketplaceand the needs of potential customers. By going outside of your company walls toresearch and investigate trends and feedback you can begin tobuildbetter, and in a lot of cases brand newmarkets for your ideas.You just need to get innovative with how people are using your products and ask them for their ideas.

You can jumpstart this process withemployees and customers -they all have great ideas and will share them if you present the right challenge. With Flagpole (www.flagpole-software.com) you canshare business and marketing challengeswith everyone in and around your organization. Best thing is, you won’t spend billions on research like the “DuPont Corporations” of the World: You can get started for free right now.

Invite Others to Solve Your Problems

Up until recently, the standard formula for most companies to innovate probably consisted of a closed-loop, if not clandestine, team of individuals to brainstorm and develop ideas. While some great projects will undoubtedly come out ofthis approach, the ‘innovation group’ can only do so much. That fact alone could become abarrier for a very large organization trying to solve a host of internal problems.

In the software arena, of course, there exists the movement of Open Source development. It’s powerful because it invites users themselves to get involved and to essentially become “co-producers” of the products they are consuming. The pride of ownership that comes from seeing the project as “your baby”, and watching it grow and develop, is fulfilling and inspires a sense of loyalty among participants. What if you could do that, in some respect, for your company and its products?

Although Open Source has never becomethe industry coup some may have predicted, the concept is a strong one that can beapplied tootherindustries: By letting outsiders get involved, youre able to pool the talents and unique experience of the best people you can reach, in addition to the specialists inyour ownInnovation Team or R&D group.

When companies open up the innovation process, great things start to happen. You increase the likelihood of finding the “good” ideas: the ones that are viable, core to your business, and will produce ROI. Now youre gathering input from folks that offer unique perspectives on your business maybe an approach to a problem that your usual suspects would never even think of. Finally, and no less importantly, youre spreading goodwill and increasing loyalty among the participants. Customers continue to buy from companies that understand their wants and needs, and employees need to know that their input is valuable.

Invite others to help solve your problems and contribute to yourproducts with Flagpole (www.flagpolesoftware.com). Flagpole is an easy-to-implement web tool for gathering ideas and feedback from your audience: employees, product users, partners, and suppliers. Flagpole guarantees that our product willprovide you a return on your investment (ROI), or we’ll refund your costs, 100%. We also offer a free versionso companies can get started immediately with absolutely no risk.