How do the most successful businesses remain the most innovative?

For more than a decade now, companies have been exhorted to open up their innovation pipeline to the outside world. As Andre Gide said, “you cannot discover new oceans unless you have the courage to lose sight of the shore.” Those brave firms doing this have discovered that by allowing third parties to contribute to their innovation agenda that suddenly they are swimming in a new ocean of powerful ideas. This new process of innovating is truly about collaboration on a company’s innovation platform and appropriately it has been called Open Innovation.

It is a process focused on a company’s long-term strategy. It is the permanent opening up of an organization’s innovation processes to external sources. It is not about having a crowdsourcing competition now and then to find expert help for specific problems. It is allowing external contributors to set the innovation agenda, to suggest solutions to problems you didn’t even know you had. It is creating an open door to a company’s research and development department and finding ways for the company to benefit from this.

Open innovation is a strategy that utilises external sources of knowledge, expertise and ideas, often in conjunction with internal intellectual property in order to drive innovation in a consistent and structured way. It is the practice of including outside capabilities and resources to expand a company’s value proposition in any number of relationships. It is about innovating with partners by sharing risk and sharing reward.

There are numerous good reasons to use an open innovation strategy. Many companies fish in the external ocean of ideas to catch truly disruptive perspectives that they may not be able to catch internally. Companies pursuing an open innovation strategy can leverage their internal research and development to include external ideas smoother and faster than if they had tried to build the expertise in the area.

However, there are many difficulties facing a company when implementing open innovation. Not least are the two core activities of open innovation—the process of idea generation and of idea selection. There are several questions that arise here: Should one source the ideas from the crowd? Should the crowd select the best ideas? Or both?

When tapping into the ingenuity of the public, one can use a number of strategies. A portal for the reception of ideas is a common one. Companies such as Procter and Gamble (P&G), GlaxoSmithKline and Shell use this. However, another strategy is to run a competition each time to crowdsource ideas.

Open innovation portals such as NineSigma and InnoCentive are attractive for a number of reasons. They allow a constant stream of ideas to flow as they arise, companies have tighter control over what is shown when, and how people can participate. Another significant benefit is that they can reach more people and attract more attention than the company’s own website. And of course, tapping into a broader base of participation helps attract a more diverse set of skills. As the latest research shows, this is a critical factor in more powerful innovation.

It is no longer about closed secretive R&D teams anymore. It is about open and powerful collaborations with the masses. At the end of the day, not only will they find your next best idea, they will buy it too!

This post is an excerpt from my book Innovation Tools, available as an ebook at:

Dr Evan Shellshear, CCO, Ebex Pty Ltd

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