Why You Should Shift to Open Innovation
Innovation is the buzz word of the business world, but I think very few people understand what it really is. It’s easy to say it’s about creating value, generating ideas, gathering and interpreting data, making decisions, implementing actions and getting a burst of inspiration. When you look at it, companies have been doing this sort of thing for years now; that’s how they’ve gotten so big and established their brands. They have brainstorming sessions, they hold meetings, they research, they have their Eureka or Caramba (same meaning as serendipity) and the new product line is born.
Today things are changing and closed innovation is shifting to a more collaborative open innovation
Since communication and access to information wasn’t as good as it was many years ago, closed innovation was the only way a company could get ahead on the competition. You had to keep your intellectual property safe from competitors, so everyone signs their non-disclosure agreements and goes on with their lives. Most, if not all the parts of your product or service is developed in-house too, so you have an established brand with its own patents.
Now, big brands cannot afford to get fresher and outside content. Why? Their competitors are going to get a hand up on them. The pure cycle of in-house research and deployment isn’t going to earn them big money. Since talking about things anywhere in the world is so easy with the internet, things get old pretty fast. If you can’t bring out something exciting or unique, people get bored and move on to the next star of the moment. You need to open up more ways for innovation if you want to keep up with consumer demands. You might miss something because you’re guarding your secrets.
So how is open innovation different?
Open innovation is not exactly the opposite of its closed counterpart. In the latter, you keep the money flowing through your researchers’ salaries and keep the ideas to yourself. While the former allows you to hire outside workers to complement your team or source some work to the crowd, in other word innovation crowd sourcing. What matters to open innovation is that you give opportunity for outside elements to influence your business processes and insight.
Sounds scary and risky? It is, but the payoff is something a closed model tries to replicate and rarely succeeds.
How do you turn your company towards open innovation?
The organization culture of your company should be geared for continuous and regular innovation. You should also have a solid strategy on how you’re going to open up your system to new elements and at the same time utilize all the new knowledge and ideas.
Here are two major tasks to work on:
- Define your organisation and innovation management goals
- Design the way your organisation will be structured and managed to reach those goals. For furhter information, here is an article on organisation design.
Your business model strategy should also reflect the kind of innovation you’re looking for. If your company is into giving luxury products, make sure that your innovation process reflects that. When you take in new ideas and talent, these factors should still be guided by your business model. I don’t think it makes sense that a company that specializes in luxury goods should go for an innovation that features cheaper materials, right?
Aside from the processes, the way you gather and deploy your resources for your research, needs also to be effective to achieve your goals. Producing your products purely from in-house knowledge and talent keeps the resources in a cycle within your organization. When you shift to open innovation, you have to be ready to allocate your resources to people who aren’t permanent fixtures in your hierarchy. This may seem counter-productive, but the key to open innovation practices is that you have a diverse knowledge base that’s flexible and always fresh. Getting new insight only when needed is a great way to enact your shift.
Here are questions you should ask yourself to define your resource allocation for an open innovation project:
- Why are you doing this (purpose & mission)?
- How do you want to manage your projects (management style and decision level)?
- How do you want to distribute your assets to create value (are resources accessible to any individual or group)?
- How do you select knowledge, insight and data? Crowdsourcing, recruitment, consulting, design thinking…
- What are your performance indicators for value creation?
I think the most important thing to remember about open innovation is that shifting isn’t just a matter of open doors and let new people in. You have to align your business model, processes, resources and goals as well.
Please share this insight to inspire people to work with more passion and lead with creativity. It’s free like this ad free article. Thank you 🙂