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In our Leadership+Innovation community on LinkedIn, Chris Thoen who is a R&D Director at Procter & Gamble asked the question which elements are needed in order to create an open innovation culture. Our community had an interesting discussion and I want to share the key elements that came up.
- Willingness to accept that not all the smart people work for your company. We need to work with smart people inside and outside our company.
- Willingness to strive for balance between internal and external R&D. External R&D can create significant value; internal R&D is needed to claim some portion of that value.
- Willingness to give part of the control to others. We don’t have to originate the research to profit from it. We don’t need to control everything from the cradle to the grave.
- No need to always be first. Building a better business model is better than getting to market first.
- Dismiss NIH (Not Invented Here). If we make the best use of internal and external ideas, we will win. We don’t need to own everything ourselves and keep it under tight wraps. We should profit from others’ use of our innovation process, and we should buy others’ intellectual property (IP) whenever it advances our own business model.
- Open innovation requires people with the right interpersonal management skills to manage the relationships with customers and partners. We need people with agility and flexibility skills. The “soft” skills of emotional intelligence — fundamental social skills such as self-awareness, self-fulfilment, and empathy — are needed to complement traditional IQ skills.
- Willingness to reward effort and learning. Failure is a fact of life for companies that pursue innovation seriously, and a leader’s response to it has a huge effect on company culture and therefore on future projects. Innovation leaders know that failures represent opportunities to learn.
- As part of good leadership skills, a group or entity has to be willing to be a risk taker rather than being risk adversed while having a good dose of common sense with regards to balancing the risk level.
- Open innovation requires open communication. Work around the confidentiality and IPR issues in order to create an environment build on trust.
- Develop a job rotation program in order to help your employees build the knowledge and understanding of how an idea or technology becomes a profitable business. Consider engaging partners and customers in such a program.
Besides Chris and myself, the contributors for this list are Robert Falcone who is R&D Director at Nice Pak Industries, Benjamin Chaloner-Gill who works with New Business Development at Chevron and Rakesh Sharma who heads Strategy & Business Development at the Indian Sub Continent at Philips.
As an innovation leader or intrapreneur, you always have something to sell. In the end it is a product or a service, but during the development of a revenue-generator, you have to sell a vision to internal and external stakeholders.
You communicate that vision by:
• Developing a value proposition that can be adapted for various stakeholders, and then
• Capturing the very essence of the value proposition in a short and brief elevator pitch that focuses on the recipients of the message.
In Geoffrey Moore’s classic book, Crossing the Chasm, he provides the term “value proposition” as a way to choose from among what is presented to us for consideration. Options include choosing nothing at all, if there are no choices that improve our current situation.
Here are the six elements Geoffrey Moore describe as needed to communicate an effective value proposition:
• For (target audience)
• Who are/wants/needs (statement of needs or opportunity or compelling reason to buy)
• The (product name) is a (product category)
• That (statement of key benefits)
• Unlike (primary competitive alternative)
• Our product (statement of primary differentiation)3
Keep in mind that some adaptation of these elements might be required for communicating value propositions for things other than products or services. However, this approach allows you to convey all important aspects without providing too much information. It also enables you to explain your product or service in a few sentences, which is short enough for people to remember. This framework can also be used later when creating your “elevator pitch.” Here the idea is that if you can convey your message to others in 60 seconds or less, they will remember the majority of the value proposition. Since word of mouth is one of the biggest forms of communication, this is extremely important.
You will most likely never get to use an elevator pitch in the true sense, as you will almost always have more than a minute to make your case when you interact with others. However, if you think that means there is no need to do this, you’d be wrong. Preparation is the key point of value propositions and elevator pitches. The learning you gain while defining your value proposition and tuning your pitch will make you understand your product, service, or message so well that it will become much easier for you to achieve success. That creates all the reasons in the world to take this very seriously.
Picture this: you have worked on an idea that can really make a difference at your company. Nevertheless, you have difficulties getting in touch with the key stakeholders, and when you do, you keep hitting the wall of indecisiveness.
Then one day you get a break. After having given yet another so-so presentation to people who seem unable to make a decision, you step into the elevator with the person who can singlehandedly decide whether your idea is boom or bust. You know this is your big–and perhaps only–shot. Your pulse quickens. Your body temperature rises. What do you do?
Too few people are prepared to deal with such a situation. They have not given such a situation much thought, let alone prepared something to say or rehearsed saying it. So instead of capitalizing on the opportunity, they just let it walk out the door or mess it up and end up looking like an incompetent fool. Do not leave this to luck. Prepare. Prepare. Prepare.
That is the question asked by BusinessWeek in a recent article. The idea of the X prize contests is quite interesting and it has also showed some value as it played a key role in developing private space travelling. But can it become an important element in open innovation efforts?
Not likely, but check it out for yourself in this article:
http://www.businessweek.com/magazine/content/08_48/b4110054165858.htm?campaign_id=rss_topEmailedStories
You need to understand that the projects you run affect other people. The more people you affect, the more likely it is that your actions will impact people having the power and influence to make or break your project. This makes stakeholder management a critical discipline for you to master if you want to become successful with your innovation projects.
You can get an idea of stakeholder management by thinking in terms of three steps: identification, profiling and communication.
The first step is to figure out who your stakeholders are. Think of internal and external people who can affect your project in both positive and negative ways and people who might feel threatened or stand to gain from your project. Think not only of the obvious people such as your boss, but also on influencers who are not on a formal organization chart. Upon this brainstorming, you can make an early prioritization and place important stakeholders on a short list.
As criteria for placing people on the short list, ask yourself two questions: Does this person hold any impact on my project right now? Does this person have a high impact now, soon or late in the project?
Although working your stakeholders is important, you will often lack the time to work with all of them, so you need to prioritize them early on. However, you should always be prepared to change the status of the stakeholders and add new stakeholders when you learn of people being affected by your project.
The next step is to create short profiles of the stakeholders you have placed on your short list. You can use this information to gain a clearer picture of the stakeholder map that must be navigated to successfully complete a project.
Besides including general information such as name, job function, contact information and a short bio you should ask yourself questions such as: Is the stakeholder an advocate, supporter, neutral, critic or a blocker towards the project? Does the stakeholder have a strong, medium or weak impact on your project and is the impact now, soon or late in the project life cycle? Does the stakeholder hold a formal/direct or an informal/indirect influence on the project? What are the key financial or emotional interests of the stakeholder with regards to your project? Remember to ask yourself why this is so.
You should also look into what we can call the circle of influence. Who influences the stakeholder generally, and who influences the stakeholder’s opinion of you? To which degree are you connected with the stakeholder and his/her influencers?
The last step is to figure out what you want from your stakeholders and what you can offer them – and then communicate with them.
You might not feel you are ready to do so, but you need to communicate with your stakeholders early and often. This makes them know what you are doing and you can use their reactions to make changes that can increase the likelihood of success for your project.
People are usually quite open about their views and the best way to start building successful relationships with your stakeholders is to talk directly with them. If you have problems getting in touch with the stakeholders, you might have to use more informal approaches such as “random meetings” in which you seek out places with a good chance of delivering an elevator pitch that makes the stakeholder interested in learning more about your project.
You should do your homework before these meetings and interactions. Besides having crafted a profile, you should also know what compelling messages to use with the stakeholder and you should be able to deliver quick and concise elevator pitches based on these messages.
In a recent article, consulting company AT Kearney, states that an innovation leader:
- designs an organization focused on open innovation
- crafts gain-sharing agreements with partners
- use change-management principles to move the organization toward open innovation
These are just a couple of characteristics of innovation leaders. You can learn more by downloading the article in this post or visit this link: Innovation Management – strategies for success and leadership
I just had an interesting exchange with a guy who just can’t see that open innovation will become a major part of how most companies innovate.
Among other things, my counterpart mentioned that barriers against open innovation are there for the purpose of keeping innovation inside the company or the country because innovation has value and thus means power.
Another point he made was that “great ideas come from an individual’s mind. I’m not saying that in a group situation, an individual’s idea couldn’t be improved, but for that individual to give up that idea before it is patented and protected, that inventor isn’t saying anything to anyone. That’s because the reward for that great idea is more profound to the innovator if it is his alone to market. Again, in my personal opinion, this is a good thing. Reward brilliance accordingly. Once the inventor has the patent, sure let anybody who wants to improve upon it, have at it.”
It has been a while since I have heard anyone talk against the idea of open innovation, so I sent a reply that went like this:
—-
Hi Steve,
You are not way off target on what I mean by open innovation. This is also why I have a slightly provocative message to you: Wake Up!
The early stages of open innovation already take place in a lot of companies and it is one of the most talked-about-things in the world of corporate innovation today. You should start looking into this as we are definitely in the process of tearing down those barriers you mention.
Why? Because we live in a global world where information is becoming more accessible and transparent. This makes it easier to innovate across barriers. It is also a bit arrogant for companies to believe they know everything by themselves.
Take P&G. Eight years ago they learned there were 200 researchers and scientists just as good or even better outside P&G for EACH of their own 7,500 researchers and scientists. P&G choose not to be arrogant and rather explore ways of working with these 1.5 million great minds. Today, they do not have an R&D department. It is called C&D – the C stands for connect and they are close to reaching one of their amazing goals: 50% of their innovation should to some extent come from external sources. Check this link for more on P&G and open innovation:
http://hbswk.hbs.edu/archive/5258.html
Another point is that we live in a networked world where you work with partners and customers to bring innovation to the market. It has become very difficult to this by yourself. Just look at the new planes from Airbus and Boeing. Their global supply chain is just as much an innovation chain generating new products, services and processes.
We have just started to embrace open innovation and this is a movement that will not be stopped…
BTW – Intellectual Property Rights is a key issue, but this can be worked out.
Stefan
Article: Strategy & Innovation: Are You Ready for the Next Generation of Innovation
My latest article was published in Strategy & Innovation. This is a newsletter run by Innosight which is an innovation consultancy built on the disruptive innovation frameworks developed by their founder, Harvard Business School professor Clayton Christensen.
In the article, I argue that companies have begun to embrace open innovation and more collaborative forms of innovation and that this move requires a new mindset and a new set of skills; it is no longer enough to just be a good project manager, researcher or engineer – or leader. The skills that need to be mastered are:
• Collaboration: You have to work across business functions and with many types of innovation to turn ideas into profitable products, services or business methods.
• Relationship building: In a world of open innovation, you need to be an expert at networking and building relationships.
• Stakeholder management: You do not need to have everyone on your side, but you need to generate adequate support to champion your ideas and enough leverage to overcome major hurdles.
• Communication: You need to be able to craft compelling messages to the stakeholders you want to influence.
Do you think you are ready for the next generation of innovation? Read the article and let me know what you think.
There is not doubt that innovation leaders and intrapreneurs have lots of drive. They make things happen and this is one of their key qualities. But there is also a thing such as too much drive.
I recently had a couple of incidents where this became very clear. Both incidents evolve around people in new jobs. They have been hired to bring change to their organizations and they are eager to show their capabilities. They are actually doing a great job having started several successful initiatives. But they want even more – and faster.
And then they forget that they have some fairly unique capabilities. Most people do not have a similar drive and even more people prefer status quo over change. When such types collide, the people with drive get frustrated and they might even start to doubt their own capabilities and whether they belong to this new organization.
The strange thing is that they have every opportunity to be successful. During these incidents, I was lucky enough to also get an executive perspective on this. The company leaders would be happy if the innovation leaders had started just a third of the initiatives they had undertaken. The thing is that people with drive sometimes move too fast for others to keep up with them. Or they may set the bar higher than other people are prepared to reach. Also, people with drive sometimes are moving so fast that they fail to communicate fully with others about where they’re headed and why others should follow.
There are two lessons here. Manage your stakeholders and be prepared to adjust your goals and expectations. Always keep in mind that the change you are so eager to bring about affects other people, who can put roadblocks in your path if they think you’re going too far too fast. Identify and map these people and get a sense of how they feel about the things you want to change. Do this not only during the preparation of new initiatives but also during the implementation. This will also give you a better understanding of what success looks like. Maybe you also have to adjust – up or down – on this.
