Making Open Innovation Work by Stefan Lindegaard

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Coyiighi 2011 STEIAN IINDEGAARD
All iighis icscivcd.
ISBN: 146S71244S
ISBN 1S: 97S146S712440
Iiliaiy ol Congicss Coniiol Numlci: 20119120S
CicaicSacc, Noiih Chailcsion, SC

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O
vci ihc asi lcw ycais, many ol ihc lcading glolal comanics
havc lcgun io cmliacc ocn innovaiion. Thcy icach ouisidc
ihcii oiganizaiions io aiinci wiih sulicis, cusiomcis, acadcmics,
comciiiois, and cniicicncuis in ihc scaich loi gicai ncw idcas ihai
will Icc ihcii lusincsscs on ihc cuiiing cdgc. Much has lccn wiiiicn
aloui ihis shili liom a closcd innovaiion modcl, in which all asccis
ol ihc innovaiion ioccss iaIc lacc inicinally in a iighily coniiollcd,
highly scciciivc cnviionmcni, io an ocn modcl in which cxicinal
aiincis lay a Icy iolc in hcling a comany innovaic. My hisi looI,
!"# %&#' ('')*+,-)' .#*)/0,-)'1 233#',-+/34 .)+56/)7834 +'5 9#+5#:3"-&
;8-//3 cxamincd ihis shili.
Rclaiivcly liiilc aiicniion has lccn aid, howcvci, io ihc way lig and
small comanics iniciscci in ocn innovaiion. Thc assumiion sccms
io lc ihai ocn innovaiion woiIs ihc samc loi cvciylody, lui, in iiuih,
ii docs noi. Small comanics havc dillcicni icsouiccs, dillcicni nccds,
and dillcicni ways ol coniiiluiing io an ocn innovaiion iclaiionshi.
Vicwing ocn innovaiion loi small comanics ihc samc way wc vicw
ii loi lig comanics is iiddlcd wiih iollcms and has ihc oicniial
lnIrccucIicn
vi
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vii
io sci small comanics u loi lailuic. This looI cxlains why ocn
innovaiion is dillcicni in small comanics ihan ii is in lig comanics
and how small as wcll as lig comanics nccd io aioach woiIing
iogcihci. My iimaiy locus will lc on how small and lig comanics
can lcnchi liom uisuing ocn innovaiion ,)<#,"#: and how ihcy can
maIc ihc iniciscciion ol ihcii iwo oiganizaiions woiI.
1456 ,7 5 +8599 ):8;5<=>
Ioi ihc uioscs ol ihis looI, I dchnc small comanics as ihosc
ihai havc only onc Icy ioduci linc. Thcy may havc many cmloyccs,
lui all ihosc woiIcis aic locuscd on dcvcloing, ioducing, and sclling
|usi ihai onc ioduci linc. Il ihcy donì succccd ai ihai, ihc comany
lails, ihcy ciihci havc no Plan B oi ihcy aic only in ihc caily siagcs ol
dcvcloing ii.
Also, ihc small comanics I`m ialIing aloui do noi havc an inno-
vaiion olhcci, somconc who is in chaigc ol maIing innovaiion ha-
cn, ihc chicl cxccuiivc olhcci is ihc onc who diivcs innovaiion. In
laci, ihcy olicn donì cvcn havc an innovaiion siiaicgy. Thcy |usi iiy
io imiovc ihai onc ioduci linc wiihoui ihinIing much aloui how
ihcy could giow ihc comany ly adding oihci lailoims. Ioi ihc small
comanics ihai do lcgin io add moic ioduci lincs, ihcn ihc nccd
loi a chicl innovaiion olhcci and an innovaiion siiaicgy lcgins io lc-
comc aaicni.
Many ol ihcsc small comanics donì havc a cluc how lig comanics
vicw ocn innovaiion. You will noiicc ihis in somc ol ihc inicivicws
wiih smallci comanics in ihc looI. So whai hacns whcn such a
comany inicisccis wiih a laigc comany ihai is inicicsicd in ull-
ing ihcm inio ihcii ocn innovaiion ccosysicm. Il ihc small comany
docsnì gci cducaicd lasi, ihcy could lc ai a scvcic disadvaniagc. Noi
all lig comanics lay nicc, so ihc smallci comany could cnd u wiih
ihc shoii cnd ol ihc dcal. In ihc long iun, loih small and lig coma-
nics will losc il ihcy do noi mcci on cqual icims.
Somc colc aiguc ihai small comanics aic noi lig cnough loi
ocn innovaiion lccausc ihcy donì havc ihc oiganizaiional inlia-
siiuciuic io cngagc in ocn innovaiion. Oihci colc do lclicvc small
comanics havc a iolc io lay in ocn innovaiion ccosysicms, lui lc-
licvc ihcy incviially will gci ihc lacIscai whilc ihc lig comanics iaIc
ihc diivci`s scai. Whilc I disagicc wiih ihc hisi siaicmcni, I agicc wiih
ihc sccond. In ocn innovaiion, comanics ciihci coniiol ihc io|ccis
oi ihcy coniiiluic io ihcm. Big comanics iclci io lc in coniiol ol
ihcii io|ccis, whcicas smallci comanics do noi cvcn gci a choicc
unlcss ihcy havc somcihing uniquc io ollci, which is iaicly ihc casc.
I lclicvc small comanics havc an imoiiani iolc io lay in ocn
innovaiion, loih loi ihcmsclvcs and loi laigc coioiaiions. Ioi small
comanics, an ocn innovaiion aiincishi can iovidc acccss io ic-
souiccs nccdcd io hii ii lig, such as disiiiluiion channcls oi ioduc-
iion icsouiccs. In many cascs, small comanics havc lccn loundcd
ly cniicicncuis who havc iicmcndous scicniihc and icchnological
cxciiisc. Coioiaiions nccd acccss io ihis cxciiisc and ihc innova-
iivc idcas and soluiions ihai can giow oui ol ii.
I liIc how ]ohn Conolcy, CEO ol Psion, ioncci ol qualiiy molilc
handhcld comuicis and ihcii alicaiion in indusiiial maiIcis
aiound ihc woild, cxlaincd why his comany nccds io dcvclo a
siiong ocn innovaiion ioccss and aiincishis: Wc dccidcd io cm-
liacc ocn innovaiion io lc lasici and comciiiivcly unicdiciallc."
Whai comany wouldnì wani io lc quicIci io maiIci wiih suiiis-
ing ncw ioducis and sciviccs. Thai`s whai ocn innovaiion can hcl
you achicvc, no maiici youi comany`s sizc. This looI ihoioughly
lnIrccucIicn
viii
ix
cxloics ihc ocn innovaiion iniciscciion lciwccn small and lig com-
anics, looIing ai ioics ihai includc:
- 1456 ?7 :;@< ?<<:A56?:<> 1456 B:C87 D:@7 ?6 65E@ 5<D F456
benets does it provide Ior both large and small compaG
nies, and what challenges does it pose Ior companies oI
D?BB@C@<6 7?H@7>
- Case studies illustrating open innovation at work in small
companies
- 2:F 6: ?D@<6?B= 5<D D@A@9:; 64@ ;@:;9@ F4: F?99 DC?A@ :;@<
innovation in your organization
- Ways to develop open innovation capabilities within a small
company
- Why big companies need small companies as part oI their
open innovation ecosystems
- Strategies Ior building and making open innovation partG
<@C74?;7 F:CE F4@< 64@ ;5C6<@C7 5C@ :B I<@JI59 7?H@
- What to do iI things go awry in an open innovation
;5C6<@C74?;
- How to handle issues oI intellectual property (IP) rights
- How to use social media tools to build your open innovation
capabilities and attract partnerships
- Throughout this book, you will hear Irom other open inG
novation experts and Irom people in companies who are
charged with making open innovation happen. Each chapG
ter ends with a list oI key takeaways: these are gathered in
one place in the book's nal chapter so you have one easy
place to go whenever you want to quickly review what you've
learned.
!4?7 ,7 64@ (I6IC@
Hcic`s somcihing vciy imoiiani ihai I wani io cmhasizc lcloic
wc go any luiihci. In hvc io scvcn ycais, wc will no longci ialI aloui
ocn innovaiion. Thc icim ocn innovaiion" will disacai and wc
will |usi vicw ihis as innovaiion." Thc Icy dillcicncc is ihai innovaiion
will havc a much highci cxicinal inui ihai whai wc scc ioday.
This cvoluiion will iaIc longci in somc indusiiics ihan in oihcis,
lui uliimaicly cvciyonc will gci io ihc samc lacc-using an ocn in-
novaiion modcl. Thus, ihcic is no nccd io sci u an cniiicly dillcicni
ocn innovaiion unii, iaihci, you should luild ocn innovaiion caa-
liliiics in as aii ol youi comany`s innovaiion DNA.
Ocn innovaiion is cvolving so iaidly ihai I cncouiagc you io visii
my llog ai www.1inno.com io hnd ncw casc siudics and ncw idcas
aloui ihis imoiiani ioic. Hcic you can also icsond io my osis
and shaic youi cxciicnccs wiih ocn innovaiion. Ici`s Icc ihc
convcisaiion going!
1
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nough colc siill asI mc io dchnc ocn innovaiion ihai ii`s
clcai io mc ihai lcniy ol conlusion siill cxisis as io whai wcìc
ialIing aloui whcn wc iclci io ihis ioic. This may lc aiiiculaily
iiuc ai small comanics sincc many lusincsscs in ihis maiIci scgmcni
aic only |usi now lcginning io icsi ihc waicis ol ocn innovaiion. So
lci`s maIc suic wcìc all on ihc samc agc aloui how io dchnc ocn
innovaiion and iclaicd icims such as ciowdsouicing, usci-diivcn in-
novaiion, ccosysicms, and innovaiion inicimcdiaiics.
Whcn colc asI whai ocn innovaiion is, I suggcsi vicwing ocn in-
novaiion as a hilosohy oi a mindsci ihai you should cmliacc wiihin
you oiganizaiion. In a moic iaciical dchniiion, ocn innovaiion is
aloui liidging inicinal and cxicinal icsouiccs and aciing on ihosc
ooiiuniiics io maIc innovaiion hacn. I also liIc ihis quoic liom
Hcniy Chcsliough: Ocn innovaiion is a aiadigm ihai assumcs ihai
hims can and should usc cxicinal idcas as wcll as inicinal idcas, and
DefniIicn:
2
3
inicinal and cxicinal aihs io maiIci, as ihc hims looI io advancc
ihcii icchnology."
1
This is in coniiasi io ihc old modcl ol closcd innovaiion, in which
a comany mainiaincd comlcic coniiol ovci all asccis ol ihc inno-
vaiion ioccss and discovciics wcic Ici highly sccici. In closcd in-
novaiion, you do noi aiicmi io assimilaic inui liom ouisidc souiccs
inio ihc innovaiion ioccss, and you avoid having io shaic inicllcciual
iociiy oi iohis wiih any ouisidc souicc. Il ihis sounds lamiliai io
small comanics, ihai`s iolally lccausc ii may wcll lc ihc modcl
youi comany has uscd io dcvclo iis ioduci ollciings io daic.
Also, in a closcd innovaiion cnviionmcni, aciiviiics aic olicn scg-
icgaicd wiihin an R8D dcaiimcni whcic ihc lcsi and ihc liighicsi
aic cxccicd io maIc suic ihc comany gcis io maiIci caily wiih ncw
idcas io gain ihc hisi movci" advaniagc.
In coniiasi, in ocn innovaiion youi comany woiIs wiih cxicinal
comanics duiing ihc innovaiion ioccss. Ocn innovaiion is olicn
aloui soliciiing idcas liom ouisidc, lui ii gocs dccci ihan |usi in-
volving oihcis in ihc idca gcnciaiion hascs, ihc coniiiluiion liom
ouisidc youi comany musi lc signihcani. Ii is also moic ihan |usi a
aiincishi whcic you ay loi sccihc sciviccs. Evciyonc involvcd in
an ocn innovaiion ioccss locuscs on iollcms, nccds, and issucs
and woiIs ihcm oui ,)<#,"#:. Iuiihcimoic, you can aiguc ihai closcd
innovaiion iimaiily locuscs on ioducis and sciviccs, whcicas you
aic moic liIcly io usc ocn innovaiion io woiI wiih a lioadci iangc
ol ihc Tcn Tycs ol Innovaiion {scc Acndix A), including lusincss
modcls, channcls, and ioccsscs.
An imoiiani oini io noic: ioo olicn, comanics lall inio ihc iia
ol considciing ocn innovaiion aioachcs only duiing whai is callcd
ihc lioni cnd ol innovaiion. Oncc ihcy havc goiicn inui liom cxici-
nal souiccs duiing ihc lioni cnd ol innovaiion, ihcy do cvciyihing
ihcmsclvcs. Gianicd, ii is a good ihing io gci moic divcisc inui caily
on, lui why sio ihcic.
Ocn innovaiion is an aioach ihai can woiI and should lc uscd
in any siagc ol ihc innovaiion ioccss, noi |usi in ihc caily hascs dui-
ing ihc lioni cnd ol innovaiion.
Comanics miss oui on ihc lull oicniial ol ocn innovaiion whcn
ihcy shui down io cxicinal icsouiccs laici in ihc ioccss. Pcihas com-
anics aic moic willing io accci cxicinal inui duiing ihc lioni cnd
ol innovaiion, whcn cvciyonc cxccis moic cicaiiviiy and ocnncss.
Oncc ihis hasc is comlcicd, comanics go inio cxccuiion modc,
which is lcss comlcx il ihcy only usc ihc inicinal icsouiccs ihcy al-
icady Inow vciy wcll.
-@956@D !@C87
Whcic do ciowdsouicing, usci-diivcn innovaiion and co-cicaiion
hi inio ihc ocn innovaiion iciuic. In gcncial, ihcsc aic iools and
icchniqucs ihai can lc uscd wiihin ihc aiadigm ol ocn innovaiion,
lui ihcsc icims ovcila, which lcavcs lcniy ol ioom loi conlusion.
Hcic`s a quicI icvicw.
Ciowdsouicing is ihc aci ol ouisouicing iasIs, iiadiiionally ci-
loimcd ly an cmloycc oi coniiacioi, io a laigc giou ol colc oi
communiiy {a ciowd), ihiough an ocn call," accoiding io WiIicdia.
Ciowdsouicing should noi lc conluscd wiih ocn innovaiion, lui
iaihci ihoughi ol as onc iool ihai can lc uscd io liing cxicinal inui
inio youi oiganizaiions as youi uisuc ocn innovaiion.
Many comanics misiaIcnly sccm io vicw ciowdsouicing moic as a
maiIciing iool ihan as an ocn innovaiion iool. Ciowdsouicing givcs
comanics gicai ooiiuniiics io iniciaci wiih cusiomcis and uscis.
Using ciowdsouicing, comanics can collcci idcas, lci ihc ciowd voic
on ihcm, and sci u icdiciion maiIcis ihai can liing ouisidc inui
DefniIicn:
4
5
io any numlci ol dccisions. Ciowdsouicing has cnoimous acal io
savvy maiIciing cxccuiivcs who undcisiand ihc owci ol social mcdia.
Whilc ihc maiIciing lcnchis alonc aic olicn cnough io |usiily ihc
launch ol ciowdsouicing iniiiaiivcs, ihc ical innovaiion ooiiuniiics
ossillc aic quiic valuallc as wcll.
Usci-diivcn innovaiion, on ihc oihci hand, is a icchniquc in which
comanics olscivc ihcii uscis in oidci io gain ncw insighis ihai can
lc uscd in ihc innovaiion ioccss. Somc conlusc ihis wiih ocn in-
novaiion lccausc ihcy lclicvc cvciyihing ihai is donc wiih uscis oi
cusiomcis consiiiuics ocn innovaiion. Howcvci, ii docs noi lccomc
ocn innovaiion uniil you ically siaii ocning u ihioughoui ihc
wholc innovaiion ioccss. Ii is noi ocn innovaiion il you |usi olscivc
oihcis in ihc caily siagcs ol ihc innovaiion ioccss-alihough ihis can
liing much valuc-and ihcn do cvciyihing inicinally in ihc samc way
as you havc always donc ii.
Co-cicaiion is iolally ihc icim ihai is closcsi io ocn innovaiion
alihough ii sccms io locus moic on co-cicaiion wiih cusiomcis iaihci
ihan wiih oihci comanics in an ccosysicm ]discusscd lclow|. Co-
cicaiion is vicwcd as a ioccss in which comanics and aciivc cusiom-
cis shaic, comlinc, and icncw cach oihci`s icsouiccs and caaliliiics
io cicaic valuc ihiough ncw loims ol iniciaciion, scivicc, and lcain-
ing mcchanisms. Ii dillcis liom ihc iiadiiional aciivc him-assivc
consumci maiIci consiiuci ol ihc asi. I liIc how C. K. Piahalad and
VcnIai Ramaswamy aiguc ihai valuc will lc incicasingly co-cicaicd
ly ihc him and ihc cusiomci.iaihci ihan lcing cicaicd cniiicly in-
sidc ihc him."
2
Co-cicaiion in ihcii vicw noi only dcsciilcs a iicnd
ol |oinily cicaiing ioducis, ii also dcsciilcs a movcmcni away liom
cusiomcis luying ioducis and sciviccs as iiansaciions, io ihosc ui-
chascs lcing madc as aii ol an cxciicncc. Thc auihois hold ihai
consumcis sccI liccdom ol choicc io iniciaci wiih ihc him ihiough a
iangc ol cxciicnccs. Cusiomcis wani io dchnc choiccs in a mannci
ihai icuccis ihcii vicw ol valuc, and ihcy wani io iniciaci and iiansaci
in ihcii iclciicd languagc and siylc.
Anoihci icim I`ll usc olicn in ihis looI is ccosysicms. Wiih ocn
innovaiion comcs ihc nccd io cicaic valuc nciwoiIs ihai includc all
ihc oicniial caicgoiics ol cxicinal souiccs ihai can suoii youi in-
novaiion clloii. Youi ccosysicm may includc cusiomcis, sulicis, aca-
dcmic insiiiuiions, innovaiion maiIcilaccs oi inicimcdiaiics, iivaic
lals, govcinmcni-suoiicd lals and icscaich insiiiuics, govcinmcni-
suoiicd innovaiion iniiiaiivcs, and cvcn comciiiois. Ai hisi, ihis
lisi may sccm ovciwhclming loi a small comany, lui undcisiand ihai
youi ccosysicm will siaii small and giow giadually ovciiimc. Ii may
cvcniually lccomc signihcanily moic comlcx lui ihai comlcxiiy
also liings wiih ii a wcalih ol ooiiuniiics. As I will dcsciilc in dciail
laici, ihc aliliiy io luild and culiivaic good iclaiionshis wiihin youi
ccosysicm is a Icy comoncni ol ocn innovaiion succcss.
14= ';@< ,<<:A56?:<>
Oncc ihcy gci an idca ol whai ocn innovaiion is, many colc con-
cludc ihai ii is ihc Holy Giail and |um aloaid ihc landwagon wiihoui
asIing ihis all-imoiiani qucsiion: Why is ocn innovaiion iclcvani io
youi comany, iis icscni siiuaiion, and iis mission and vision. Il you
havcnì answcicd ihis qucsiion ihoioughly, you nccd io liing youi lcci
lacI on ihc giound and icmcmlci ihai innovaiion ol any iyc is |usi a
iool, noi a goal. Thc goal is io giow youi comany and maIc a iohi.
An answci io ihc why" qucsiion should show an undcisianding ol
how ocn innovaiion can lc an imoiiani aii ol ihc gcncial inno-
vaiion siiaicgy, which in iuin nccds io lc siiongly aligncd wiih ihc
ovciall coioiaic siiaicgy. Bui many comanics, csccially small oncs,
donì cvcn havc an ovciall innovaiion siiaicgy, much lcss a sccihc
ocn innovaiion siiaicgy ihai linIs wiih ii.
DefniIicn:

7
Thc lcnchi ol having an innovaiion siiaicgy is ihai ii scis a diicc-
iion loi youi clloiis, hoclully a diicciion ihai`s aligncd wiih youi
comany`s siiaicgy. This also allows you io lciici dchnc youi ocn in-
novaiion in alignmcni wiih youi siiaicgy. Innovaiion and-cvcn moic
so-ocn innovaiion can lc cusiomizcd io hi a comany`s nccds in so
many dillcicni ways. Each comany nccds io hnd iis own aioach,
ihc onc ihai maichcs iis ol|cciivcs, caaliliiics, and icsouiccs. Oncc
ihc icason loi innovaiing and ihc aioach io innovaiion aic in lacc,
ii lccomcs casici io woiI oui a siiaicgy and imlcmcni ii.
Hcic`s an insighilul and slighily iovocaiivc aiiiclc ly Giaham Hill,
who is a lcading inicinaiional cxcii in cusiomci-diivcn innovaiion.
Alihough ihc aiiiclc is a lcw ycais old and ihus somc ol ihc daia is
ouidaicd, ihcic siill aic somc good lcssons on ciowdsouicing in ihis.
How Understanding Customer ]obs Turns Crowdsourcing into
Smartsourcing
By Giaham Hill, aii consuliani, aii innovaioi and aii cniicic-
ncui hcling comanics co-cicaic valuc wiih ihcii cusiomcis.
Pcici DiucIci ihc guius` guiu lamously said, Bccausc
ihc uiosc ol lusincss is io cicaic a cusiomci, ihc lusincss
cniciiisc has iwo-and only iwo-lasic lunciions: maiIci-
ing and innovaiion. MaiIciing and innovaiion ioducc ic-
sulis, all ihc icsi aic cosis." MaiIciing is haid cnough io gci
iighi, lui innovaiion is a wholc loi haidci siill. Dccnding
on ihc indusiiy, aloui S0 ciccni ol ncw ioducis lail on
iniioduciion in ihc maiIci. And u io 60 ciccni lail in
iciniioduciion.
To ovcicomc ihis disasiious lailuic iaic, comanics havc
siaiicd io icciuii cusiomcis io gcnciaic idcas loi ncw iod-
ucis, a ioccss ]cll Howc callcd ciowdsouicing in a 2006
aiiiclc in Wiicd magazinc. Thcic aic a numlci ol gicai
cxamlcs ol succcsslul ciowdsouicing iogiams, howcv-
ci, iwo cxamlcs illusiiaic whai hacns whcn comanics
siaii ciowdsouicing iogiams wiihoui ically ihinIing ihcm
ihiough iocily.
Thc hisi ol ihcsc is Dcll wiih iis IdcaSioim iogiam.
Anyonc can comc u wiih a comuici-iclaicd idca, osi ii
on ihc IdcaSioim wclsiic, voic loi ihc lcsi idcas, commcni
aloui ihcm and hoclully, scc ihcm imlcmcnicd. Sounds
gicai. Why noi haincss idcas liom cusiomcis. And why noi
gci cusiomcis io voic loi ihcm io cui iogiam siall cosis.
Unloiiunaicly, ciowdsouicing has a numlci ol sciious
iollcms. Thc hisi iollcm is ihai cusiomcis, cvcn laigc
numlcis ol ihcm, iyically ioducc avciagc, unicmaiIallc,
incicmcnial innovaiions, iaihci ihan ihc sic-changc in-
novaiions ihai comanics hoc loi. Alihough 12,4SS idcas
havc lccn osicd on ihc wclsiic sincc IdcaSioim siaiicd in
Icliuaiy 2007, only S66 havc lccn imlcmcnicd io-daic, a
miscily 2.9 ciccni ol ihc ioial. And mosi ol ihc imlcmcnicd
idcas iovidc only incicmcnial imiovcmcnis io Dcll`s lusi-
ncss. To iis cicdii, Dcll says ihai IdcaSioim is inicndcd as an
cxicnsion ol iis iclaiionshi wiih iis cusiomcis, iaihci ihan
|usi as a souicc ol ioduci idcas. ]usi as wcll, as IdcaSioim is
a lailuic as a souicc ol winning ncw innovaiions.
Thc sccond cxamlc is SiailucIs wiih iis My SiailucIs
Idca. Similai io IdcaSioim, My SiailucIs Idca allows any
DefniIicn:
8
icgisicicd cusiomci io osi an idca, voic loi ihc lcsi idcas,

commcni on ihcm and scc ihcm imlcmcnicd. Oi noi as
ihc casc may lc. My SiailucIs Idca, dcsiic iccciving ovci
7,6S idcas, has only imlcmcnicd S1 idcas io-daic, an
cvcn moic miscily 0.4 ciccni ol ihc ioial.
You wouldnì ihinI ihai having idcas io imiovc a collcc-
housc chain would lc all ihai dilhculi io imlcmcni. Bui ihc
low iaic ol imlcmcniaiion illusiiaics ihc sccond iollcm
wiih ciowdsouicing, cusiomcis havc no idca ol how ihc lusi-
ncss woiIs, whai lusincss caaliliiics ii has and ihus, no idca
whcihci cvcn ihc simlcsi ol idcas can icalisiically lc imlc-
mcnicd {lci alonc whcihci ihcy will iuin a iohi).
In siaiI coniiasi io SiailucIs, Toyoia imlcmcnis
ovci 1,000,000 cmloycc idcas cvciy ycai, 9 ciccni ol ihcm
wiihin 10 days ol lcing sulmiiicd. Bui unliIc SiailucIs`
cusiomcis, Toyoia`s cmloyccs Inow cxacily whcic ihc lcsi
innovaiion ooiiuniiics lic, whai can icalisiically lc imlc-
mcnicd and ihc iohi-imaci ol doing so. Coming u wiih
innovaiions liIc ihis is aii ol ihc Toyoia Way. Ii`s whai maIcs
Toyoia such a uniquc comany.
And ihcic is anoihci lig iollcm ioo. Cusiomcis cx-
cnd a loi ol cicaiivc goodwill gcnciaiing idcas loi Dcll and
SiailucIs, only io scc ihc vasi ma|oiiiy ol ihcm shoi down
ly ihcii ccis oi ignoicd ly ihc comanics. All ihai ialI ly
Dcll ol luilding a iclaiionshi wiih cusiomcis quicIly comcs
io noihing whcn iis cusiomcis` haid woiI cicaiing idcas is
nciihci iccognizcd noi icwaidcd.
As Dcll and SiailucIs aiicmis ai ciowdsouicing illusiiaic
only ioo clcaily, ciowdsouicing`s suoscd advaniagc ol hai-
ncssing cusiomcis as souiccs ol innovaiion is in laci iis lig-
gcsi wcaIncss. Thc laci is ihai mosi cusiomcis simly donì
havc any good idcas and many ol ihc good idcas ihai do
comc loiwaid aic simly noi imlcmcniallc. This ioduccs
a minisculc imlcmcniaiion iaic ihai luins a loi ol cusiomci
goodwill in ihc ioccss.
So whai should comanics who siill wani io haincss cus-
iomcis io gcnciaic winning innovaiions do. How can ihcy
iuin wasiclul ciowdsouicing inio ioduciivc smaiisouic-
ing. Onc comany ihai goi ii iighi is Cisco wiih iis I-Piizc
comciiiion. Siaiiing in laic 2007, Cisco asIcd innovaiois
io comc u wiih idcas ihai could ii iuin inio ihc ncxi lillion
dollai lusincss. Cisco collccicd ovci 1,200 idcas liom 2,00
innovaiois in 104 couniiics acioss ihc glolc. Thc idcas wcic
iniiially hlicicd io scc il ihcy iacIlcd Cisco`s ain ainis, il
ihcy could lc dclivcicd using Cisco`s caaliliiics and il Cisco
could maIc moncy liom doing so.
Thc hliciing was donc ly a lull-iimc, six-man icam, diawn
liom acioss Cisco`s lusincss. Thc lcsi 40 idcas wcic ihcn as-
signcd a mcnioi io hcl ihc innovaiois iuin ihcii idca inio a
woiIallc lusincss lan. Thc hnal 10 idcas wcic ihcn sclcci-
cd, and iaIcn ihough an inicivicw and luiihci hliciing io-
ccss io hnd ihc cvcniual winnci. A singlc idca-loi a smaii
clcciiiciiy giid-ly a Gciman/Russian icam was sclccicd io
collcci ihc S20,000 iizc.
Cisco`s succcss ai smaiisouicing shows ihc imoiiancc ol
locusing idcas on aiiiculai ain oinis oi ooiiuniiics.
Raihci ihan |usi lci innovaiois comc u wiih idcas, ii is much
lciici io locus ihcii cicaiiviiy on |usi ihosc ooiiuniiics
whcic ihcy can ioducc a licaIihiough. As innovaiion gu-
ius Tony UlwicI ol Siiaicgyn and Piol. Clayion Chiisicnscn
havc shown, in ioday`s cusiomci-ccniiic lusincss cnviion-
mcni ihis mcans undcisianding ihc |ols cusiomcis aic
DefniIicn:
10
11 10
iiying io do and ihc ouicomcs ihcy wani liom doing ihcm.
And noi only lunciional doing" |ols, lui also cmoiional
|ols ihai dcsciilc how ihc cusiomci lccls aloui whai ihcy
aic doing and social |ols ihai dcsciilc how ihc cusiomci
iclaics io ihcii ccis.
Oncc you undcisiand cusiomci |ols and ouicomcs, ihcy
should lc iioiiiizcd io hnd ihc aicas whcic ihc imoiiancc
io cusiomcis is highcsi lui saiislaciion wiih cuiicni soluiions
is lowcsi. This is ihc innovaiion swcci soi. Exciicncc sug-
gcsis ihai locusing on ihc innovaiion swcci soi can ioducc
an S0 ciccni succcss iaic loi ncw ioducis, a wholc loi lci-
ici ihan ihc S0 ciccni lailuic iaic wc commonly scc.

K@= )45;6@C !5E@5F5=7
- Open innovation is about bridging internal and external reG
sources and acting on those opportunities. This contrasts
with closed innovation, where you do not attempt to assimiG
late input Irom outside sources into the innovation process,
and you avoid having to share intellectual property or proIG
its with any outside source.
- Open innovation should take place throughout your innovaG
tion process, not just in the early phases during what we call
the Iront end oI innovation. You will miss out on the Iull
;:6@<6?59 :B :;@< ?<<:A56?:< ?B =:I 8:C@ :C 9@77 D@9?L@C56@9=
shut down to external resources later in the process.
- With open innovation comes the need to create value netG
works-or ecosystems-that include all the potential cateG
gories oI external sources that can support your innovation
eIIort. This may include customers, suppliers, academic inG
stitutions, and even competitors.
- BeIore jumping into open innovation, determine why open
innovation is relevant to your company, its present situation,
and its mission and vision.
- Each company needs to nd its own approach to open inG
novation, one that matches its objectives, capabilities and
resources.
1. H. W. Chcsliough, %&#' ('')*+,-)'1 !"# =#> (?&#:+,-*# @): A:#+,-'< +'5
P.oIr .o TeLroIo, {Bosion: Haivaid Busincss School Picss, 200{S),
xxiv.
2. C. K.Piahalad and VcnIai Ramaswamy, Co-Oiing Cusiomci
Comcicncc," B+:*+:5 C03-'#33 .#*-#> {Icliuaiy 2000), hii://hlswI.
hls.cdu/aichivc/1299.himl.
M
any colc-including ihosc who ociaic small comanics-
do noi linI small lusincss wiih innovaiion. Ycs, ihcy aic cn-
iicicncuiial, lui ihis is noi ncccssaiily vicwcd as innovaiion, as ihcsc
colc icnd io ihinI innovaiion is |usi loi lig coioiaiions. Yci, scv-
cial ycais ago, whcn Iniuii lcgan sonsoiing icscaich ihai would looI
ai ihc luiuic ol small lusincss, onc ol ihc hisi ioics ihcy chosc io
looI ai was small lusincss innovaiion. Thcii icoii, Rcscaich Biicl:
Dchning Small Busincss Innovaiion," siaics ihai ihc inicnsiiy ol cco-
nomic and icchnological changc mcans lcw lusincsscs can succccd
wiihoui coniinually incoioiaiing ncw mcihods. Innovaiion, oncc o-
iional loi mosi small lusincsscs, is now mandaioiy."
1
13
CFEN lNNCV/IlCN
8 E NE F l I S
FCF SM/LL /ND L/FGE 8USl NESSES
CFEN lNNCV/IlCN
FCF SM/LL /ND L/FGE 8USl NESSES
"
CFEN lNNCV/IlCN
Cpen lnncvcIicn 8enefI:
14
15
Thc icoii gocs on io noic, howcvci, ihai many small lusincsscs
donì call whai ihcyìc doing innovaiion. Insicad, ihcy usc woids liIc
iwcaI," ad|usi," imiovc," and changc" io dcsciilc how ihcy aic
coniinuously imioving ihcii ioduci oi scivicc in icsonsc io maiIci
dcmands.
2
Thcy ihinI ol ii moic in ihc vcin ol noimal ociaiions ihan
as lcing innovaiivc. And ol couisc, ihcy aic unliIcly io havc an R8D
dcaiimcni oi somconc who is in chaigc ol innovaiion.
Yci, as ihc Iniuii icoii noics, |usi lccausc small lusincss owncis
and managcis donì scc ihcmsclvcs as innovaiois docsnì mcan ihcy
aic noi innovaiing. In laci, small lusincsscs usc ihc maiIci as ihcii
innovaiion lal as ihcy consianily icsond io ihc nccds ol ihcii cusiom-
cis. As small oiganizaiions, ihcy gcncially havc vciy closc iclaiions
wiih cusiomcis, cnalling ihcm io Icc a closc waich on changing cus-
iomci nccds.
Iniuii uncovcicd ihicc main diivcis ol innovaiion in small lusincss
S
:
- Necessity: No small business can stay alive without constantG
ly changing to meet the shiIts in their marketplace. Look
back at your product or service or how you operated ve
years ago or ten years ago and compare that to what you
are doing today. You will see that a world oI change has ocG
curred in many aspects oI your business. So while you may
not call what you do innovation, it is still innovation.
- ';;:C6I<?6=M +8599 LI7?<@77@7 E<:F 4:F 6: 76C?E@ F4?9@ 64@
iron is hot when it comes to taking advantage oI a new opG
portunity. With relatively at organizations, decision making
is Iast and opportunities are quickly seized upon.
- Ingenuity: Many small businesses are started by people who
are Irustrated by not being able to nd a product or service
to meet a need they have. The ingenuity that enables them
to ll that need means they have the creativity to support
innovation. In addition, while many people can spot a need,
it takes a lot oI drive and passion to devote yourselI to comG
ing up with a new solution to meet that need. This drive and
passion are key elements required to be successIul at the
long, hard slog that innovation oIten entails.
Onc moic imoiiani idca liom ihc Iniuii icoii is ihcii conclusion
ihai innovaiion is lcss iisIy loi small lusincsscs ihan laigc coioia-
iions. Bccausc ol ihcii smallci scalc, small lusincsscs can cxciimcni
wiih and imlcmcni ncw aioachcs lasici, casici, and chcaci ihan
laigc coioiaiions. And unhindcicd ly dccision-maIing luicauciacy
and icmoic dccision maIcis, small lusincsscs can movc much moic
quicIly on innovaiion ooiiuniiics."
4
Open Innovation and Large Companies
Il small lusincsscs aic naiuial innovaiois, whcic docs ocn inno-
vaiion hi inio ihc iciuic loi ihcm. Alihough ocn innovaiion was
discusscd going lacI as lai as ihc 1960s, ii was noi uniil ihc asi dc-
cadc ihai ii ically camc alivc in laigc coioiaiions aiound ihc woild.
Icading ihc way was Piocici 8 Gamllc {P8G), ihc woild`s laigcsi con-
sumci-acIagcd goods comany. In 2000, iis ncw CEO, A.G. Iaucy,
cxicsscd ihc iadical idca ihai hall ol ihc comany`s innovaiion oui-
ui should includc a Icy cxicinal coniiiluiion. This lcd io ihc ado-
iion ol an innovaiion modcl P8G calls Conncci + Dcvclo via which
P8G acccsscs cxicinally dcvclocd inicllcciual iociiy in iis own
maiIcis whilc allowing iis inicinally dcvclocd asscis and Inow-how io
lc uscd ly oihcis. Ii collaloiaics wiih individuals, comanics, laloiaio-
iics, icscaich insiiiuics, hnancial insiiiuiions, sulicis, acadcmics, and
R8D nciwoiIs.
P8G has had iicmcndous succcss wiih iis ocn innovaiion clloiis,
succcss ihai has cncouiagcd cvci-giowing numlcis ol coioiaiions
io lollow iis lcad ovci ihc asi icn ycais in scaich ol ihc lcnchis ihai
1
17
acciuc liom ocn innovaiion. Chicl among ihcsc lcnchis--which a-
ly no maiici how laigc oi small an oiganizaiion is--aic:
- Faster development and market launch oI new products
and services, which will build revenues, market share, and
prots;
- More diversity brought to innovation, which will result in
uncovering more opportunities;
- Improved success rate oI new products and services by makG
ing the innovation process stronger; and
- Diversied risks and the sharing oI both market and technoG
logical uncertainties oI innovation.
N
Olviously, ihcsc aic imoiiani advaniagcs loi oiganizaiions ol any
sizc, csccially in ioday`s hyci-comciiiivc glolal maiIcilacc. Bui
ihcsc aic only ihc lcginning ol ihc icasons comanics loih laigc and
small aic cmliacing ocn innovaiion.
In a wclinai conducicd in advancc ol Co-Dcv 2011, an annual con-
lcicncc on co-dcvclomcni and ocn innovaiion, Blainc Childicss,
a icscaich scicniisi ai Scalcd Aii Coioiaiion, dclincaicd a num-
lci ol oihci imoiiani icasons Scalcd Aii, which is a laigc coio-
iaiion, siaiicd uisuing ocn innovaiion scvcial ycais ago. Thcsc
icasons aly cqually wcll-oi cihas cvcn moic so-io smallci
comanics:
- You can't know everything; the world oI science is Iar too
big Ior any organization to employ experts in every eld.
- Science and technology advance too rapidly Ior any one
company to cover all advances in any single eld.
- Innovation is essential Ior market survival.
- Talent is a global resource.
- Organizations must ll skill gaps by nding external partG
ners (enlarging networks).
Ici`s looI moic closcly ai ihcsc icasons. Iiisi, P8G lcaincd ihai loi
cvciy onc iis 7,00 scicniisis and icscaichcis, ihcic wcic 200 oihcis
ouisidc ihcii oiganizaiion who wcic |usi as good oi lciici, mcaning
ihcic aic cihas 1. million ialcnicd colc ouisidc ol P8G who
could lc ol valuc io ihc comany`s innovaiion clloii. How many cx-
ciis do you suosc aic oui ihcic in ihc woild who havc Inowlcdgc
and idcas ihai mighi lcnchi youi small comany.
To Childicss`s idca ihai scicncc and icchnology aic advancing ioo
iaidly loi a comany io Icc aacc, I would add ihai lusincss and
consumci iicnds aic also cvolving ai a lai moic iaid acc ihan cvci
lcloic. This maIcs ii dilhculi loi cvcn laigc comanics io siay on io
ol ihings, ncvci mind ihc challcngc ihai ihis icscnis loi smallci com-
anics wiihoui acccss io cxcnsivc icscaich ihai lig comanics usc io
iiacI shilis in ihc maiIcilacc.
Ovci ihc asi lcw dccadcs, ii has lccomc a givcn ihai innovaiion
is ncccssaiy loi suivival. And ly ihis I mcan ical innovaiion, noi |usi
slaing a ncw namc and acIaging on somcihing old. Thc cicaiion
ol ncw valuc is whai scaiaics ihc comanics ihai ihiivc liom ihc oncs
ihai languish in ihc doldiums oi cvcn lail aliogcihci.
Thc lanIiuicy ol Boidcis BooIs is an cxccllcni cxamlc ol whai
hacns whcn you lail io innovaic in a maiIcilacc ihai is undcigo-
ing ma|oi changcs. Ovci ihc asi dccadc, ihis looIscllci laggcd lai
lchind iis comciiiois in Iccing acc wiih ihc changcs ihai aic
iiansloiming ihc indusiiy. Iiisi, ii ouisouiccd iis onlinc icscncc io
Amazon.com loi a numlci ol ycais insicad ol dcvcloing a siiaicgy
ihai would cnallc iis own liand io ihiivc onlinc. Wiih looIs lcing
ihc mosi oulai onlinc uichasc, noi having a viallc onlinc liand
icscncc huii Boidcis dcaily. To maIc maiicis woisc, ihc comany
was cxiicmcly slow io cmliacc ihc c-looI hcnomcnon. Evciyonc has
18
1
hcaid ol Amazon`s Kindlc and Baincs 8 Nollc`s NooI, lui how many
colc Inow ihc namc ol Boidcis` c-icadci. {Ii`s ihc Kolo.)
As Boidcis lcaincd ihc haid way, innovaiion is imciaiivc in ioday`s
maiIcilacc. This is iiuc whcihci youìc in ihc lusincss-io-lusincss
maiIci oi sciving ihc nccds ol consumcis. So ihc qucsiion is noi
whcihci you havc io innovaic, ii`s how you aic going io maIc ihai
innovaiion hacn. And loi incicasing numlcis ol comanics ol all
sizcs, ihc answci io ihai qucsiion is ihiough ocn innovaiion.
As Blain Childicss oinis oui, lcw comanics can alloid io hiic all
ihc nccdcd cxciiisc inicinally. This, ol couisc, is csccially iiuc loi
small comanics. Yci as hc also noics, comanics ol all sizcs now havc
acccss io ialcni liom aiound ihc woild, noi |usi whai`s in ihcii own
ncighloihood. And small comanics can iaIc advaniagc ol ihis ic-
souicc ihiough innovaiion inicimcdiaiics, as dcsciilcd in Chaici 9.
Bccausc ol ihc high lcvcl ol iisI-iaIing involvcd wiih young vcn-
iuics, lcadcis ol cniicicncuiial cniciiiscs olicn havc hcalihy oi
cvcn ouisizcd cgos, ii iaIcs a cciiain amouni ol huliis io lclicvc you
can dclcai ihc high odds againsi ihc succcss ol a ncw vcniuic. This can
lcad you io ignoic ihc icaliiy ihai A. G. Iaucy ai P8G Incw and whai
Blain Childicss ialIcd aloui: ihai you and youi colc may, in laci,
'), havc ihc lcsi idcas and soluiions. In icaliiy, ihcic is a siiong os-
sililiiy ihai ihc lcsi colc and ihc lcsi idcas aic io lc lound ouisidc
youi oiganizaiion. Iailuic io iccognizc ihis can hold a comany lacI
liom icalizing iis lull oicniial.
And ihc iollcm can only lccomc woisc as an cniicicncuiial com-
any movcs lcyond ihc caily hascs, whcn all aciiviiics aic gcaicd io-
waid cxccuiing on a singlc, gicai ioduci, idca, oi icchnology. As ihc
comany giows, locus icnds io shili iowaid coniiol iaihci ihan Icc-
ing ihc visionaiy ihinIing and lold aioachcs ihai luili ihc com-
any. Thcsc musi lc ic-igniicd. Ocn innovaiion can lc ihc vchiclc
loi accomlishing ihis ol|cciivc.
Ol couisc, ocn innovaiion ollcis challcngcs as wcll, csccially loi
colc who aic accusiomcd io woiIing in a closcd innovaiion cnvi-
ionmcni. Thcsc ihicc lundamcnial qucsiions musi lc answcicd ly
lusincsscs ol all sizcs lcloic cmlaiIing on a |ouincy iowaid ocn
innovaiion:
- 1456 F?99 :;@< ?<<:A56?:< D: 6: =:IC LI7?<@77 8:D@9> ,< 5<
open innovation world, you may end up working with anyG
one-even competitors. How will this impact your business
model and alter your competitive landscaper
- How will your organization change to accommodate open
innovationr What kind oI collaborations do you want to enG
gage inr What common vision and mission will you share
with partnersr Systems, processes, values, and culture across
the company will need to be transIormed. People who have
spent their careers being internally Iocused must now Iocus
externally as well. Change is resisted in many organizations,
no matter their size.
- Do you and your organization really understand open inG
novation and what it takesr Silos can exist even in small
businesses, meaning that even a small company may have
problems with innovating internally, let alone doing so with
outside partners. Leaders need to understand the impact oI
64?7 8:A@8@<6O?67 :;;:C6I<?6?@7 5<D 64C@567O5<D 9@5C< 6:
5D:;6 5 76=9@ 6456 :;6?8?H@7 6CI76P 8:6?A56?:<P 5<D ;@CB:CG
mance. And they need to help their entire team understand
the whys and whereIores oI open innovation. This may be
simpler in a small organization since it probably won't entail
educating hundreds oI individuals.
20
21
Interview #1: LG Experiences With Small Companies
Chiis Ryu, Ocn Innovaiion Managci ai IG shaics in-
sighis and cxciicnccs on how IG innovaic wiih small
comanics. You can hnd moic inloimaiion on IGs ocn
innovaiion clloiis on ihcii Collaloiaic and Innovaic oiial.
How well inIormed do you nd small companies to be
5L:I6 :;@< ?<<:A56?:<>
-=IM Iiom my cxciicnccs, ihcyìc noi inloimcd wiih ihc
icim, ocn innovaiion", lui I hnd ihai ihcy undcisiand
and aicciaic lig comanics` ocn innovaiion iniiiaiivcs.
And loi ihcm, dcvcloing inicinally is noi an oiion, so
ihcy musi hnd iighi aiincis io woiI wiih io launch ihcii
ioducis oi soluiions.
What have been your key learnings in working with small
companies on open innovation projectsr
-=IM A Icy lcaining is ihai unlcss a laigc ma|oiiiy ol
cmloyccs ai youi comany undcisiand and iaciicc iiuc
ocn innovaiion, you nccd io havc dcdicaicd icams io diivc
ocn innovaiion aciiviiics, and cooidinaic collaloiaiions
lciwccn you and small comanics.
Small comanics donì havc ihc icsouiccs io hnd ihc
iighi coniaci in lig comanics and as a icsuli ihcy olicn cnd
u coniinuing io ncgoiiaic wiih colc who havc a closcd
innovaiion mindsci.
What advice would you give small companies that want
to innovate with big companiesr
-=IM Thc mosi imoiiani ihing is io hnd ihc iighi con-
iaci. You havc io hnd ihc iighi colc on loih ihc woiI-
ing- and managcmcni-lcvcl. Pcolc ai lig comanics icnd
io gci lusy wiih oihci siull, so you nccd io maIc suic io
Icc coniaciing and udaiing ihcm aloui youi cuiicni sia-
ius and issucs.
Ii iaIcs a loi ol icsouiccs, lui whcn you iiy io solvc issucs,
ii is always lciici io mcci in cison. Olicn, cxchanging
cmails scnd ihc wiong mcssagcs io colc. This is csccially
iiuc loi non-naiivc English scaIcis.
Ii mighi also lc a good idca io usc local agcncy ihai un-
dcisiands culiuic and languagc il youìc iniioducing youi
icchnologics io ovciscas comanics. Olicn, colc liom
small comanics who dcal wiih lig comanics aic noi
good ai managing iclaiionshi lciwccn comanics. Thcsc
cooidinaiois nccd io cxccl ai luilding iclaiionshis, Icc-
ing consiani communicaiions, ncgoiiaiing, culiuic, lan-
guagc, cic.
How can big companies improve their ways oI innovatG
ing together with small companiesr
-=IM Thc only way io imiovc is io havc a siiong commii-
mcni liom ihc io managcmcnis and a siiong ocn innova-
iion icam ihai diivcs ihc coioiaic culiuic.
22
23
What are the benets oI innovating with small
companiesr
-=IM Big comanics cannoi dcvclo cvciyihing ly ihcm-
sclvcs. Also lig comanics canì sccializc in many aicas.
Are you capable oI detecting early signs oI danger or
promise when you engage with small companiesr II so,
F456 5C@ 64@=>
-=IM I icnd io lc caiclul whcn ihcy aic vciy siulloin
and ihus haid io woiI wiih. I also ay aiicniion whcn ihcy
havc vciy ooi icscniaiion sIills and whcn I cannoi scc ihc
clcai valuc in ihcii icchnologics oi sciviccs.
What are the key elements needed to create win-win
7?6I56?:<7>
-=IM You nccd vciy clcai and licqucni communicaiion.
This is cxiicmcly imoiiani and a lacc-io-lacc mcciing
always hcls. Ii is a good idca io havc a mcdiaioi who can
cooidinaic collaloiaiion lciwccn lig comanics` lals and
small comanics. Wc nccd io icmcmlci ihai ncgoiiaiion is
noi aloui wc win and you losc," lui aloui coming u wiih
cicaiivc ihinIing io solvc conuicis.
Small companies oIten have limited legal resources.
What can they do to get better deals and protect their intelG
lectual propertyr
-=IM Thcy should sign an NDA il conhdcniial inloima-
iion is io lc discusscd and ihcy should always ihoioughly
icad ihc agiccmcnis cvcn il ihcy aic undci icssuic liom
lig comanics io icvicw lasici.
Interview #2: Arcimoto and Open Innovation: Don't
-@?<A@<6 64@ 14@@9
Thc mission ol Aicimoio is io dcvclo uliia-clhcicni
moliliiy soluiions-vchiclcs, clcciionics, and soliwaic-io
caialyzc ihc shili io a susiainallc iiansoiiaiion sysicm.
Aicimoio`s hisi ioduci, Pulsc IT, is an uliia-clhcicni clcc-
iiic commuici vchiclc ihai siiiIcs a lalancc lciwccn uiiliiy,
cconomy, and uic clcciiic lun. Aicimoio is woiIing on ihc
cuiiing cdgc in many ways and I wondcicd whai ocn inno-
vaiion mcans io a comany liIc ihis, so I inicivicwcd sciial
cniicicncui MaiI Iiohnmayci, who is Aicimoio`s loundci
and icsidcni.
MaiI siaiicd oui ly siaiing ihai, as a vchiclc dcvcloci,
Aicimoio woiIs wiih a laigc collcciion ol sulicis, laigc
and small, io dcvclo oui ioducis. Sincc oui iimaiy iolc
is dcsign and inicgiaiion, an ocn, collaloiaiivc aioach
is a lundamcnial icquiicmcni ai lcasi io a dcgicc. As wc
lan ihc iolloui ol oui lailoim siiaicgy, wcìc also looIing
io availallc souicc` soliwaic modcls as wcll io coniinuc io
ush ihc loundaiics ol ocnncss."
What does open innovation mean to Arcimotor
(C:4<85=@CM I had io looI u ihc icim on WiIicdia loi
ihc common dchniiion. To mc, ocn innovaiion mcans
locuscd inici-oiganizaiional collaloiaiion and io somc
dcgicc ihc willingncss io cngagc ihc masscs {ciowdsouic-
ing, cic.) io aiiiciaic in ihc innovaiion ioccss.
24
25
1456 E?<D :B ;@:;9@ F:CE F?64 :;@< ?<<:A56?:< 56
Arcimotor Do they have specic traits, skills, or mindsetsr
(C:4<85=@CM Thc cngincciing icam is ihc iimaiy giou
wiihin Aicimoio cuiicnily innovaiing wiih ouisidc aii-
ncis. Communicaiion aliliiics aic Icy, as wcll as a willing-
ncss io looI ouisidc ol ihc oiganizaiion loi a soluiion.
What actions has Arcimoto taken to get better deals and
protect your intellectual propertyr
(C:4<85=@CM IiIc you said, small comanics olicn havc
limiicd lcgal icsouiccs. Ioi us ihai has mcani having io ii-
oiiiizc which clcmcnis wc choosc io ioicci as inicllcciual
iociiy. Wc`vc hlcd loi iovisional aicni ioicciion loi
scvcial clcmcnis ol ihc vchiclc aichiicciuic, and will lc ai-
cniing ihc indusiiial dcsign ol ihc ioduci as wcll. Alihough
I scc aicnis as usclul holdings, oui main locus is luilding
ihc liand ol ihc comany and ihc ioducis ii icicscnis.
Can you share how Arcimoto benets Irom innovating
F?64 :64@C7>
(C:4<85=@CM Wc donì havc io icinvcni ihc whccl.
Iiicially. Thcic aic a loi ol good whccls oui ihcic, and
liaIc lincs, and moiois and laiiciics and coniiollcis, and
so on. Paiinciing wiih oihci oiganizaiions lcis us lcvciagc
ihc advanccs oihcis maIc inio imiovcmcnis in oui own
ioduci ollciings. Wc can locus on whcic wc aciually add
valuc.
A smaller company like Arcimoto is oIten Iaster and
more agile compared to big companies. Which benets or
opportunities can Arcimoto bring to bigger companies in
5 ;:6@<6?59 ;5C6<@C74?;>
(C:4<85=@CM Dccnds on ihc comany. Maiciials suli-
cis can icsi cuiiing-cdgc maiciials on small ioduciion iuns
wiih much gicaici iimc clhcicncy ihan an auiomoiivc linc
ihai has io scalc quicIly io hundicds ol ihousands ol uniis.
Iiom a uichasing anglc, Aicimoio`s ioducis aic iuncd io
ihc nccds ol mosi commuiing diivcis, so laigc comanics
can casily inicgiaic Aicimoio ioducis inio vchiclc uccis and
mcci cvci-incicasing clhcicncy goals.
What concerns should small companies have about open
?<<:A56?:<>
(C:4<85=@CM Bcing clcai aloui whcic ihcy aic ically add-
ing valuc, and maIing suic such valuc is iocily icwaidcd
and ioiccicd.
2
27
1 Rcscaich Biicl: Dchning Small Busincss Innovaiion," (',0-, D0,0:#
)@ ;?+// C03-'#33 .#&):, {Maich 2009): 1, hii://hii download.iniuii.
com/hii.iniuii/CMO/iniuii/luiuicolsmalllusincss/
iniuii_losl_icoii_maich_2009.dl.
2 Ilid., 2.
S Ilid., S.
4 Ilid., .
M. M. Kcu and O. Gassmann, Dciciminanis and Aichciyc
Uscis ol Ocn Innovaiion," .EF G+'+<# S9 {2009): SS1-41.
K@= )45;6@C !5E@5F5=7
- ]ust because small companies don't see themselves as innoG
vators doesn't mean they are not innovators. In Iact, they
use the market as their innovation lab as they constantly
respond to the needs oI their customers.
- According to Intuit, necessity, opportunity, and ingenuity
drive innovation in small businesses.
- Open innovation can speed the development and market
launch oI new products and services, bring more diversity
to innovation, improve the success rate oI new products and
services, and diversiIy risks and share both market and techG
nological uncertainties oI innovation.
- ';@< ?<<:A56?:< 5DDC@77@7 64@ ?77I@7 ;:7@D L= C5;?D9=
advancing science and technology and opens up your comG
pany to talent Irom around the world, enabling you to ll
gaps in expertise.
- The pursuit oI newness through real innovation is what sepG
arates the companies that thrive Irom the ones that languish
in the doldrums or even Iail altogether.
- There is a strong possibility that the best people and the
best ideas are to be Iound outside your organization. Failure
to recognize this can hold a company back Irom realizing its
Iull potential.
- BeIore embarking on a journey toward open innovation,
=:I 8I76 @Q;9:C@ F456 :;@< ?<<:A56?:< F?99 D: 6: =:IC LI7?G
ness model, understand how your organization will change
to accommodate open innovation, and determine whether
you and your organization really understand open innovaG
tion and what it takes.
2
IHE lNNCV/IlCN
E CCS YS I E M
WHE N 8 l G CCMF/Nl E S ME E I
S M/L L CCMF/Nl E S l N CFE N
l NNCV/I l CN E F F CF I S
#
O
cn innovaiion has lccn a hoi ioic among laigci comanics
loi a whilc now. This is iiuc cvcn in moic conscivaiivc indus-
iiics ihai havc highci laiiicis io adoiing ocn innovaiion, which
includc indusiiics chaiaciciizcd ly high caiial invcsimcnis, long
ioduci dcvclomcni cyclcs, and siiongci locus on inicllcciual io-
ciiy iighis {IPR) issucs. Imaginc a coniinuum wiih iwo oosiic cnds.
Ai onc cnd, wc havc lasi-moving consumci goods comanics, many
ol whom havc lccn caily adaicis ol ocn innovaiion. Ai ihc oihci
cnd, wc havc haimaccuiical oi scmiconduciois comanics, among
oihcis, which musi dcal wiih ihc highci laiiicis mcniioncd alovc. Yci
Ihe lnncvcIicn Ecc:y:Iem
30
31
their established core business operations, so the price oI
Iailure Ior the small, agile start-up is signicantly less than
that oI a large corporation. At this level, people tend to
embrace risk, while the larger companies may have cultures
that don't support risk taking at all.
- Smaller companies are oIten closer to the markets they
serve than large corporations are to their markets. As a
result, small companies can be eIIective in helping large
companies obtain a better grasp oI changing needs within a
market and better insights into innovations that might meet
those needs. Smaller companies may also have developed
ties with submarkets that corporations have not been able to
reach. This again oIIers more opportunities Ior innovation.
- Smaller companies are oIten more agile than large corpoG
rations. The approach and mindset oI those operating in
small businesses can provide a breath oI Iresh air to large
corporations that are set in their ways, bound by tradition
and aIraid oI change. Innovation requires agility, something
many large corporations lack and many small companies
have in abundance.
Challenges Abound
Whilc woiIing wiih small comanics has siiong lcnchis, ii is noi
wiihoui iis challcngcs loi laigc oiganizaiions. Ocn innovaiion is a
aiadigm shili in which comanics musi lccomc much lciici ai com-
lining inicinal and cxicinal icsouiccs in ihcii innovaiion ioccss
and aciing on ihc ooiiuniiics ihis cicaics.
Il you wani io liing cxicinal aiincis inio youi innovaiion ioccss,
ihcsc aiincis cxcci you io havc youi own housc in oidci. Il you lail
io woiI clhcicnily wiih ihcsc aiincis, noihing hacns in icims ol
cvcn innovaiion diicciois in comanics in such indusiiics aic iiying
io hguic oui how ihcy can cmliacc ocn innovaiion. And cciiainly
laigc coioiaiions in indusiiics wiihoui such consiiainis aic cxloi-
ing ocn innovaiion oi havc alicady adoicd ii as a aii ol ihcii in-
novaiion locus.
As moic and moic lig comanics cmliacc ocn innovaiion, o-
oiiuniiics aic cicaicd loi small comanics io lccomc aii ol ihcsc
coioiaiions` ocn innovaiion ccosysicms, a concci I dchncd lacI
in Chaici 1. Righi now, ihcic is a loi ol ialI aloui lccoming ihc ic-
lciicd aiinci ol choicc wiihin innovaiion ccosysicms and ihus gial-
ling innovaiion lcadcishi osiiions. Many aic siill in lay, lui ihcy
aic lcing locIcd down lasi. Coioiaiions nccd io undcisiand ihis.
Coioiaiions ihai aic iaIing ihc lcad in ocn innovaiion aic ho-
ing io gain an advaniagc ovci ihcii comciiiois as ihcy will gci acccss
io a moic divcisc inuow ol ooiiuniiics, which can lcad io lasici and
lciici innovaiion. Sccihcally, as ihcy looI io liing smallci coma-
nics wiihin ihc oilii ol ihcii ocn innovaiion iogiams, coioiaiions
undcisiand ihai small comanics liing ihcsc advaniagcs io ihc iallc:
- Small companies are oIten at the leading edge oI breakG
through or disruptive innovation. Breakthrough innovaG
tion-that is, innovation with potential to be a real game
changer-can be exceedingly hard to achieve in a large,
bureaucratic organization where people work in silos, have
their own turI to protect, and are wedded to the status quo.
In contrast, entrepreneurial companies are oIten Iounded
based on a breakthrough idea that the Iounders are pasG
sionate about and deeply committed to. They may lack the
resources to bring this breakthrough to market, however,
so they need the resources the larger company can provide.
- Small companies can take risks that large companies can't
aIIord to take. Bigger entities have to protect and deIend
32
33
)I96IC@ 5<D 0?<D7@6
Anyonc who has woiIcd loi loih a laigc coioiaiion and a small,
cniicicncuiial comany can ialI cndlcssly aloui ihc dillcicnccs in
ihc iwo culiuics and mindscis. In icsonsc io a llog osi I`d wiiiicn
aloui why small comanics should cmliacc ocn innovaiion, Russ
Consci liom Shcll`s GamcChangci iogiam had somc inicicsiing
commcnis aloui ihc culiuial dillcicnccs. Hcic`s whai hc said:
Siclan, as is olicn ihc casc, youìc on ihc iighi iiacI-
SMEs nccd lig comanics as much as lig comanics nccd
SMEs. Thc iioullc is ihai ii`s a classic cxamlc ol onc lcing
liom Vcnus and ihc oihci liom Mais. Picciscly lccausc
ihcyìc dillcicni and ihcy nccd cach oihci, ihcy olicn comc
inio conuici caily in a iclaiionshi. Us lig-comany guys
siill havc lcniy io lcain aloui how io woiI wiih SMEs wiih-
oui Iilling ihc vciy ihings ihai maIc ihcm valuallc {c.g.
cicaiiviiy, ucxililiiy). Mcanwhilc, SMEs also nccd io lcain
io havc icalisiic cxcciaiions ol whai ihcy havc and whai
ihcy siill nccd il ihcy wani io maIc ihcii idcas ical-much
ol which can olicn lc lound in ihc hands ol ihc coioiaic
iycs {c.g. hnancial icsouiccs, comlcmcniaiy sIills, oi
iaciical conicxi).
My cxciicncc is ihai mosi olicn ihcic`s moic ihan
cnough valuc ai ihc iniciscciion loi loih io lc hay wiih
ihc gains ol a iclaiionshi, as long as ihcy donì Iill cach
oihci in ihc ioccss ol cicaiing ii.
Hcic`s anoihci commcni woiih noiing on culiuic liom an anony-
mous osici in icsonsc io onc ol my llog osis: Smallci hims icnd
io lc youngci and moic cniicicncuiial. Thc can do` siiii ol in-
novaiion is olicn alivc and wcll and a Icy aii ol ihcii DNA {ihinI
ouicomc. Evcn woisc, ihc woid sicads ihai you aic noi a good inno-
vaiion aiinci and ihus you will havc a haidci iimc aiiiaciing luiuic
aiincis.
Somc laigc comanics lclicvc ihai il ihcy |usi cmliacc ocn innova-
iion, ihcn all ihcii inicinal innovaiion issucs will lc solvcd. This will
noi hacn. Ocn innovaiion is noi a holy giail. Ocn innovaiion
is vciy much aloui managing changc. Il a comany can handlc ihc
changc ioccss iclaicd io imlcmcniing ocn innovaiion, ihcn ihcy
will havc lcaincd valuallc lcssons ihai can lc uscd in changc managc-
mcni siiuaiions. In ihc cuiicni and luiuic lusincss climaic, I ihinI
cvciyonc should aicciaic woiIing in an oiganizaiion ihai is agilc
and icaicd loi changcs.
Olicn, ihc liggcsi cncmy ol innovaiion is ihc comany iiscll as ii
lcgins io locus moic on iis own nccds iaihci ihan ihc nccds ol ihc
maiIci. Whcn you lcgin io innovaic wiih aiincis, you will scc ihai
ihcsc aiincis ciihci locus on ihcii own nccds-and ihcn innovaiion
will dchniicly lail-oi you will scc ihai ihcy comc iogcihci and lunncl
ihcii icsouiccs iowaid a maiIci nccd. Il ihc laiici hacns, ihcn you
havc a gicai chancc io succccd wiih innovaiion. Picssuic liom cxici-
nal aiincis can shili awaicncss liom inicinal nccds io maiIci nccds
and ihis movc can lc hcllul lcyond ihc innovaiion ioccss.
Ocn innovaiion can liing along ncw oiganizaiional siiuciuics.
As ocn innovaiion lccomcs ihc way io innovaic, ihc lunciional/divi-
sional oi maiiix oiganizaiional siiuciuics as wc Inow ihcm ioday will
changc-oi cihas cvcn licaI down. This can lc cxiicmcly scaiy loi
ihc lovcis ol ihc siaius quo wiihin a coioiaiion. Rcsisiancc may lc
sicc wiihin such oiganizaiions unlcss lcadcishi lays a siiong iolc
in lcading such changc.
Thc incicascd numlci ol colc involvcd in ocn innovaiion io-
vidcs ncw ways loi colc io conncci and ihcicloic ncw ways io lc
cicaiivc. This can also incicasc ihc lcvcl ol comlcxiiy.
34
35
- "66?6ID@ 6:F5CD C?7EM How large and small companies Ieel
about risk-taking can vary considerably. Particularly where
the smaller company is a start-up or still in a Iast-growth
stage, the organization at all levels may wholly embrace risk
because, at this point, the whole business is a risk. However,
in a large corporation that has been around Ior decades,
people may be Iar more vested in keeping things as they've
always been than they are in trying something new and potenG
tially risky. Here again, this diIIerence can lead to IrustraG
tion on both sides when two such organizations engage in an
open innovation partnership.
Hcic`s anoihci ascci ol ihis dillcicncc as dcsciilcd ly Bcngi
]aiichuli, diiccioi ol Innovaiion and Knowlcdgc Managcmcni ai SCA
Hygicnc Pioducis and SCA PacIaging, in a commcni io my llog osi
on ihis ioic: Thc liggcsi dillcicncc as I scc ii is ihc lalancc lciwccn
ihc dclcnsivc and ollcnsivc lchavioi. Thc liggci {and olicn ihc moic
maiuic) ihc comany is, ihc moic ihc comany has io losc, and as
losscs loom laigci ihan gains` {TvcisIy 8 Kahncman) ihc lchavioi ol
ihc laigci, maiuic comany gcis moic dclcnsivc and hcncc ihc icla-
iivc locus on moic oicniially licaIihiough innovaiions vcisus con-
iinuous imiovcmcnis dccicascs."
Olviously, il a laigc comany and iis smallci ocn innovaiion aii-
nci dillci in icims ol whai iyc ol innovaiion ihcy should sccI-licaI-
ihiough vcisus incicmcnial-ihis can causc ihcii aiincishi io lail.
This is why claiiiy ol uiosc liom ihc gci-go is so imoiiani.
Edwaid Thomson, an advisoi in ihc iclccommunicaiions indusiiy,
also wcighcd in on ihc ioic ol iisI:
Big comanics cciiainly can innovaic. Thcy havc ihc icquiicd
icsouiccs and dcc ialcni ools. Howcvci, lig comanics aic olicn
vciy iisI advcisc, so ii`s dilhculi io gci a aiiiculai lusincss unii oi
division io adoi an innovaiion ihai is noi cxacily in ihcii maiIci oi
Silicon Vallcy siaii-us vs. Ioiiunc 00s. As hims giow, ihis cicaiivc
cncigy gcis slowly squcczcd oui as ihc coioiaic locus iuins io quai-
icily ciloimancc {vs. a longci-icim vicw), siallc ociaiions {vs. dis-
iuiivc innovaiions), and ioduciiviiy imiovcmcnis {vs. invcsiing in
giowih)."
Stark DiIIerences
Thc dillcicnccs ihai can causc iollcms whcn lig and small com-
anics comc iogcihci loi ocn innovaiion can lc siaiI. Ici`s looI ai a
lcw ihai imaci ihc way ihc iwo iycs ol oiganizaiions aioach ocn
innovaiion:
- Speed oI decision-making: Large corporations, with their
abundance oI silos and bureaucratic levels, oIten require
considerable time to make decisions. Analysis paralysis is
not uncommon, with decisions that seem simple to an outG
sider taking ages to make. In contrast, in smaller organizaG
tions, decision making can be Iairly rapid.
Thus, whcn ihcsc iwo iycs ol oiganizaiions comc iogcihci in ocn
innovaiion, ihc smallci comany may hnd ihc sccd ol iogicss lius-
iiaiingly slow. Ai ihc samc iimc, ihc colc liom ihc laigc coioiaiion
may lc iioullcd ly ihc consiani lcas ol ihc smallci aiinci io movc
lasici. Boih sidcs may lc lcli lccling ihai ihc oihci sidc |usi docsnì
undcisiand ihcm.
Iniuii, a Caliloinia-lascd maIci ol hnancial soliwaic, is onc coi-
oiaiion ihai has woiIcd haid io ovcicomc ihis iollcm. Thcy un-
dcisiand ihai ihc icly iimc ihcy can ollci oicniial aiincis in ihcii
ccosysicms is ciiiical. As a icsuli ol ihis undcisianding, ihcy iiy io
iovidc a clcai go/no-go wiihin |usi loiiy-cighi houis whcn ihcy siagc
ihcii Eniicicncui Days. This can iaIc wccIs oi cvcn monihs loi
many oihci comanics.
3
37
allcciing ihc wholc comany can lc a haid, long-icim iasI,
as onc has io luild a common undcisianding and molilizc
aiound vciy dillcicni vicws ol ihc comany. Innovaiion is
moic liIcly io occui ai lusincss oi ioduci linc lcvcl, ihcn
ai a wholc ol comany lcvcl.
A sccond considciaiion is who managcs ihc lusincss
modcl. In lig coioiaiions, colc lccl icsonsillc loi only
ihcii oiiion, oi shcic, ol coniiol. This coniiol is mani-
lcsicd in lcing allc io inuucncc dccisions oi ludgcis, oi
lcing allc io dchnc mcaning wiihin ihc conicxi ol ihc lusi-
ncss. Thcic aic only a lcw colc who coniiol" ihc wholc
oiganizaiion, so innovaiion ol ihc comany has io lc man-
agcd and diivcn ly ihc scnioi cxccuiivcs. Thc moic dis-
iiiluicd" coniiol ovci ihc Icy aicas ol dccisions, ludgcis,
and mcaning, ihc moic dilhculi ii is io diivc innovaiion.
Boih ol Michacl`s oinis can lcad io liusiiaiion loi smallci coma-
nics whcn ihcy iiy io cngagc wiih laigci coioiaiions in ocn innova-
iion. Small comanics may scnsc a lacI ol assion among coioiaic
cmloyccs who donì undcisiand ihc wholc lusincss modcl, and ihc
layciing ol coniiol in coioiaiions will olicn lcad io slow dccision
maIing, as alicady mcniioncd.
- Processes or lack thereoI: Many small companies don't yet
have dened processes in place to drive innovation IorG
ward. This is one oI the areas where partnering with a larger
company can really benet them. Ironically, however, as
someone pointed out in a comment on my blog, while in
theory, this dimension should go to the big guys who tend
to take the time and eIIort to embed systematic processes,
this isn't always the advantage that it might rst at seem. He
continued, I'm a big believer that innovation can benet
icchnology swcci soi. Tiuc innovaiion olicn icquiics a comany io
cmliacc a ioially ncw maiIci sacc. Big comanics aic vciy icluciani
io iaIc any soii ol iisI associaicd wiih cniciing a ncw hcld."
- Allocation oI resources: In a small company, every penny
counts. Resources, which can be scarce, are allocated based
almost solely on whether they will boost the bottom line.
This bottom line Iocus may not be so distinct in a larger
corporation. With more abundant resources-at least in
comparison to smaller companies-people in corporations
may be relatively Iree spenders, although this is certainly
not always the case and hasn't been in recent years as the
recession has taken its toll. However, the small company
may expect its larger partner to Ioot every bill and may not
understand that even big companies have their limits. The
result oI such a relationship can be similar to problems that
5C?7@ F4@< 6F: ;@:;9@ F?64 A@C= D?BB@C@<6 566?6ID@7 6:F5CD
money and spending get married.
- Who understands the business model and who manages it:
Here's an astute comment Michael Lachapelle, a Canadian
expert on business design and business models, made in
response to a blog I wrote about the diIIerences between
large and small companies when it comes to innovation:
Onc ol ihc considciaiions in diiving innovaiion is who
undcisiands ihc lusincss modcl ol ihc comany. In a small
comany ii is much moic liIcly ihai cvciyonc in ihc comany
undcisiands how ihc comany woiIs and how ihc individ-
ual aiis will comlinc in ihc lusincss modcl io cicaic and
dclivci valuc io ihc cusiomci/clicni. Iaigci coioiaiions
icnd io lc much moic liaciuicd, and ihus ihc siall is lcss
liIcly io undcisiand ihc wholc. In ihis conicxi innovaiion
38
3
good cnough, oi whcihci you havc io ad|usi ihcsc oi cihas cvcn
dcvclo ncw ncxi iaciiccs loi youi oiganizaiion. An cxamlc: you gci
ncw ciscciivcs on collaloiaiion. Pcihas ihis can insiic io lciici
iniciaciion and collaloiaiion lciwccn lusincss uniis.
Thai`s said, laigc comanics havc always uscd ihcii sizc and owci
io gci ihings ihcii way. This is no dillcicni wiih ocn innovaiion. So I
am noi suiiiscd whcn I lisicn io colc liom smallci comanics com-
lain aloui ihc lchaviois ol laigc comanics whcn ihcy siaii woiIing
iogcihci.
Such lchaviois wcic conhimcd ly scvcial laigc comanics ai an
Ocn Innovaiion Summii I aiicndcd somc iimc ago. Thcic, cxccuiivcs
liom laigc coioiaiions ocnly shaicd sioiics on how ihcy had uscd
ihcii sizc and coioiaic owci io gci dcals ihai lavoicd ihcmsclvcs,
and ihcy cvcn admiiicd ihai somc dcals could lc so losidcd ihai ihcy
could discouiagc oihci smallci comanics liom woiIing wiih ihcm.
Only hall-|oIing, ihcy also said ihai ihcii vicw ol win-win siiuaiions
gocs liIc ihis: Wc win a loi. You win a liiilc." Oi, Win-win mcans ihai
wc gci io IicI ihc liiilc guy iwicc."
Ai lcasi somc laigci comanics aic awaic ol ihis siiuaiion. I ic-
dici ihai as moic laigc and small comanics innovaic iogcihci, laigci
comanics will icalizc ihcy can no longci alloid io iainish ihcii icu-
iaiion ly lchaving ladly in such aiincishis. Thcy`ll lcgin io un-
dcisiand how imoiiani ii is io lc ciccivcd as ihc iclciicd aiinci
wiihin ihcii indusiiy.
- DiIIering denitions oI innovation: In response to a blog
post I wrote about the diIIerences between large and
small companies, ]ackie Hutter, CEO and IP strategist at
Evgentech, a company with patent pending technology that
greatly improves battery charging speed, made the IollowG
ing insightIul comment based on her experience:
Irom process, tools, and governance and is not just a matG
ter oI divine inspiration-although that helps too! However,
in practice, not many big rms have GOOD radical/blue
ocean innovation processes. They tend to be good at increG
mental innovation (smaller-scale product improvements or
extensions) because (1) this is their bread and butter and so
they have dedicated resources Iocused on this, and (2) radiG
cal innovation is high risk and highly disruptive to a large
organization Irom a resource, capital, and management
Iocus perspective.
- Following rules versus breaking rules: Mark Palmer, a comG
munication advisor, added that big companies preoccupy
themselves with competitors, the market, and the rules.
Small companies are more inclined to make up new rules.
This relates to some oI the benets oI working with small
companies as mentioned earlier. OI course, rules should be
B:99:F@DP LI6 7:8@6?8@7 64@= D: <@@D 6: L@ L@<DO:C ;@CG
haps even be broken-to make real progress.
Thosc laigc hims ihai aic siill siiong innovaiois {Googlc, Alc,
P8G, SM, cic.) icnd io lc ihc cxcciions ihai havc coniinucd io losici
a gicai culiuic ol innovaiion whilc also cmlcdding siiong ioccsscs
ihai hcl nuiiuic licaIihiough idcas in ihc challcnging conhncs ol
laigc, luicauciaiic siiuciuics.
Ai an ocn innovaiion conlcicncc I aiicndcd, Cisco said ii is iiying
io movc liom a culiuic ol comciiiion io a culiuic ol shaicd goals,
a movc laigcly diivcn ly a dcsiic io innovaic wiih cxicinal aiincis.
Ocn innovaiion has ihc oicniial io changc much-ouidaicd coio-
iaic ihinIing lcyond ihc noi-invcnicd-hcic" culiuic.
As you woiI wiih cxicinal aiincis, you aic cxoscd io oihci ways
ol gciiing ihings donc. You liing divcisc ihinIing inio ihc oiganiza-
iion. This can maIc you considci whcihci youi cuiicni iaciiccs aic
40
41
,<7;?C56?:< BC:8 5< ';@< ,<<:A56?:< $@5D@C
You can also hnd somc insiiaiion liom an Ociolci 27,
2010, llog osi liom P8G ihai announccs ncw goals loi
ihcii ocn innovaiion iogiam. Ii shows how commiiicd
ihc ocn innovaiion ioncci has lccomc iowaid ihc idca ol
lccoming ihc iclciicd aiinci ol choicc. I hoc ihis P8G
aioach can insiic oihci comanics io iaIc ihc iclciicd
aiinci ol choicc idca sciiously.
P&G: New Goals Ior C+D to Accelerate Our Innovation
P8G has sci iwo ncw goals loi oui ocn innovaiion io-
giam wiih ihc aim ol iaIing Conncci + Dcvclo io ihc ncxi
lcvcl ol siiaicgic valuc cicaiion. In shoii, wc aic looIing io
diivc gicaici valuc liom oui cxicinal aiincishis. This
will diivc a shaici culiuic changc loi us. And, wc ihinI,
cicaic cvcn gicaici ooiiuniiy loi oui aiincis. Thc goals
call loi
- C+D to triple its contribution to P&G's innovation developG
ment by delivering $3 billion toward the Company's annual
sales growth.
- P&G to become the Partner oI Choice Ior innovation colG
laboration by consistently delivering win-win relationships.
Ioi oicniial aiincis, ihai mcans wc will aggicssivcly
sccI gamc-changing idcas io luild ihc lusincss ihai will
dclivci gicaici valuc and scalc ooiiuniiy io iouch moic
consumcis.
Inicinally, ihai mcans wc aic going io locus cvcn moic
shaily on cnsuiing ihai wc includc C+D in oui laigcsi ini-
iiaiivcs, liinging ihc lcsi minds io woiI againsi ihc liggcsi
Onc ihing I havc noiiccd wiih my own comany is ihai
ihcic can lc a ical disconncci lciwccn ihc mcaning ol
innovaiion" lciwccn small and laigc comanics. Somc-
cihas mosi-laigc comanics vicw innovaiion as a suci"
ioduci dcvclomcni icam. Thcsc aic ihc lolIs who looI
loi licaIihioughs, lui ihcsc so-callcd licaIihioughs" aic
cxccicd io sloi inio an cxisiing ioduci oi io|cci ai ihc
comany. In coniiasi, ai a siaii-u ihc innovaiion" is ihcii
wholc lusincss, and dcvclocd wholly indccndcnily ol ihc
ioducis and iimclincs ol ihc laigc comany.
Wc havc alicady sccn ihis whcn a Ioiiunc 00 comany
sclccicd us ihiough an ocn innovaiion oiial. Thc com-
any was suoscdly looIing loi innovaiions liIc oui icch-
nology, lui ihcy cllcciivcly wanicd ii io hi inio ihcii cxisiing
inliasiiuciuic wiihoui much modihcaiion. Thcy didnì
scc ihai oui icchnology could changc ihc gamc loi ihcm
lccausc ihcy wcic laying a dillcicni gamc ihan us. Bui
cvcn il ihcy had sccn ihai wc wcic dillcicni, ihcy wouldnì
havc caicd lccausc ihcy liIcd ihc gamc ihcy wcic laying.
Ioiiunaicly, wc wcic allc io scc ihai ihis comany was
noi going io lc a good aiinci, and wc didnì luin much
iimc on ihcm and movcd on quicIly. {Thcy sccmcd a lii
suiiiscd whcn wc cllcciivcly iold ihcm, wcìc noi ihai inio
you.") Wc lcaincd much liom ihis cxciicncc, and havc
modihcd oui oicniial aiinci iniaIc io sccily siiong
innovaiion mindsci" lccausc wc iccognizc ihai unlcss a
comany is alicady wiicd io undcisiand ihc ooiiuniiics
ihai oui icchnology will iovidc ihcii comany, ihcy havc a
low liIclihood ol lcing succcsslul in gciiing io maiIci wiih
oui disiuiivc icchnology. And, il ihcy aicnì succcsslul, wc
wonì gci aid.
42
43
K@= )45;6@C !5E@5F5=7
- Small companies bring these advantages to corporations
that are striving to become preIerred partners oI choice
within innovation ecosystems: (1) Small companies oIten
are at the leading edge oI breakthrough or disruptive inG
novation. (2) Small companies can take risks that large
companies can't aIIord to take because the bigger entities
have to protect and deIend their established core business
operations. (3) Smaller companies are oIten closer to the
markets they serve than large corporations are to their marG
kets. (4) The approach and mindset oI those operating in
small businesses can provide a breath oI Iresh air to large
corporations.
- Open innovation is a paradigm shiIt in which companies
must become much better at combining internal and exterG
nal resources in their innovation process and act on the opG
portunities this creates.
- II you want to bring in external partners to your innovation
process, these partners expect you to have your own house
in order. Adapting open innovation will not eliminate your
internal innovation problems; you need to solve those rst.
- When you begin to innovate with partners, you will see that
these partners either Iocus on their own needs-and then
innovation will denitely Iail-or you will see that they
come together and Iunnel their resources toward a market
need. II the latter happens, then you have a great chance to
succeed with innovation.
- When small and large companies intersect Ior open innovaG
tion, they need to overcome diIIerences that may include
speed oI decision making, attitudes toward risk, willingness
io|ccis io dclivci ihc liggcsi gamc-changing wins loi
consumcis.
Thc sccond aii ol ihc goal is good ncws, ioo, as ii clcaily
siaics ihai only win-win aiincishis aic on oui iadai.
Wc`vc lccn commiiicd io ihis liom ihc vciy siaii ol C+D
in 2001. Bui now ii`s an csiallishcd goal ihai wc wani io lc
THE aiinci ihai innovaiois comc io. And ihcy`ll only con-
iinuc coming io us il ihcy aic conhdcni ihai ihcy`ll gci a laii
shaIc and good valuc.
C+D alicady has dclivcicd siiaicgic valuc all acioss ihc
Comany, and a sciics ol gamc-changing consumci innova-
iions. Thai was in ihc hisi 10 ycais ol ihc iogiam. Ici`s scc
whai wc can do now...
1
44 45
GEIIlNG YCUF
CFG/Nl Z /I l CN
F E /DY F CF CFE N l NNCV/I l CN
$
I
l whai you`vc icad aloui ocn innovaiion so lai maIcs you ihinI
youi comany could lcnchi liom ii, youìc iolally wondciing
whai you nccd io do io icaic loi maIing ocn innovaiion aii ol
youi giowih siiaicgy. As I mcniioncd lacI in Chaici 1, cvciy coma-
ny, icgaidlcss ol sizc, ihai considcis cmlaiIing on an ocn innovaiion
|ouincy should hisi answci ihis all-imoiiani qucsiion: Why is ocn
innovaiion iclcvani io youi comany, iis icscni siiuaiion, and iis mis-
sion and vision. Il you havcnì answcicd ihis qucsiion ihoioughly, you
nccd io icmcmlci ihai ocn innovaiion is |usi a iool, noi a goal. Thc
goal is io giow youi comany and maIc a iohi.
An answci io ihc why" qucsiion should show an undcisianding ol
how ocn innovaiion can lc an imoiiani aii ol ihc gcncial inno-
vaiion siiaicgy, which in iuin nccds io lc highly aligncd wiih youi
to develop new rules instead oI Iollowing the old ones, al-
location oI resources, denitions oI innovation, and varying
processes or a lack oI processes. They also need to be clear
about each other's business model and who is in charge.
- "7 =:I F:CE F?64 @Q6@C<59 ;5C6<@C7P =:I 5C@ @Q;:7@D 6: :64@C
ways oI getting things done. You bring diverse thinking into
the organization. This can make you consider whether your
current practices are good enough, or whether you have to
adjust these or perhaps even develop new next practices Ior
your organization.
- Large companies that hope to succeed in becoming part-
ners oI choice must do their best not to use their size to get
their way all the time in open innovation partnerships.
1 P8G: Ncw Goals loi C+D io Accclciaic Oui Innovaiion," P8G
Vicws H6/)<I Oci. 27, 2010), hii://www.g.com/cn_US/ncws_vicws/
llog_osis/2010/oci/accclciaic_oui_innovaiion.shiml.
GeIIing Ycur CrgcnizcIicn
4
47
Other Necessary Elements
Youi ncxi sics will includc uiiing in lacc ihcsc hvc Icy clcmcnis
ihai aic ncccssaiy loi maIing any ocn innovaiion siiaicgy a succcss:
%9@8@<6 RSM +65E@4:9D@C "<59=7?7
Imlcmcniing ocn innovaiion is a aiadigm shili ihai icquiics
colc io changc ihcii mindscis and oliain ncw sIills. So ii`s ciiii-
cal io siaii wiih an ovcivicw ol youi inicinal and cxicinal siaIchold-
cis. Who will lc allccicd ly ihc ocn innovaiion inicniion. Analyzc
ihc ios and cons ol youi ocn innovaiion iniiiaiivc loi ihcsc colc.
Whai issucs loihci ihcsc colc. How can you cicaic a valuc ioosi-
iion ihai will maIc ihc siaIcholdcis suoii ihc iniiiaiivc.
Onc aioach is io cicaic a siaIcholdci ma ihai idcniihcs all ihc
vaiious gious ihai mighi lc imacicd ly youi ocn innovaiion iniiia-
iivc, ihcn dcvclo sccihc valuc ioosiiions loi cach giou. Donì
loigci io locus on inloimal inuucnccis, ihai is, colc wiih a disio-
oiiionaic lcvcl ol inuucncc. Il you aic noi lamiliai wiih nciwoiI anal-
ysis whcic ihis is a common concci, ihcn you should imaginc ihai any
oiganizaiion has iwo Iinds ol oiganizaiional hiciaichics. Onc is ihc
loimal hiciaichy whcic you Inow who ihc managcis aic ly ihcii iiilcs
and |ol dcsciiiions. Thc oihci is ihc inloimal hiciaichy luili on ihc
iiusi and icscci among ihc cmloyccs. Somc collcagucs aic moic
iiusicd and icsccicd ihan oihcis and as such ihcy aic Icy laycis in
any Iind ol changc managcmcni iniiiaiivc, including ihc imlcmcnia-
iion ol ocn innovaiion. Iind ihcsc colc and win ihcm ovci io youi
causc, and ii will lc casici io luild ihc innovaiion DNA. You can icad
moic aloui siaIcholdci analysis in Chaici 6.
ovciall coioiaic siiaicgy. Bui many comanics, loih small and laigc,
donì cvcn havc an ovciall innovaiion siiaicgy, much lcss a sccihc
ocn innovaiion siiaicgy ihai linIs wiih ii.
Also, I iccognizc ihai siiaicgic lanning iiscll is noi a siiong oini
loi many small comanics. Thcyìc olicn ioo lusy Iccing ihcii hcads
alovc waici io cngagc in whai should lc a siiong, annual ioccss.
So il youi siiaicgic lan has lccn gaihciing dusi on ihc shcll loi scv-
cial ycais, lcloic iiying io answci qucsiions aloui youi innovaiion
siiaicgy and youi ocn innovaiion siiaicgy, you`ll nccd io udaic youi
lan io maIc suic youi siiaicgy siill his wiih shilis ihai havc occuiicd
in youi maiIcilacc as a icsuli ol comciiiivc oi cconomic changcs oi
icchnological advanccs.
A Holistic View
As mcniioncd cailici, ihc lcnchi ol having an innovaiion siiaicgy
is ihai ii scis a diicciion loi youi clloiis. This also allows you io lci-
ici dchnc ocn innovaiion in icims ol youi comany. As I also mcn-
iioncd cailici, ihcic is no singlc mcihod loi ocn innovaiion. Ii can
woiI in many dillcicni ways and involvc a numlci ol dillcicni iycs
ol aiincis. Thc ossililiiics aic almosi cndlcss. Iinding an aioach
ihai mccis youi comany`s individual nccds, icsouiccs, and maiIci
siiuaiion is csscniial. Oncc you`vc hguicd oui why you nccd ocn in-
novaiion and how youìc going io aioach ii loi youi aiiiculai com-
any, ii lccomcs casici io woiI oui a siiaicgy and imlcmcni ii. Thc
Icy ihing hcic is ihc aliliiy io vicw innovaiion in moic holisiic icims.
Innovaiion should lc aloui moic ihan |usi coic ioducis and sciviccs,
and ii should involvc as many lusincss lunciions as ossillc sincc in-
novaiion ihai suoiis ihc giowih ol youi comany can comc liom
almosi any aii ol youi comany. Ocn innovaiion givcs you a chancc
io licaI down ociaiional silos, which cxisi cvcn in small comanics.
48
4
tion. Nevertheless, this has to happen in order Ior them
to change mindsets and behaviors and thus be able to Iully
support open innovation and benet Irom this. This is very
much about communication.
As ihcy cmliacc ocn innovaiion, comanics aic incicasingly ic-
alizing ihai ihcy nccd io changc liom |usi lianding and iomoiing
ihc innovaiion ouicomc io doing ihc samc loi ihcii coioiaiion in-
novaiion caaliliiics. Doing so hcls ihcm luild ihcii imagc as an ai-
iiaciivc aiinci and ihus suoiis ihc goal ol luilding a siiong ocn
innovaiion ccosysicm. Olviously, communicaiions comcs inio lay
hcic, ioo, loih wiih inicinal and cxicinal audicnccs.
Knowing ihc siiaicgic goals moiivaics colc and luilds a collcciivc
scnsc ol uiosc. So ui a communicaiions lan in lacc lcloic you
cvcn siaii. MaIc suic you iaIc cvciy ooiiuniiy io iuin good ncws
inio a sioiy ihai can woiI inicinally as wcll as cxicinally. Thc laiici is
csccially usclul il icciuiimcni is a sciious issuc.
Olviously, communicaiing wiihin a small comany is casici ihan
in a laigc coioiaiion. Bui ihai docsnì mcan ihai dcvcloing a sol-
id communicaiions lan is any lcss imoiiani. In a small comany,
ii mighi lc casici loi onc oi iwo colc io ihiow a wicnch inio ihc
woiIs, so ii`s imoiiani ihai cvciyonc undcisiand why ocn innova-
iion is imoiiani io youi comany`s luiuic and whai ihcy nccd io do
io gci on loaid.
You should dcvclo sccihc communicaiion oinis ol vicw loi youi
siaIcholdci gious. Ii`s cvcn lciici il ihcsc oinis ol vicw aic aligncd
wiih ihc valuc ioosiiions.
In a icscniaiion I hcaid ly ]cll Bochm, a loimci VP ol Invcniion
Machinc, ihc innovaiion soliwaic comany, hc vciy smaiily ouilincd
a loui-sic ioccss loi Iccing ihc nccd loi locusing on innovaiion
Element #2: Communication Strategy
Siiong communicaiion iogiams aic imoiiani ai any iimc wiihin
an oiganizaiion, lui ncvci moic so ihan whcn ocn innovaiion is youi
goal. Wiihoui a good communicaiion siiaicgy, youi odds loi succcss
do noi looI good. To movc loiwaid, colc nccd io Inow whcic io go
and how io gci ihcic. Hcic aic ihicc icasons why communicaiion is a
ciiiical clcmcni il you wani io succccd wiih ocn innovaiion.
- We are in the matchmaking business. This quote came
Irom Chris Thoen, Iormer managing director oI the Global
Open Innovation oIce at P&G, during his presentation at
a CoDev conIerence. Chris also stated that one oI the key
objectives oI open innovation is to become the preIerred
partner oI choice. As with any kind oI matchmaking, we
strive to nd the best possible partner and in order to do so
we must be able to articulate our propositions in an attracG
tive manner. This is very much about communication.
- Find and be Iound. Let the ecosystem in your region-as
well as globally-know what you are doing. Tell about your
open innovation initiatives, share your learnings, and ask
Ior input. Messages with substance move very Iast within
such ecosystems. This can help a company to be perceived
as a preIerred partner oI choice or at least as a company
with a potential Ior this to happen. You need to nd the
right partners, but it would be great iI they also came to you,
rightr This is very much about communication.
- Open innovation needs to become top oI mind within orgaG
nizations; not just within innovation teams. #= <:FP 85<=
?<<:A56?:< 6@587 I<D@C765<D 64@ A59I@ :B :;@< ?<<:A5G
tion and those that do not will soon learn the hard way.
It is a tougher challenge making the rest oI the company
BI99= I<D@C765<D 5<D LI= ?<6: 64@ A59I@ :B :;@< ?<<:A5G
50
51
new strategies only to abandon them a short while later. This
cannot be allowed to happen with open innovation. Actions
Irom the top must continually show that open innovation
is here to stay and will be a continuous Iocus oI company
eIIorts. In other words, do everything possible to build
open innovation into your company's culture.
Element #3: Common Language
A Icy ol|cciivc ol youi communicaiion siiaicgy is io dcvclo a shaicd
languagc aloui ocn innovaiion-and innovaiion in gcncial-wiihin
youi comany. Whcn cvciyonc uscs ihc samc languagc, ii is signih-
canily casici io liamc ihc iollcms and idcas in ways ihai cvciyonc
can undcisiand and iclaic io.
Iaigc coioiaiions olicn dcvclo ihis common languagc ly liing-
ing in ouisidc cxciis io cducaic and iiain colc. You may noi lc
allc io alloid ihai lui ihcic aic oihci ways io gci ihc |ol donc. Ioi
cxamlc, you can iovidc colc wiih looIs and aiiiclcs aloui ocn
innovaiion and ihcn hold discussions io ull oui Icy icims and ihcii
dchniiions ihai colc should lccomc lamiliai wiih. MaIc suic you
and youi lcadcishi icam usc ihis languagc in comany icscnia-
iions and mcciings. Slowly lui suicly, ihc languagc will lcgin io hl-
ici ihioughoui ihc oiganizaiion and lccomc aii ol ihc comany`s
shaicd vocalulaiy.
Somc comanics dcvclo clcvaioi iichcs-vciy shoii iichcs aimcd
ai gciiing io ihc ncxi lcvcl ol cusiomci coniaci-loi ihcii ioducis
and sciviccs. Why noi do ihc samc loi ihc mcssagcs and ioosiiions
uscd iowaid oicniial aiincis as wcll as ihc collcagucs you nccd io
iuin inio lacIcis ol youi ocn innovaiion iniiiaiivcs.
consianily in ihc loiclioni ol cmloyccs` minds ihiough smaii com-
municaiions. Hcic aic his sics wiih somc claloiaiion liom mc:
- Positioning: Make it relevant and show success. !: E@@;
people on track when it comes to pursuing open innovation,
they need to understand why it matters to the wellbeing oI
the organization they're part oI. In some ways, this may be
easier to do in a small company than in a large corporation,
because in a small organization it can be easier Ior people to
see how their work impacts the overall organization's well-
being. They may Ieel less like just one cog in a giant wheel
than someone who is working in a big global corporation. As
a result, they may Ieel see the direct link between what they
do and the success oI the business more clearly.
Onc ol ihc lcsi ways io show why ocn innovaiion is iclcvani is io
ioui succcss sioiics. Thcsc wonì lc availallc caily on lui whcn loi-
waid iogicss is madc, maIc suic cvciyonc Inows aloui ii.
- Promotion: Make it obvious. As discussed in Chapter 4,
having a communications strategy and plan in place to proG
mote open innovation is vital. Constantly reinIorcing mesG
sages about the purpose oI open innovation and the desired
outcomes will assure that employees understand just how
important it is.
- Calls to action: Make it easy. This builds on the above. Keep
the messages clear and simple to better allow your people to
engage in and thus learn about open innovation.
- Sustain momentum: Make it stick. 14@< :;@< ?<<:A56?:< ?7
rst introduced in a business oI any size, it is possible some
people may conclude that it is another avor oI the month
initiative sent down Irom on high. This is particularly apt to
occur iI an organization has a track record oI introducing
52
53
lcnchis ol oiganizaiional nciwoiIing analysis ihai could hcl idcniily
ihc colc holding imoiiani Inowlcdgc, as wcll as ihc colc who
wcic loiilcnccIs. Hc saw ihc iclcvancc. Wc ialIcd aloui ihc imoi-
iancc ol lcing good ai iclaiionshis in ihc movc iowaid ocn innova-
iion. Hc agiccd.
Howcvci, whcn I asIcd whai hc would do aloui ihc nciwoiIing cul-
iuic, I goi ihc samc answci. Hc would do noihing. Why noi. Things
liIc ihai will iaIc caic ol ihcmsclvcs," hc said.
Hc could noi lc moic wiong. An innovaiion culiuic docs noi cic-
aic iiscll and ihc samc gocs loi a nciwoiIing culiuic. This icquiics
a io-down aioach in which you and youi lcadcishi icam ciali a
siiaicgy, sci ihc goals, and iovidc ihc mcans and iools loi nciwoiIing
iniiiaiivcs. In addiiion, you nccd io hnd ways io lc cisonally involvcd
in nciwoiIing io convincc cmloyccs ihai you aic sciious.
Ii may lccl liIc iaIing ihc iolc ol chicl nciwoiIci is adding a hugc
|ol io youi alicady ciowdcd io-do lisi, and ii iolally is. Bui ocn in-
novaiion wonì hacn wiihoui a siiong nciwoiIing culiuic, and sciv-
ing as a iolc modcl is csscniial.
Why a Networking Culture Is Important
Thc imcius loi cicaiing a nciwoiIing culiuic is olvious oncc you
looI ai ihc cuiicni and luiuic diicciion ol innovaiion. Ici`s siaii ly
disosing ol ihc myih ol ihc lonc gcnius-ihc Thomas Edisons and
ihc Alcxandci Giaham Bclls ol ycsiciycai-aiiiving ai a licaIihiough
innovaiion on his/hci own. This modcl wasnì iiuc ihcn, and cvcn il
ii wcic, ii simly docs noi hold iiuc in ioday`s comlcx lusincss oiga-
nizaiions. Tcchnology and ihc challcngcs ihai musi lc solvcd havc lc-
comc so comlcx ihai many-cihas cvcn mosi-comanics can no
longci icly solcly on ihcii own inicinal innovaiion gcniuscs, no maiici
how liilliani ihosc colc may lc.
Element #4: Appreciation Ior Employees
I olicn say ihai cxccuiivcs nccd io cicaic ihc ioci sciiings and
condiiions loi ocn innovaiion sincc ii is so dilhculi io |usi imlc-
mcni lois ol iools and maIc ocn innovaiion woiI. Onc ol ihc Icy
clcmcnis ol cicaiing ihc iighi condiiions is io maIc ihc cmloyccs
undcisiand ihai a siiongci locus on cxicinal coniiiluiion is noi a sign
ol disaioval ol ihc woiI lcing donc ly ihcm. Ii is mcicly an aiicmi
io incicasc ihc ovciall innovaiion ioduciiviiy ly comlining inicinal
and cxicinal icsouiccs. This is cqually iiuc loi loih small and laigc
oiganizaiions.
You do noi wani liusiiaicd cmloyccs who do noi lccl ihai ihcy aic
lcing aicciaicd.
Having cmloyccs who lccl aicciaicd wiih icgaids io innovaiion
also maIcs ii casici loi an oiganizaiion io cmliacc a moic holisiic a-
ioach io innovaiion in ihc scnsc ihai all lusincss lunciions should
lc involvcd in ihc innovaiion ioccss. Innovaiion is moic ihan |usi
ioducis and icchnology, and ii should noi lc diivcn cniiicly ly ihc
R8D lunciion.
%9@8@<6 RNM *@6F:CE@D ,<<:A56?:< )I96IC@
Onc musi-havc comoncni ol a siiong innovaiion culiuic is a siiong
nciwoiIing culiuic. To ihiivc in an innovaiion cnviionmcni ihai lc-
comcs incicasingly ocn and cxicinally oiicnicd, colc ihioughoui
youi oiganizaiion nccd io lc caallc ol luilding and susiaining icla-
iionshis loih inicinally and cxicinally.
Unloiiunaicly, ihis is a ncglccicd aica ol aiicniion in comanics
ol all sizcs. I icmcmlci ialIing wiih an cxccuiivc ai a laigc comany
alici having mci wiih many ol ihc innovaiion colc liom his oigani-
zaiion. I asIcd him aloui his inicniions wiih icgaid io cicaiing a lci-
ici nciwoiIing culiuic. Hc did noi havc any lans. Wc discusscd ihc
54
55
innovation in diIIerent companies, value- and supply-chain
networks, Ieeder networks, and events and Iorums connectG
ing problem solvers and innovators with your company.
- Leaders show a genuine and highly visible commitment to
networking.
- Leaders must walk the walk, not just talk the talk. By making
themselves available at networking events and by being visiG
ble users oI virtual networking tools, they model the desired
behavior and motivate others to participate. AIter all, who
doesn't want a chance to exchange ideas with the top brassr
- Leaders should also share examples oI their networking
experiences whenever possible. Spread the word about your
own and others' networking successes. Hearing you talk
repeatedly about how networking is helping the organizaG
tion in its innovation eIIorts will reinIorce the message that
this is important.
- Networking initiatives mesh closely with your corporate culG
ture. This is not one-size-ts-all; each company's networking
eIIorts will diIIer. You can take bits and pieces, concepts
and theories, knowledge and experience Irom others, but
you still need to make it work Ior your own company.
- People are given the time and means to network. Frequent
:;;:C6I<?6?@7 5C@ ;C:A?D@D 6: 4@9; ?<D?A?DI597 ;:9?74 64@?C
personal networking skills. Not everyone is a natural netG
worker. But almost everyone can become good at it with
proper training and encouragement.
- Both virtual and Iace-to-Iace networking are encouraged
and supported. Web 2.0 tools and Iacilitated networking
@A@<67 85Q?8?H@ 64@ :;;:C6I<?6?@7 ;@:;9@ 45A@ 6: ?<?6?56@
and build strong relationships.
Innovaiion is incicasingly aloui having gious ol colc comc io-
gcihci io lcvciagc ihcii divcisc ialcnis and cxciiisc io solvc muliilac-
cicd challcngcs ihai cioss muliilc discilincs. To maIc ihis hacn
wiihin youi oiganizaiion-and lcyond as you movc iowaid ocn in-
novaiion-icquiics a nciwoiIing culiuic ihai is dcsigncd, suoiicd,
and modclcd ly youi comany`s lcadcis.
Anoihci Icy moiivaiion loi sciiing u nciwoiIing iniiiaiivcs is lascd
on ihc simlc laci ihai ihc Inowlcdgc ol any comany is insidc ihc
hcads ol ihc cmloyccs. Discovciing and disiiiluiing ihis Inowlcdgc
has always lccn a challcngc, and now, moic ihan cvci, ihc aliliiy io
lcvciagc a comany`s collcciivc Inowlcdgc and cxciicncc is ciiiical
io innovaiion. Iuiihcimoic, csiallishing ihc aliliiy io liing Inowl-
cdgc and oicniial ncw innovaiion insighis in liom cxicinal souiccs
dcmands a siiong nciwoiIing culiuic suoiicd and modclcd liom
ihc io.
What a Networking Culture Looks Like
So whai docs a good nciwoiIing culiuic looIs liIc. Ii`s such a ncw
concci ihai ihcic aicnì a loi ol cxamlcs availallc io illusiiaic ii, lui
hcic aic somc Icy comoncnis ol a good nciwoiIing culiuic:
- Top executives have outlined clear strategic reasons why
@8;9:=@@7 <@@D 6: D@A@9:; 5<D <IC6IC@ ?<6@C<59 5<D @Q6@CG
nal relationships. This includes making clear how your
company's networking culture links with and supports your
innovation strategy.
- Among the things to consider when developing your netG
working culture strategy is what types oI networks you hope
to build to support your innovation eIIorts. II your organizaG
tion is moving toward open innovation, possibilities would
include peer-to-peer networks Ior people working with open
5
57
aliliiy io diivc changc, dillusion, oi innovaiion, and ihcy
can also aci in Icy liaison oi cioss-ioccss iolcs.
Accoiding io Cioss, lioIcis olicn sii in iiing-oini osi-
iions and, ihcicloic, dillusc inloimaiion lasici ihan lcadcis
and ccniial conncciois. Evcn in a small giou, lioIcis aic
ihc mosi cllcciivc mcans io dillusc inloimaiion. BioIcis
havc giound-lcvcl cicdililiiy and acInowlcdgcd cxciiisc
in ihc cycs ol ihcii ccis. Thcy aic much moic liIcly io
lc soughi oui and lisicncd io ihan a dcsignaicd cxcii oi
lcadci who mighi noi lc inuucniial in ihc nciwoiI. BioIcis
liidgc divcisc ciscciivcs and undcisiand culiuial noims
and iaciiccs ol dillcicni gious in ways ihai ihosc lamiliai
and comloiiallc wiihin ihcii own giou olicn cannoi.
Pciihcial colc could lc ncw colc, cxciis, salcs
colc, ooi ciloimcis, oi culiuial mishis. Thcy sii on
ihc cdgc ol ihc nciwoiI, and Cioss has lcaincd ihai iyi-
cally S0 io 40 ciccni ol ciihcial colc would liIc io
gci lciici connccicd lui havc iun inio olsiaclcs. Thcy aic
a icsouicc ol uniacd cxciiisc lui aic sulsianiial uighi
iisIs. Pciihcial colc aic aiiiculaily in nccd ol cduca-
iion aloui how io nciwoiI, ihcy will also nccd moic cncoui-
agcmcni ihan oihcis io aiiiciaic in nciwoiIing.
Knowing ihcsc dillcicni iycs should iomi you io asI
qucsiions aloui whai nciwoiIing iycs you havc wiihin youi
oiganizaiion and whai iyc ol nciwoiIing aioachcs mighi
woiI lcsi. Ioi cxamlc, il youi comany has a loi ol ciihcial
colc, you`ll nccd io dcvoic moic iimc io iiaining in nciwoiI-
ing sIills. Also, as a lcadci, ihinI aloui how you can woiI lcsi
wiih ihc dillcicni iycs io lc allc io gci ihc mosi oui ol ihcm.
!4C@@ !=;@7 :B *@6F:CE@C7
As you dciciminc how io luild a nciwoiIing culiuic
wiihin youi oiganizaiion, ii`s imoiiani io undcisiand how
nciwoiIing aciually woiIs. Onc ol ihc mosi Inowlcdgc-
allc colc on oiganizaiional nciwoiIing-and how ii
suoiis innovaiion-is Rol Cioss, an associaic iolcssoi
in ihc managcmcni dcaiimcni ol Univcisiiy ol Viiginia`s
McIniiic School ol Commcicc. Hc is also onc ol ihc lound-
cis ol Thc NciwoiI Roundiallc. I havc lcaincd a loi liom
my visiis and iniciaciions wiih Rol and I iccommcnd ihai
you iaIc a looI ai his wclsiic ai www.iolcioss.oig.
Rol Cioss has idcniihcd ihicc nciwoiIing iycs ihai you
should ay aiicniion io wiihin youi oiganizaiion. Thcy aic
- central connectors;
- brokers; and
- peripheral people.
Ccniial conncciois aic ihosc colc wiih ihc highcsi num-
lci ol diicci conncciions. Thcy can lc loimal lcadcis-oi
oliiical laycis iiying io lc lcadcis-whom cvciyonc sccIs
oui ciihci lccausc ihcy maIc ihings hacn oi lccausc ihcy
havc madc ihcmsclvcs loiilcnccIs. Thc laiici can lccomc a
ma|oi issuc wiih icgaid io innovaiion, whcic you olicn nccd
a dynamic uow. Exciis aic also a iyc ol ccniial conncciois
who aic somciimcs ovciuscd, as cvciyonc gocs io ihcm wiih
qucsiions. Somciimcs cxciis musi lc ioiccicd.
BioIcis aic high-lcvciagc cmloyccs who conncci colc
acioss loundaiics, such as lunciions, sIills, gcogiahy, hici-
aichy, cihniciiy, and gcndci. Thcsc colc havc ihc lcvciagc
58
5
icmind colc is ihai mainiaining linIs in a nciwoiI is cosily. So |usi
llindly nciwoiIing` io luild u conncciions is liIcly io do moic haim
ihan good. Going down io no conncciions docsnì woiI ciihci ihough.
You havc io ihinI aloui ihc Iind and qualiiy ol conncciions ihai you
wani."
I lully agicc wiih Tim and iccommcnd using ihc maniia ol nci-
woiIing wiih a uiosc."
- Lack oI commitment and structure: The networking-will-
take-care-oI-itselI-and-you-do-not-need-to-work-at-it attitude
is not the approach to take toward building what is increasG
ingly a core innovation skill. Building a networking culture
requires commitment and structure to support it.
Potential Roadblocks
In woiIing wiih comanics ihai aic iiying io luild a nciwoiIing
culiuic, hcic aic somc icasons I`vc idcniihcd loi why such clloiis can
lail oi noi icach ihc hocd-loi dcgicc ol succcss:
- Lack oI time: 05<= :B I7 7?8;9= D: <:6 45A@ 64@ 6?8@ 6:
network and build relationships. It is necessary to develop
a strategy and initiate projects, but you also need to give
your people time to invest in initiating and maintaining both
internal and external relationships.
- Lack oI skills: Some people are natural-born networkers;
many others are not. But the basics oI eIIective networkG
ing can be learned, just like any other business skill. With
appropriate instruction and motivation, wallowers can
learn to work a room. By providing your people with this
type oI training, you will give them a skill that will be invaluG
able throughout their careers.
- Lack oI Iocus: A community or a network will only work iI it
connects people who share a common experience, passion,
interest, aIliation, or goal. Your people need to have ways
to nd and join groups that are right Ior them and right
Ior your company. In other words, you and your employees
should only network when there is a good reason to do so.
Random networking rarely results in anything but wasted
time, which devalues networking in people's minds and
makes it harder to encourage them to try it again.
Whcn I oscd ihc dclilciaicly iovocaiivc qucsiion on my llog ol
whcihci iclaiionshis and nciwoiIing wcic ovciiaicd, Tim Kasicllc, a
mcmlci ol ihc Tcchnology 8 Innovaiion Managcmcni Ccniic in ihc
School ol Busincss ai ihc univcisiiy ol Quccnsland, commcnicd, I
vicw mosi ihings ihiough a nciwoiI lcns, and ihc ihing ihai I always
0
1
- People must be given the time and means to network and
be provided with help to polish their personal networking
skills.
- Pay close attention to the three types oI networkers in your
organization: central connectors, brokers, and peripheral
people.
- Avoid these roadblocks to building a networking culture:
not enough time or skills and lack oI Iocus, commitment,
structure, and communications.
K@= )45;6@C !5E@5F5=7
- II your strategic plan is several years old, beIore trying to
answer questions about your innovation strategy and your
open innovation, you'll need to update your plan to make
sure your strategy still ts with shiIts that have occurred in
your marketplace as a result oI competitive or economic
changes or technological advances.
- Finding a denition Ior open innovation that meets your
company's individual needs, resources and market situation
is essential. Once you've gured out why you need open
innovation and how you're going to dene it Ior your parG
ticular company, it becomes easier to work out a strategy
and implement it.
- To have your open innovation strategy succeed, you must
put in place these ve elements: (1) stakeholder analysis, (2)
communication strategy, (3) common language, (4) appreG
ciation oI employees, and () networked innovation culture.
- Keep open innovation in the IoreIront oI employees' minds
by (1) making it relevant and showing success, (2) promotG
ing it, and (3) making it easy and (4) making it stick.
- Key components oI a good networking culture include (1)
clear strategic reasons why employees need to develop and
nurture internal and external relationships; (2) an underG
standing oI the types oI networks you hope to build to supG
port your innovation eIIorts; (3) leaders who show a genuine
and highly visible commitment to networking, who walk the
walk, not just talk the talk, and who share examples oI their
networking experiences whenever possible; (4) networking
initiatives that mesh closely with your corporate culture; and
() both virtual and Iace-to-Iace networking opportunities.
3
%%
GEIIlNG YCUF
FE CFL E FE /DY
F CF CFE N l NNCV/I l CN
T
hc lcadcis ol succcsslul small comanics undcisiand how im-
oiiani ii is io havc ihc iighi colc in ihc iighi osiiions.
Whcn icsouiccs aic slim, ihc aliliiy ol cvciyonc io do ihcii |ol wcll
maiicis iicmcndously. Onc oi iwo wcaI linIs can scll ihc dillcicncc
lciwccn succcss and lailuic. So ii will comc as no suiiisc whcn I say
ihai colc maiici moic ihan idcas whcn ii comcs io maIing innova-
iion ol all iycs hacn.
You should iaIc a momcni io ihinI aloui ihai sincc many innova-
iion iniiiaiivcs lail miscially lccausc ihcii lcadcis donì undcisiand
ihis simlc laci. In laci, ii is aciually moic imoiiani io havc giadc-A
colc ihan ii is io havc a slcw ol giadc-A idcas. Why. Bccausc giadc-A
colc can iaIc a giadc-B idca-oi cihas cvcn a giadc-C idca-and
GeIIing Ycur Fecp|e Feccy
4
5
iuin ii inio a succcsslul icaliiy. Giadc-B colc, on ihc oihci hand,
will siiugglc wiih cvcn iiuly gicai idcas.
Il wc iaIc ihis io ihc woild ol small lusincss, ihc lig qucsiion is
whcihci you havc cnough availallc giadc-A colc wiihin youi oi-
ganizaiion who can iaIc gicai idcas, whcihci ihcy comc liom insidc
oi ouisidc ihc comany, and iuin ihcm inio icaliiy.
Whcn laigc coioiaiions iacIlc ihis qucsiion, ihcii answci is sim-
lc, wiih ihcii laigc lody ol cmloyccs, ihcy can casily swiich gicai
colc io oihci io|ccis. Bui loi a small comany wiih iis smallci siall,
you simly donì havc ihc aliliiy io do ihai. In ihis casc, ii is aiiicu-
laily ciiiical io idcniily and dcvclo colc wiih ihc aiiiiluics and
sIills nccdcd io iuin an idca inio a hnishcd ioduci oi scivicc. So
lcloic you gci all hicd u aloui gcnciaiing a ion ol idcas, hisi hguic
oui how youìc going io maich ihosc idcas io colc who can maIc
ihings hacn.
#@B:C@ 3:I +65C6
As you siaii ihis woiI, hcic`s anoihci Icy oini io icmcmlci: Thc
sIills nccdcd io lcad and managc a io|cci wiihin ihc cxisiing coic
lusincss-whcic innovaiion is liIcly io lc incicmcnial and icsouiccs
lcniilul-aic signihcanily dillcicni liom ihc sIills nccdcd io ovci-
comc ihc challcngcs and olsiaclcs ihai gicci almosi any ncw lusincss
io|cci involving licaIihiough oi iadical innovaiion. And ihis is csc-
cially challcnging in small comanics whcic icsouiccs may lc haid io
comc ly. You nccd io siall ncw lusincss io|ccis wiih colc who havc
a mindsci and ioollox ihai maich ihis dillcicni challcngc.
You also nccd dillcicni colc loi ihc dillcicni hascs ol ihc inno-
vaiion ioccss, which icscnis anoihci challcngc loi small comanics.
]usi as somc cniicicncuis aic lciici ai iunning a comany ai iis vciy
caily siagc and oihcis aic lciici ai hcling ihc lusincss scalc oncc ihc
ioduci is launchcd, so, ioo, aic ihcic iniiaicncuis who aic lciici
suiicd loih in icims ol mindsci and sIills io vaiious hascs ol ihc in-
novaiion ioccss.
Ioi cxamlc, ihc discovciy-innovaiion-accclciaiion {D-I-A) modcl
ol innovaiion ui loiwaid ly ihc Radical Innovaiion Giou idcniihcs
ihicc hascs ol innovaiion:
Discovery:
- Basic research: internal and external hunting
- Creation, recognition, elaboration, and articulation oI
:;;:C6I<?6?@7
Incubation:
- Application development: technical, market learning, marG
ket creation, and strategic domains
- Evolving opportunities into business propositions: creating
a working hypothesis about what the technology platIorm
could enable in the market, what the market space will ultiG
mately look like, and what the business model will be.
Acceleration:
- Early market entry: Iocus, respond, and invest
- Ramping up the edgling business to a point where it can
765<D :< ?67 :F<P C@956?A@ 6: :64@C LI7?<@77 ;956B:C87 ?< 64@
ultimate receiving unit
S
This modcl has lccn uscd wiih succcss ai many comanics, which
havc lcaincd ihai vciy lcw colc havc ihc sIills io movc liom hcad-
ing ihc io|cci in ihc discovciy hasc io hcading ii duiing ihc ac-
cclciaiion hasc. Thc challcngc ihis icscnis loi small comanics is
olvious. Wiih lai lcwci cisonncl io choosc liom, ii can lc iough io
hll all ihc slois idcniihcd in ihis modcl. Thc good ihing is ihai you
can idcniily colc wiih ihc iighi mindsci {scc lclow) and ihcn siaii

7
woiIing on ihcii ioollox. MaIing colc moic icady loi innovaiion
ly coniinuously dcvcloing ihcii ioollox is onc ol ihc low-hanging
liuiis and ihis can lc donc in small as wcll as lig comanics.
The Necessary Skills & Attributes
So as you lcgin io considci ihc colc on youi icam, whai cison-
al comcicncics aic you looIing loi whcn ii comcs io dcciding who
can suoii youi ocn innovaiion clloiis. I was loiiunaic io scc a
icscniaiion ly Gail Maiiino, managci ol Emciging and Disiuiivc
Innovaiion ai Unilcvci, in which shc idcniihcd scvcn ciiiical cisonal
comcicncics nccdcd loi ocn innovaiion succcss. Hcic is hci lisi:
1. Intrapreneurial Skills
Sccs ooiiuniiics and diivcs an ooiiuniiy loiwaid wiih and
wiihin an oiganizaiion.somciimcs lcloic ihc oiganizaiion Inows
ihcy nccd ii.
Kcy Tiaiis/Bchaviois:
- "F5C@ :B 5<D @<5L9@7 <@F ?D@57OBC:8 5<=F4@C@
- At ease outside their comIort zone
- Non-complacent; boundary pusher
- SelI-driven; risk taker
- *:6 5BC5?D 6: B5?9
2. Talent Ior Relationship Building Both within and outside the
Organization
- Is genuine; builds trust
- Represents the partner well to the organization
- Listener, which is key in building win-win deals
3. Strategic Inuencing
Is allc io cisuadc, insiic, and gainci suoii.
- Politically astute; high organizational awareness
- Knows when, how, and with whom to gain support
- Top-notch communication skills
4. Ability to be a Quick Study
Scll-diivcn io lccomc u io sccd in ncw aicas {ciiiical sIill io hcl
showcasc and gain
suoii ol oihcis).
- "L?9?6= 6: D@A@9:; @Q;@C6?7@P 7:8@6?8@7 :I67?D@ :B 64@?C
area oI specialization quickly
- )IC?:I7
- ResourceIul
. Tolerance Ior Uncertainty
Allc io managc high iisI io|ccis and maIc dccisions wiihoui ci-
lcci inloimaiion aloui
ouicomc.
- Manages risks through milestones and keeps moving
B:CF5CD
- Doesn't plan Ior Iailure-plans to avoid it
6. Balanced Optimism
Kccs alovc ihc liay.
8
- Knowledgeable about risks as well as rewards

- Overcomes moods and emotional states to keep moving
B:CF5CD
- Non-reactive; evaluates criticism but moves on
7.Passion
Encigy io moic loiwaid and ovcicomc ioadllocIs.
- InIectious energy
- Sees opportunity, not just issues
Gail`s lisi cxands on ihc idcas I ui loiih in !"# %&#' ('')*+,-)'
.#*)/0,-)' and highlighis how imoiiani ihc so-callcd soli" sIills aic
whcn ii comcs io maIing ocn innovaiion woiI. As I said ai ihc siaii
ol ihis chaici, lccausc cach cison involvcd in a small comany`s in-
novaiion clloii is so imoiiani duc io ihc small sizc ol ihc icam, you
nccd io caiclully cvaluaic cach ncw hiic io scc il ihcy havc ihcsc ca-
aliliiics. This may icquiic comlcicly icdoing youi inicivicw ioccss
io comc u wiih qucsiions dcsigncd io lciici oui a candidaic`s aiiiiudc
iowaid iisI, loi cxamlc, oi how inicicsicd ihcy aic in lcaining aloui
ncw hclds.
Ai ihc samc iimc, you nccd io maIc suic youi comany culiuic su-
oiis ihc caaliliiics idcniihcd alovc. Il cvciy lailuic is unishcd, loi
insiancc, ihai will maIc youi comany an unwclcomc lacc loi ihc
iyc ol iisI-iaIcis who aic nccdcd io maIc innovaiion hacn. Hcic`s
a quoic I olicn usc in my ialIs ihai caiuics whai I`m ialIing aloui,
ii`s liom a llog osi wiiiicn ly David Noidlois, lounding cxccuiivc
diiccioi ol ihc Sianloid Ccnici loi Innovaiion and Communicaiion:
Whcn somconc iiics io innovaic wiihin a iiadiiional oiganizaiion,
lcw will undcisiand whai hc/shc is doing, lui cvciylody will undci-
siand who is a iioullcmaIci. Alici ihc innovaiion has lccn cmliaccd
ly ihc oiganizaiion, lcw will icmcmlci who siaiicd ii, lui cvciylody
will icmcmlci who was a iioullcmaIci. This is ihc dilcmma cncoun-
icicd ly many iniiaicncuis-ihcy iisI unishmcni loi succcss."
2
Developing the Focus
Thc challcngcs ol dcvcloing ocn innovaiion caaliliiics in a
small lusincss aic noi limiicd io maIing suic ihc iighi colc aic
in lacc io movc ihc clloii loiwaid. Ocn innovaiion icam mcmlcis
musi lc givcn ooiiuniiics io dcvclo ihc iniiaicncuiial caalili-
iics discusscd alovc. Also, ihcy nccd io lc consianily icmindcd why ii
is imoiiani io Icc uisuing innovaiion cvcn whcn ihcii laics aic
lull wiih oihci imoiiani duiics. Ici`s looI ai ihc laiici issuc hisi.
Bccausc cmloyccs in small lusincsscs licqucnily wcai many hais,
ii is all ioo casy loi ihcm io sci asidc ihcii ocn innovaiion hai whcn
icssing maiicis aiisc iclaicd io ihc comany`s coic ioduci oi scivicc.
Pui anoihci way, ii is noi unicasonallc loi somconc io ihinI ii`s moic
imoiiani io Icc ihc iiain on ihc iiacI ihan ii is io dcvoic iccious
iimc and scaicc icsouiccs io iiying io imiovc ihc iiain. Couniciing
ihis naiuial icndcncy iaIcs consiani vigilancc and clloii.
70 71
K@= )45;6@C !5E@5F5=7
- People matter more than ideas when it comes to making
innovation oI all types happen.
- Your innovation team needs to include people who are
good at working in the three-phased discovery-innovation-
acceleration (D-I-A) model oI innovation put Iorward by the
Radical Innovation Group. Remember that not all people
are good at all phases, so you need diIIerent people Ior diI-
Ierent phases.
- When looking Ior people Ior your team, look Ior people
with these seven skills: (1) intrapreneurial skills, (2) talent
Ior relationship building, (3) strategic inuencing, (4) abil-
ity to be a quick study () balanced optimism, (6) tolerance
Ior uncertainty, and (7) passion.
1 Gina Colaiclli O`Connoi, Rcscaich Rcoii: Susiaining
BicaIihiough Innovaiion," Fe:en.L-TeLroIo, Anrneer 2, no S
{2009): 12-14.
2 David Noidlois, Thc Iniiaicncui`s Dilcmma," !"# ('J) C/)<,
Sci. 14, 200S, hii://llog.innovaiion|ouinalism.oig/200S/09/
niiaicncuis- dilcmma.himl.
WH/I IC CCNSlDEF
8 E F CFE L E /Fl NG
l NI C / F/F I NE F S Hl F
&
Y
ou`vc dcicimincd ihai you wani io cngagc in ocn innovaiion
and you`vc dcvclocd a siiaicgy, lcgun io luild a nciwoiIing
culiuic, and aic hcling youi colc luild ihc sIills ihcy`ll nccd io
ociaic in such a culiuic. You aic now on ihc vcigc ol moving loiwaid
and lcginning io cngagc wiih oihci comanics. In ihis chaici I`ll
ialI aloui how io maIc such aiincishis woiI. Bui hisi, wc musi looI
ai ihc onc ihing ihai should lc ucimosi in youi mind ai ihis oini:
how io luild ihc iiusi ihai is lundamcnial io ocn innovaiion.
Tiusi comcs ai many lcvcls-inicinally as wcll as cxicinally. As you
movc iowaid ocn innovaiion, you should lcgin io looI inio iwo
qucsiions:
WhcI Ic Ccn:icer 8efcre Lecping
72
73
1. Whai docs ii iaIc loi you io iiusi oihcis.
2. How do you convincc ihc colc in ihc oiganizaiions you wani
io diaw inio youi ocn innovaiion ccosysicm io luild iiusi in you and
youi comany and ihcn siaii loiging siiong iclaiionshis wiih ihcm.
Thc ncccssiiy ol luilding iiusi as a lasis loi succcsslul ocn innova-
iion mcans ihai ii is moic iclcvani io looI ai ihc colc sidc ol innova-
iion ihan io conccniiaic on ioccsscs, and ii also liings moic owci
io ihc colc who ically diivc innovaiion wiihin youi oiganizaiion.
Why. Bccausc iiusi is hisi and loicmosi csiallishcd lciwccn colc
and ihcn cihas lciwccn oiganizaiions. Tiusi is a cisonal ihing,
and ihosc who cxccl ai luilding iiusi aic suddcnly in a much lciici
osiiion wiih icgaid io maIing ihings hacn and lcing valucd ly
ihcii oiganizaiions.
Ii is noi suiiising ihai in a Twiiici chai I conducicd wiih Chiis
Thocn, who ai ihc iimc was iunning ocn innovaiion ai P8G, hc
lisicd iiusi and inicgiiiy as iwo ol ihc chaiaciciisiics P8G looIs loi
in ocn innovaiion aiincis. Hc also mcniioncd good chcmisiiy in
ihc woiIing iclaiionshi, including ihc nccd io havc aiincis who aic
icsonsivc and who align wiih you on uiosc, valucs, and iincilcs
ihai guidc how a comany is iun and how colc lchavc as cmloyccs.
All ol ihis scaIs io ihc imoiiancc ol ihc colc aii ol ihc ocn in-
novaiion cquaiion.
#5CC?@C7 6: !CI76
Whai aic ihc laiiicis againsi luilding iiusi and siiong iclaiion-
shis wiih siaIcholdcis in youi ccosysicm.
- Most organizational structures Ioster an internal rather than
an external perspective.
- Most companies view external partners as someone paid to
deliver a specic service rather than a source oI co-creation
and open innovation.
- Most companies are more Iocused on protecting their own
knowledge and intellectual property rather than opening up
and exploring new opportunities. They play deIense rather
than oIIense. This should not come as a surprise, as one
oI the main objectives Ior corporate lawyers is to minimize
risk, and it is Iair to say that opening up to the outside world
increases the risk element.
- Large companies can be inherently skeptical about the capaG
bilities oI small companies. Running into a wall oI doubt
would not be unusual in these situations. AIter all, what
could a little rm possibly have to oIIer a global giantr And
iI the small company's people were really any good, wouldn't
they be working Ior bigger companies to begin withr Yes, I
am overstating it here, but you get the point, rightr
- Forging strong relationships takes time and personal comG
mitment. We are just too busy to make it happen and it does
not help that most companies do not provide the necessary
time, resources, and encouragement to make this happen.
Whai should you do io losici an oiganizaiional mindsci ihai su-
oiis ihc luilding ol iiusi.
Thc mosi dilhculi siiuaiion laccd ly lcadcis who sccI io movc an
oiganizaiion iowaid ocn innovaiion is ihai ihcy aic alonc. This is a
ncw way ol doing ihings, and ii will dcvclo many locs among ihosc
who |usi wani ihings io siay as ihcy havc always lccn. This is iiuc no
maiici whai ihc sizc ol ihc comany.
This is a vciy noimal icaciion, many colc lccl ihicaicncd ly somc-
ihing ihai is ncw and docsnì sccm io maich whai has lcd ihc oigani-
zaiion io succcss in ihc asi. So you do noi gci much suoii loi ihis
ncw way ol ihinIing liom anyonc wiihin youi comany. Thcy mighi
scc ihai ihis could lc inicicsiing, lui oncc ihcy lcgin io undcisiand
ihai you havc io maIc signihcani changcs in ihc way you aic dcaling
74
75
wiih cxicinal siaIcholdcis, ihcy lcgin io iaisc olsiaclcs iaihci ihan
scc ooiiuniiics.
Whcn you havc icciuiicd cnough colc wiih a ioci mindsci,
ihcn you havc laid ihc loundaiion loi iiusi, which in iuin maIcs cv-
ciyonc accci ihai siiong iclaiionshis aic ihc Icy io lusincss succcss
in ihc luiuic. Now you aic icady loi ocn innovaiion.
Unloiiunaicly, ii is my cxciicncc ihai lcw comanics havc laid ihis
loundaiion, and ihis will noi hacn unlcss you lccomc succcsslul in
icciuiiing ihc iighi colc wiih ihc iighi mindsci. You can moic oi
lcss |usi loigci aloui ioccsscs and conccis lccausc, whcn ii comcs
io ocn innovaiion, ii is ihc mindsci ihai maiicis ihc mosi. Il you gci
ihc mindsci iighi, ihc imlcmcniaiion ol ioccsscs will lc so much
casici io dcal wiih.
Stakeholder Management
SiaIcholdci managcmcni is a ciiiical discilinc io masici as you iiy
io losici a culiuic in which iiusi is a Icy comoncni and in which
icsisiancc io changc is minimizcd so ocn innovaiion can ihiivc. ]usi
as I asIcd you io considci inicinal siaIcholdcis whcn you lcgin io
osiiion youi comany loi ocn innovaiion, so you musi now considci
ihosc samc siaIcholdcis and how ihcy mighi icaci io ihc launch ol
ocn innovaiion ai youi comany.
You can gci an idca ol siaIcholdci managcmcni-loi loih inicinal
and cxicinal siaIcholdcis-ly ihinIing in icims ol ihicc sics: idcn-
iihcaiion, iohling, and communicaiion.
1. IdentiIy your stakeholders.
Thc hisi sic is io hguic oui who youi siaIcholdcis aic. ThinI ol
inicinal and cxicinal colc who can allcci youi ocn innovaiion ini-
iiaiivc in loih osiiivc and ncgaiivc ways, and colc who mighi lccl
ihicaicncd oi siand io gain liom ii. ThinI noi only ol ihc olvious
colc, lui also ol inuucnccis who aic noi on a loimal oiganizaiion
chaii. Piioiiiizc and lacc imoiiani siaIcholdcis on a shoii lisi.
As ciiiciia loi lacing colc on ihc shoii lisi, asI youiscll iwo qucs-
iions: Docs ihis cison hold any imaci on ocn innovaiion in oui oi-
ganizaiion iighi now. Will ihis cison havc a high imaci now, soon,
oi laici.
Alihough woiIing wiih youi siaIcholdcis is imoiiani, you will ol-
icn lacI ihc iimc io woiI wiih all ol ihcm, so you nccd io iioiiiizc
ihcm caily on. Howcvci, you should always lc icaicd io changc ihc
siaius ol ihc siaIcholdcis and add ncw siaIcholdcis whcn you lcain ol
colc lcing allccicd ly youi woiI.
2. Prole your stakeholders.
Thc ncxi sic is io cicaic shoii iohlcs ol ihc siaIcholdcis you havc
laccd on youi shoii lisi. Comilc inloimaiion such as:
- 'C?@<656?:<M ,7 64@ 765E@4:9D@C ?<6@C<59 :C @Q6@C<59>
- General inIormation: What are the name, job Iunction, conG
tact inIormation, and short bio oI the stakeholderr
- View: Do you see the stakeholder as an advocate, supporter,
neutral, critic, or a blocker oI open innovationr Whyr
- Impact: Does the stakeholder have a strong, medium, or
weak impact on your open innovation workr Whyr
- Type oI inuence: Does the stakeholder hold a Iormal/
direct or an inIormal/indirect inuence on the open innoG
A56?:< ?<?6?56?A@> 14=>
- Key interests: What are the key nancial or emotional interG
ests oI the stakeholder with regard to your open innovation
@BB:C6>
- The circle oI inuence: Who inuences the stakeholder genG
erally, and who inuences the stakeholder's opinion oI your
7
77
To what degree are you connected with the stakeholder and
his/her inuencersr
3. Communicate with your stakeholders.
Thc lasi sic is io hguic oui whai you wani liom youi siaIcholdcis
and whai you can ollci ihcm-and ihcn communicaic wiih ihcm.
You mighi noi lccl you aic icady io do so, lui you nccd io commu-
nicaic wiih youi siaIcholdcis caily and olicn. This lcis ihcm Inow
whai you aic doing, and you can usc ihcii icaciions io maIc changcs
ihai can incicasc ihc liIclihood ol succcss loi youi ocn innovaiion
iniiiaiivc.
Pcolc aic usually quiic ocn aloui ihcii vicws, and ihc lcsi way io
siaii luilding succcsslul iclaiionshis wiih youi siaIcholdcis is io ialI
diiccily wiih ihcm. You should do youi homcwoiI lcloic ihcsc mcci-
ings and iniciaciions. Bcsidcs having cialicd a iohlc, you should also
Inow ihc mosi comclling mcssagcs io usc wiih cach siaIcholdci, and
you should lc allc io dclivci quicI and concisc clcvaioi iichcs lascd
on ihcsc mcssagcs.
It's Homework Time
A siaIcholdci analysis is noi ihc only homcwoiI you nccd io do
whcn considciing ocn innovaiion. Onc ol ihc ciilous asccis ol
ocn innovaiion loi small comanics is ihc incquiiy ihai can comc
liom lcing in a iclaiionshi wiih a laigci comany. As ihc liiilc guy"
ii is all ioo casy io lc uscd and aluscd ly a liggci aiinci. To avoid
cniciing inio a win-losc iclaiionshi in which you gci ihc shoii cnd ol
ihc dcal, lc suic io iaIc a sic I lcai ioo many small comanics sIi:
doing ihcii homcwoiI io lcain as much as ossillc aloui ihc coioia-
iion ihcyìc aloui io |oin loiccs wiih, aiiiculaily wiih icgaid io ihai
oiganizaiion`s hisioiy ol dcaling wiih smallci comanics. This may
lc aiiiculaily ai io hacn il a small comany is aioachcd ly a
laigci onc insicad ol ihc oihci way aiound. Ii can lc hugcly uaiiciing
io havc, loi cxamlc, a Ioiiunc 00 him say ihcy`d liIc you io lc aii
ol ihcii ocn innovaiion ccosysicm.
In ihc iush io say ycs, ii is all ioo casy io loigci io icscaich youi
suiioi`s icuiaiion whcn ii comcs io dcaling wiih ihc smallci hsh in
ihcii ond. Aic ihcy Inown as ihc ncighloihood lully. Ii`s always a
ossililiiy. Evcn il ihcy aic, ihai docsnì ncccssaiily mcan you havc io
say no. Ii |usi mcans you wani io havc youi cycs widc ocn liom ihc
ouisci and ihai you mighi iaIc moic iccauiions io guaid youi inici-
csis ihan you would il youi icscaich icvcalcd ihai ihc coioiaiion ihai
is anxious io woiI wiih you has a siciling icuiaiion loi how ii iicais
aiincis ol all sizcs.
Thcic is a ihiid ossillc ouicomc ol youi icscaich, you may hnd ihc
laigci comany has iclaiivcly liiilc cxciicncc in dcaling wiih hims
ol youi sizc. This mcans ihcy may noi Inow much moic ihan you do
aloui how io dcvclo a aiincishi ihai will woiI loi loih sidcs. Also,
sincc ihcyìc incxciicnccd ai ihis, ihcy may maIc somc inaccuiaic as-
sumiions, including ihinIing ihai you Inow how a comany ol ihcii
sizc ociaics, whcn ically you do noi Inow ihis and nccd io lc cdu-
caicd. Ioi insiancc, ihcy may lc uscd io ihings iaIing longci lccausc
ol ihcii mulii-laycicd luicauciacy whcicas youìc uscd io maIing dc-
cisions and moving loiwaid much lasici.
Also, il ihc laigci comany is ncw io ihc ocn innovaiion gamc, ihcy
also may icnd io assumc ihai ihcy Inow whai`s lcsi loi you. This may
comc acioss as aiiogancc, whcn ii`s ically a lacI ol cxciicncc ihai is
causing ihcm io ihinI ihis way. Thcy |usi nccd io lcain io lisicn.
IooIing inio ihcsc issucs and oihcis lcloic you lca has oihci lcn-
chis as wcll. Thc moic you Inow aloui a oicniial ocn innovaiion
ally liom ihc gci-go, ihc lciici icaicd you will lc undcisiand how
youi comany mighi lc ol hcl io ihc laigci comany. This mcans you
will lc lciici icaicd io showcasc youi him`s asscis. You`ll also havc
78
7
Inowlcdgc ihai will lc valuallc whcn loih sidcs aic iiying io sci ihc
goals and ol|cciivcs ol ihc iclaiionshi.
Ioiiunaicly, an awlul loi can lc lcaincd liom ciusing a comany`s
wclsiic. How do ihcy ialI aloui ocn innovaiion. Oi do ihcy cvcn ialI
aloui ii ai all. Il ihcy havc an ocn innovaiion in iogiam in which
ihcyìc asIing colc io iovidc ihcm wiih idcas, whai hacns io
ihosc idcas. Docs ihcii iogiam acai io lc wcll locuscd, wiih clcai
ol|cciivcs. Oi aic ihcy |usi asIing loi iandom idcas. {Scc sidclai loi
an cxamlc ol ihc iyc ol inloimaiion you can glcan liom a coioiaic
wclsiic ihai scaIs volumcs aloui a comany`s iiuc commiimcni io
lcing a iiusiwoiihy innovaiion aiinci.)
Duiing ihc icscaich and gciiing-io-Inow-you hasc, ii`s good loi
loih sidcs io looI oui loi hyc and cxaggciaiions. Havc youi sin"
dciccioi on lull alcii as you lisicn io a oicniial aiinci ialI aloui
ihc wondcilul ihings ihcy can do loi you. AsI sccihc qucsiions aloui
cxamlcs ol how ihcy`vc aiincicd wiih oihcis and whai ouicomcs
wcic achicvcd.
Ii`s casici io siaii a aiincishi ihan ii is io cnd ii. Bui donì lc so ca-
gci ihai you donì iaIc iimc io lully considci whcihci ihis is ihc iighi
aiinci loi you. Il youìc ihc smallci ol ihc iwo oicniial aiincis,
is ihc oihci comany ialIing io you as il youìc cquals oi is ihcic an
undciionc ol aiiogancc. Do you lccl youìc lcing ialIcd down io. Aic
sccihcs lcing ollcicd oi is cvciyihing a liiilc luzzy. Aic goals and ol-
|cciivcs clcai. Oi docs ii sccm ihai cihas youi ioscciivc aiinci is
gciiing inio ocn innovaiion wiihoui a loi ol loicihoughi, cihas |usi
doing ii lccausc cvciyonc clsc sccms io lc doing ii. In shoii, lc alcii
and lollow youi iniuiiion. Il anyihing lccls oui ol lacc oi amiss now,
ii`s iciiy much a givcn ihai ii is only lound io gci woisc oncc you`vc
lcgun woiIing iogcihci.
Hcic aic somc addiiional laciois ihai small comanics nccd io
considci:
- Control or contributionr Compared to big corporations,
smaller companies have a hard time controlling open innoG
vation projects. Instead, they should Iocus on projects
where their contribution is truly important and valued. The
projects should also t the overall strategy oI the smaller
company.
- Big corporations can drain a smaller company. Signs oI this
include long planning periods, diIculties in identiIying
and working with the right people, and too much time spent
on patent lawyers too early in the process. II these telltale
signs appear, a smaller company needs to evaluate whether
this will become a drain oI valuable resources that could be
better spent elsewhere.
- Seeking vs. being Iound: Smaller companies need to be
more active looking around Ior partners whereas big corG
porations can Iocus more on being Iound and becoming a
preIerred partner oI choice. Companies can look Ior projG
ects and partners in their own networks (such as customers,
suppliers, and partners) or in external networks (such as
universities, intermediaries, and consultants).
+:8@ 1?<G1?< +?6I56?:<7 "C@ #@66@C 645< '64@C7
Hcic`s an undcniallc laci ol lilc: Mosi-il noi all-cllcciivc ccosys-
icms aic iniiiaicd and/oi coniiollcd ly comanics ihai siands io lcn-
chi mosi liom ihcm. I do noi vicw ihis as a ncgaiivc ihing. Howcvci, ii
should csccially cauiion smallci comanics whcn oicniial aiincis
iich you a io|cci in which ihcy say cvciyonc will win. Mosi liIcly
cvciyonc will lcnchi-il noi, ihcn ihc ccosysicm will lalici, as no cco-
sysicm can susiain iiscll il only onc aiinci lcnchis liom ii.
Wc should |usi noi loigci ihai somc always win moic ihan oihcis do.
Alc is a gicai cxamlc. Thcy walI a ihin linc as ihcy Icc siiong
80
81
coniiol ol ihcii ccosysicms and ica ihc mosi iohis. Ncvciihclcss,
ihcy siill managc io liing in lois ol ncw aiincis loi ihcii iniiiaiivcs.
A ciiiical iasI loi a smallci comany in such a siiuaiion is io cvalu-
aic whcihci ihis is ihc iighi sciu io |oin givcn ihai you havc limiicd
icsouiccs and hoclully scvcial oiions availallc io you. Kcc in mind
ihai noi cvciy dcal is woiih doing. IooI loi ihc onc whcic youi aii ol
ihc win-win is mosi signihcani loi ihc luiuic ol youi comany.
Starting Small
Now lacI io ihc challcngc I mcniioncd in ihc icvious chaici-
ioviding cmloyccs wiih ooiiuniiics io luild and cxand ihcii
ocn innovaiion caaliliiics. Coioiaiions ihai undcisiand ihc ad-
vaniagcs ol having smallci comanics as aii ol ihcii ocn innovaiion
ccosysicms can hcl small comanics addicss ihis nccd.
Hcic aic somc oihci icsouiccs small comanics can ia inio io hcl
ihcm luild ocn innovaiion musclc:
- Learning with intermediaries: "7 64@ 8:A@8@<6 6:F5CD
open innovation has grown, so too has a group oI businesses
popped up to create innovation marketplaces. These interG
mediaries help companies oI all sizes reach out to talent
around the world to solve their innovation challenges. Small
companies as well as large can benet in various ways Irom
using these intermediaries, with one oI the benets being
the ability to give employees the chance to build their open
innovation skills by being part oI a global team. I have much
more on this topic in Chapter 0, where I discuss some oI the
major innovation marketplaces and how your organization
can benet Irom them.
- Teaming up with others: More and more emphasis is being
placed these days on clusters, which are geographic concenG
trations oI interconnected businesses, suppliers, and associG
ated institutions in a particular eld. One oI the activities
that such clusters can undertake is to provide companies
F?64 5< :;;:C6I<?6= 6: 6@58 F?64 :64@C LI7?<@77@7 F?64?<
the cluster on open innovation eIIorts. Building on the age-
old notion that there is strength in numbers, such clusters
can provide training opportunities and other resources that
individual companies might not be able to aIIord on their
own.
- Universities, research institutions, and publicly Iunded projG
ects: Institutions oI higher education and research institutes
around the world have long partnered with businesses, but
this movement has gained even more momentum in recent
years. The desire to commercialize innovations developed
on campus in order to bring in income is increasingly attracG
tive-and important-to institutions oI higher education
that have experienced Ialling revenues Irom other sources.
With universities and research institutes eager to be part
oI open innovation ecosystems, businesses oI all sizes can
reach out to these organizations to build relationships that
will result in opportunities Ior employees to engage in open
innovation and thus build their skill sets.
- Corporate wild cards: Many larger corporations invite
smaller companies into what we can call wild card sessions.
These corporations understand the advantages oI having
smaller companies as part oI their open innovation ecoG
systems and they oIten invite smaller companies to help
with ideation, provide an outside perspective, and provide
expertise in a specic area. Giving employees Irom a small
company that is part oI a corporation's open innovation
ecosystem a chance to participate in such sessions as wild
82
83
cards exposes these people to the innovation processes
and methods used by the larger entity. It also gives both
sides a chance to get to know one another so it serves as an
eIIective door opener to a potentially larger, more serious
partnership.
- ):<7I965<67M There is no shortage oI consultants and serG
vice providers that oIIer insights and training modules
aimed at developing the skills and mindset needed Ior open
innovation.
2:F *:6 6: .: ';@< ,<<:A56?:<
In Aiil 2009, I wioic a llog osi ihai icIcd u lois ol
inicicsi. Ii was aloui Camlcll Sou Comany and how
I vicwcd ihcm as cxamlc ol how noi io do ocn innova-
iion. To lc laii, ihcy wcic-and io somc cxicni siill aic-
haidly alonc in lcing a lad cxamlc. Whilc ihcii inicniions
may lc good, ihcii cxccuiion is ooi, and ii sccms unliIcly
ihcy will gain ihc iiusi ol ihc communiiy ihcy aic iiying io
couii wiih ihcii Idcas loi Innovaiion iogiam. Hcic aic ihc
oinis I madc lacI in 2009 aloui ihc iollcms I saw wiih
ihcii clloii:
- It's too vague and unIocused. )58;L@99 75=7 64@= F5<6
ideas Ior new products, packaging, marketing, and proG
duction technologies that will help us meet the needs oI
our consumers and customers better, Iaster, and more comG
pletely. That could be almost anything, couldn't itr Why
<:6 4@9; =:IC ;:6@<6?59 @Q6@C<59 ;5C6<@C7 5<D 75A@ @A@C=G
body time by being more specic about what you're lookG
ing Iorr HopeIully, Campbell Soup (and other companies
doing this) have set an innovation strategy and know much
more specically what areas they're most interested in purG
suing than the catch-all description above implies. By being
more specic vague, they would avoid being inundated by
useless and energy-wasting ideas.
Turn me on, not oII. Campbell says it will take you three
to six months to get a reply and iI they turn down your idea,
you will not receive any explanation oI why it has been
rejected. Why not try to make it more invitingr I think the
C@57:< B:C L:64 64@7@ 76?;I956?:<7 ?7 6456 )58;L@99 ?7 5BC5?D
oI getting too many submissions, which takes me back to my
rst point. Bring some Iocus to the eIIort and you'll receive
ideas that are more on target and that can be reviewed
Iaster and better. And iI someone went to the trouble oI
sending in an idea, you could at least develop some general
categories to explain why an idea is turned down.
It reads like an ego trip. A press-release announcing this
program said this: The Ideas Ior Innovation website is
designed to provide an eIIective way Ior Campbell to review
and evaluate unsolicited ideas by oIIering people who do
not work Ior the company an easy way to submit ideas.
You ask people Ior their input and yet you design the entire
process toward your own needs. Come on! Yes, this is your
website and you are in control. But the website talks only
about why this is good Ior Campbell. Why not mention what
Campbell can bring to the table to the companies or people
interested in working with them and how this can be doner
- No commitment leads to wasted resources and internal
resistance. The press release announcing Campbell's Ideas
84
85
B:C ,<<:A56?:< ?<?6?56?A@ 8@<6?:<7 6456 @Q6@C<59 ?<A:9A@8@<6
is a key element to improve their innovation results. II this
?7 5 E@= @9@8@<6 B:C 64@8P 64@< , C@599= F:<D@C F4= 64@= D:
not put more eIIort into it.
)58;L@99 D:@7 8@<6?:< 6456 64@= 45A@ :64@C F5=7 :B
accessing innovation Irom other sources. I hope this
includes a pure business-to-business version that is much
more attentive toward their partners compared to their
Ideas Ior Innovation website. UnIortunately, I have not
been able to nd any inIormation on this so perhaps they
don't. Perhaps Campbell uses intermediaries such as
InnoCentive and NineSigma.
The website Ior this initiative was launched in April 2000.
UnIortunately, when I returned to it in May 2011-two Iull
years later-little appeared to have changed. At rst, I was
amused. Then I got a bit angry. It seems as iI Campbell
has done nothing at all to improve. The site looks the same
and many oI the issues I pointed out in my original article
still exist. One example is that it still takes three to six
months to get a reply-iI you get any at all.
I went on to check their corporate site to learn more about
their Iocus on (open) innovation. Nothing showed up.
Then I checked Google. Most people will do online
research about a potential partner and their innovation
@BB:C67 F4@< 64@= 5C@ 5L:I6 6: @8L5CE :< 5< :;@< ?<<:A5G
tion journey together. It would thus be great to read how
the potential partner approaches innovation and how othG
ers praise their eIIorts. You just don't nd much oI interG
est when it comes to Campbell and innovation. On the
contrary, my original blog post in which I hit on Campbell
Soup pretty hard is one oI the rst articles to show up when
you search Ior Campbell Soup and innovation.
The combination oI all this tells me that Campbell is a
company to avoid Ior potential innovation partners and Ior
corporate innovators as well. Campbell simply does not give
the impression oI being a good place to work iI you are a
corporate innovator, and I imagine they have a hard time
recruiting and retaining strong corporate innovation talent,
let alone attracting-and working with-external partners.
Fortunately, everyone else can learn Irom their bad
example; iI you are researching a potential partner and
they seem to have some oI the same aws that Campbell
does in their approach, be wary oI what kind oI partner they
might make. For small companies who have Iew resources
to waste, it is especially important to nd the right partner
and not one who is as unIocused as Campbell.
Interview #3: Metaio: A Small Company Perspective on
';@< ,<<:A56?:<
Mciaio dcvclos soliwaic ioducis loi visual iniciaciivc
soluiions comlining ical and viiiual clcmcnis. Ii is a ii-
vaicly hcld soliwaic comany loundcd in 200S wiih 6+
cmloyccs, lascd in ihicc locaiions in Gcimany, Souih
Koica, and ihc Uniicd Siaics. Thcy havc S40+ cusiomcis.
8
87
A Icy io Mciaio`s succcss is innovaiion wiih oihci aiincis.
In ihis inicivicw, ]an SchlinI, who woiIs in MaiIciing and
Busincss Dcvclomcni ai Mciaio, shaics somc vicws on how
a small comany looIs ai ocn innovaiion.
Hcic`s a commcni ]ay scni mc lcloic ihc inicivicw ihai
I wanicd io shaic, hc wioic, io lc honcsi: I wasnì much
awaic ol ihc icim and ciicumsianccs ol ocn innovaiion`
{dchniiion-wisc) and I hoc my answcis aic noi ioo much
in layman`s icims.. As lai as I undcisiood ii, ii is moic
a ciscciivc loi hugc comanics io includc SME inio ihc
ioduci lilc cyclc ai an caily siagc and shaic Inowlcdgc in
oidci io innovaic |oinily. Is ihai coiicci."
]an is vciy much coiicci. Whai I liIc aloui ihis is how a small
comany aciually docs ocn innovaiion wiihoui ically Inow-
ing ihc dchniiions. I ihinI ihis is vciy common in many small-
and mcdium-sizcd comanics. Thcy |usi do ii, whcicas mosi
lig comanics cngagc wiih ocn innovaiion as a clcai, dclil-
ciaic, and siiaicgic choicc. Undcisianding ihis dillcicncc is
imoiiani whcn lig comanics imlcmcni ocn innovaiion.
Now ihc inicivicw..
Why should small companies embrace open innovationr
Schlink: Thcy havc ihc chancc io lay ihcii sccihc iolc
in ihc dcvclomcni ol ioducis and sciviccs ihcy would oih-
ciwisc noi havc had ly only maiIciing ihcii own soluiion.
Esccially wiih consumci ioducis, ihcic aic many huidlcs
an SME can ncvci ovcicomc, lui lcing aii ol an OEM oi
an ccosysicm can hcl an SME giow and scalc iis icvcnucs.
Ii is also vciy inicicsiing io lcain liom ihc liggci aiinci
aloui ioccsscs and Pioduci Iilccyclc Managcmcni.
What does open innovation mean to small companiesr
How does this diIIer Irom the way big companies view
:;@< ?<<:A56?:<>
Schlink: Thc main dillcicncc sccms io lc ihc maiIci
cniiy siiaicgy loi SMEs vcisus an innovaiion/icchnology
lcadcishi osiiioning on ihc lig comanics` sidc. Ioi
SMEs ii is olicn an ooiiuniiy loi ihcii maiIci cniiy siiai-
cgy {gciiing inio ncw maiIcis). Thc lig comanics wani
cxicinal Inow-how io Icc ihcii osiiion as ihc innovaiion
lcadci oi cnhancc ihcii ioducis wiih ncw, uniquc sclling
ioosiiions.
What are the benets oI innovating together with others
Ior small companiesr
Schlink: In an cmciging maiIci, ihcic comcs ihc iimc
whcn csiallishcd laycis cnici ii wiih ihcii own soluiion.
Somciimcs ihcy havc loughi a sccialisi in advancc oi ihcy
dcvclocd ii ihcmsclvcs. Now, il you aic an SME ihai wanis
io siay indccndcni, you havc io |oin loiccs wiih liggci
aiincis io comcic wiih ihc |oinily dcvclocd soluiion.
In addiiion, I can mcniion ihai maiIciing and PR gci
casici wiih lig namcs and liands. An inicinal and cxici-
nal muliilici cllcci IicIs in whcn you aic aii ol an OEM
ccosysicm, you gci highly iohlcd cxicinal lccdlacI on ihc
ihings you do/did and you gci ihc ossililiiy io cicaic long-
icim ioadmas and lund R8D loi ihcsc goals.
88
8
What concerns should small companies have about open
?<<:A56?:<>
Schlink: Maylc somc lcai ihai ihcii Inowlcdgc gcis sio-
lcn" oi ihai ihc asymmciiic owci lalancc could inuucncc
ihcii siiaicgic lans. I ihinI ihai a good icaiaiion and
claloiaic coniiacis iogcihci wiih a comloiiallc lccling hcl
io icvcni lcing iaIcn ly suiiisc. I lci ihai lig comanics
wiih a good ocn innovaiion" imagc havc ii casici cniciing
aiincishis. Misiiusi is a lad siaiici..
How can small companies prepare themselves Ior open
?<<:A56?:<>
Schlink: Thcy havc io lc adaiallc {daily luilds, qual-
iiy and indusiiy siandaids), aioachallc {inicinaiional,
ocn-mindcd, soli sIills), and scll-conhdcni, ihai is, Inow-
ing cxacily whcic ihcii siicngihs aic and ihai ihcii solu-
iions lay a noiallc iolc in ihc |oini vcniuic.
Siiaicgically cxciicnccd managcmcni mcmlcis aic vciy
imoiiani. You havc io lc allc io scaI ihc samc languagc
as a CTO ai a lillion-dollai cniciiisc wiihoui sounding
cocIy.
Which business Iunctions should own open innovaG
tion at small companiesr What kind oI people should work
with open innovation at small companiesr
Schlink: Thc CEO and/oi high-lcvcl managcmcni should
own ihis il ihcy aic icchnologically cxciicnccd, lui idcally
cvciy unii should lc involvcd wiih ocn innovaiion lccausc
io|ccis nccd io lc iniiializcd, cicaicd, and maiIcicd.
)5< =:I @95L:C56@ 5 L?6 :< 64?7>
Schlink: Wcll, lci`s say ihcic is a managcmcni coniaci
lciwccn iwo comanics and ihcy agicc on an innovaiion
aiincishi. Thc io|cci will noi lc imlcmcnicd and
dcloycd ly ihcsc iniiial cisons. Dcvclocis will gci in
iouch, samc as ihc maiIciing oi PR dcaiimcni, in oidci io
dcvclo, oiimizc and, ai ihc cnd, communicaic ihc io|-
cci. Thai`s why almosi cvciy division should lc allc io woiI
undci ihcsc-say, asymmciiical-ciicumsianccs.
Open innovation is very much about ecosysG
tems with several partners. Small companies oIten
take the back seat in such setups. Is this a problemr
Schlink: I ihinI ihis is a maiici ol iimc and ciloimancc.
And I ihinI ii`s noi always lad io lc in ihc lacI scai. You
scc all ihc laycis.
What can they do to get better deals and protect their intelG
lectual propertyr
Schlink: IP managcmcni and cnough lcgal icsouiccs aic
imoiiani. Thcy should noi savc ihc moncy hcic! You havc
a lciici osiiion in ncgoiiaiions wiih a good IP oiilolio
and a good lawyci who can hcl you undcisiand comlcx
NDAs and coniiacis.
0
1
K@= )45;6@C !5E@5F5=7
- Trust is an essential component oI open innovation relaG
tionships. As you move toward open innovation, you should
begin to look into two questions: (1) What does it take Ior
you to trust othersr (2) How do you convince the people in
the organizations you want to draw into your open innovaG
tion ecosystem to build trust in you and your company and
then start Iorging strong relationships with themr
- Trust is rst and Ioremost established between people and
then perhaps between organizations, so it is more important
to look at the people side oI innovation than the process
side.
- The barriers against building trust and strong relationships
with stakeholders in your ecosystem may include (1) an interG
nal rather than an external perspective, (2) viewing external
partners as someone paid to deliver specic services rather
than sources oI co-creation and open innovation, (3) being
more Iocused on protecting your own knowledge and intelG
lectual property than opening up and exploring new opporG
tunities, (4) being skeptical about the capabilities oI small
companies, and () being too busy to make it happen.
- Stakeholder management is a critical discipline to master
as you try to Ioster a culture in which trust is a key compoG
nent and in which resistance to change is minimized so open
innovation can thrive.
- You can get an idea oI stakeholder management-Ior both
internal and external stakeholders-by thinking in terms oI
three steps: identication, proling, and communication.
- Small companies must do their homework to learn as much
as possible about the corporation they're about to join
Iorces with, particularly with regard to that organization's
history oI dealing with smaller companies. !4?7 F?99 4@9;
you avoid entering into a win-lose relationship in which you
get the short end oI the deal.
- !4@ 8:C@ =:I E<:F 5L:I6 5 ;:6@<6?59 :;@< ?<<:A56?:< 599=
Irom the get-go, the better prepared you will be understand
how your company might be oI help to the larger company.
This means you will be better prepared to showcase your
rm's assets.
- It's easier to start a partnership than it is to end it. But
don't be so eager that you don't take time to Iully consider
whether this is the right partner Ior you.
- A critical task Ior smaller companies is to evaluate whether
a corporate partner is right Ior them, given that they have
limited resources that a larger company can quickly drain.
- Small companies can provide opportunities Ior their
employees to gain open innovation skills by using innovaG
tion intermediaries, teaming up with other businesses in
clusters, serving as corporate wild cards, or bringing in conG
sultants to provide training.
3
M/KlNG lI WCFK
'
O
ncc you`vc donc youi duc diligcncc and havc dccidcd io io-
cccd wiih an ocn innovaiion aiincishi, whai do you nccd io
do maIc suic ihc iclaiionshi gcis oll io a good siaii and siays on him
looiing. In ihc cxciicmcni io lcgin, ii is ossillc io ovcilooI imoiiani
gioundwoiI ihai should lc donc ihai will hcl assuic ihai ihings go
smooihly ovci iimc. As usual, always go lacI io alignmcni, maIing
suic ihc goals and ouicomc aic aligncd wiih siiaicgy loi loih aii-
ncis. Ii is also imoiiani io csiallish loundaiics, such as dcciding u
lioni how any disagiccmcnis will lc sciilcd as wcll as lcing vciy clcai
on cxcciaiions loi ihc amouni and iyc ol icsouiccs io lc dcvoicd io
ihc io|cci liom loih sidcs. This laiici oini is aiiiculaily imoiiani
io ioicci ihc smallci aiinci who is in ihc moic iccaiious osiiion
icgaiding ihc cxcndiiuic ol siall iimc and hnancial icsouiccs.
Chiis Thocn, loimci managing diiccioi ol ihc Glolal Ocn
Innovaiion olhcc ai P8G, iovidcd somc cxccllcni guidancc on ihis
sul|cci in a icscniaiion on Suiviving, and Thiiving, in an Ocn
M/KlNG lI WCFK M/KlNG lI WCFK
Mcking lI Wcrk
4
5
Innovaiion Iuiuic." Whilc hc covcicd many aicas, his main mcssagc
was io lc ihc aiinci youìc looIing loi. Hcic`s how hc said io go
aloui doing ihai:
- It's about actions. But it starts with a mindset that needs to
inIuse the culture.
- Celebrate your partners. They should come back, and tell
others.
- Don't think in terms oI one-oII deals.
- Unless win-win is the mentality, there are no wins in the long
run.
- Grow the total pie versus growing your piece oI the pie.
- Connect partners. Connect suppliers.
- Be up Iront; be transparent.
This is all imoiiani, Chiis said, lccausc ol whai hc calls Wccdman`s
law ol aiincishi, which siaics ihai ihc sccond dcal wiih ihc samc
aiinci iaIcs aloui hall ihc iimc and cicaics doullc ihc valuc.
]an Bosch, a loimci vicc icsidcni ol Ocn Innovaiion ai Iniuii,
iovidcd addiiional good advicc loi ihc icadcis ol my llog on how io
aci in ihc caily siagcs ol luilding iclaiionshis. Hcic`s whai hc wioic:
- Set expectations up Iront. We try to be very clear about what
potential partners can expect in order to avoid the Ialse
positives mode. For instance, Ior entrepreneur day, we
promise a yes/no response within Iorty-eight hours aIter the
event. A yes means that we explore the possibility oI runG
ning a customer trial with the potential partner. We explicitly
communicate that even aIter a successIul trial, we still mainG
tain the right to not proceed with that partner, etc.
- Avoid condentiality and IP issues in the early stages. "99 @A@<67
and initial contacts are explicitly in the public domain. No
NDAs are signed; no promises are made. The goal oI initial
contacts is to create enough interest Irom our end to get into
deeper discussions that may take place under NDA.
- Facilitate the building oI a community F4@C@ @Q6@C<59 ?<<:G
vators may even decide to get together and partner with each
other, rather than with us. We've had at least one and probG
ably more cases oI where this happened. We are delighted
about this and Ieel it's an important success Iactor.
Thc icsi ol ihis chaici is dcvoicd io ihicc casc siudics ihai illusiiaic
how dillcicni comanics aic iacIling ihc challcngc ol luilding good
ocn innovaiion aiincishis. Each oiganizaiion`s icsouiccs and nccds
dillci, ol couisc, so you musi hnd a modcl ihai his youi aiiiculai siiu-
aiion. Howcvci, imoiiani lcssons can lc lcaincd liom Inowing whai
oihcis havc iiicd and whai has woiIcd-oi noi woiIcd-loi ihcm.
General Mills Town Hall Meetings
As aii ol ihc ihcii ocn innovaiion siiaicgy, Gcncial Mills has dc-
vclocd an cllcciivc iown hall mcciing siiaicgy which hcls ihcm clh-
cicnily maIc mcaninglul conncciions aiound ihc glolc wiih oicniial
aiincis. Hcic aic insighis ihcy shaicd wiih mc aloui how io maIc
such a siiaicgy woiI:
- When planning your town hall event, select a time when
there is already a Iood or technology industry event hapG
pening to ensure that you'll have a large number oI relevant
people in the area. Then, secure a speaking role Ior a memG
ber oI your team at the conIerence or event to increase the
visibility and credibility Ior your program.
Mcking lI Wcrk

7
- Once you decide on a location, partner with a trusted guide
in the region who can help you understand the culture and
who best to invite to your town hall meeting. For example,
you could consider using Iree resources Irom trade and
export agencies.
- Once you decide who you will invite, encourage potential
attendees to visit your website up Iront to become IamilG
iar with your company and the types oI technical challenges
you're looking to solve.
- During the town hall meeting, explain the heart and mission
oI your company, what you're looking Ior, and what opporG
tunities you have Ior the attendees to partner with you.
The meeting also provides an opportunity Ior attendees to
network with each other and chat with you one-on-one Ior
30 minutes. During the one-on-one meetings, learn about
potential partners' core competencies, and what technical
challenges they could solve.
- Follow up with the potential partners who were a best t in
terms oI core competencies, ability to solve your challenges,
and interest in the partnership.
Interview #4: How Existing Partners React to an Open
Innovation Strategy
Olicn, comanics alicady havc a vaiiciy ol siiaicgic
aiincishis in lacc, many ol ihcm long-sianding, iioi
io dcciding io adoi ocn innovaiion. Il you wani ihcsc
aiincis io lc aii ol youi ocn innovaiion ccosysicm,
you nccd io caiclully siiaicgizc how you`ll iniioducc ihc
concci io ihcm. I inicivicwcd Todd Boonc, diiccioi ol
MaiIci Dcvclomcni ai Psion TcIlogix, iovidci ol iuggcd
molilc comuicis, on ihis ioic.
Iasi ycai, Psion iooI a lig sic loiwaid wiih iis siiaicgic
iniciiciaiion ol ocn innovaiion-callcd Ocn Souicc
Moliliiy {OSM)-whcn ii lioughi iis glolal aiincis
iogcihci loi a sciics ol conlcicnccs ai which ihcy unvcilcd a
ncw lailoim dcsigncd io givc icscllcis and dcvcloci aii-
ncis ihc ooiiuniiy io co-cicaic wiih Psion. How cxisiing
aiincis icaci io ocn innovaiion iniiiaiivcs is ciucial and
ihus I asIcd a lcw qucsiions on ihis:
In which ways did you prepare to bring your partners on
L:5CD F?64 =:IC :;@< ?<<:A56?:< @BB:C67>
#::<@M Wc aciually siaiicd io liing oui aiincis on
loaid iioi io lcing involvcd in, oi, moic accuiaicly, lcloic
loimally dcloying ocn innovaiion. By ihai, I mcan ihai
wc havc had aiincis dcvcloing sccihc icchnologics and
ciihcials on io ol oui ioducis loi many ycais. Much ol
ihc locus is now on loimalizing ihc ioccss io do ihis and
cxanding ihc nciwoiI luiihci.
Somc ol ihc iniiial ioccss loimalizaiion locuscd on
inloimaiion uows-shaiing inloimaiion ihai was icvi-
ously dccmcd ioo conhdcniial io go io aiincis. Iuiihci,
wc havc scni a loi ol clloii imioving ihc ocnncss" ol
oui dcviccs-loih ihc inicilaccs inio ihc dcviccs as wcll
as oui dcvclomcni iool Iiis loi haidwaic and soliwaic.
This givcs a moic comichcnsivc lailoim io oui aiincis
Mcking lI Wcrk
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io dcvclo on, dclivcicd cailici in ihc ioduci lilc cyclc.

Howcvci, ihcic is siill much io do in icims ol liinging ocn
innovaiion inio ihc laliic ol how wc woiI wiih aiincis.
What were the biggest obstacles in getting your partners
:< L:5CD>
#::<@M Gciiing ihcm io undcisiand ihc lull scoc ol whai
wc aic doing. This is undcisiandallc lccausc ihc iiming ol
loih changc and dcvclomcni wiihin oui comany diciaicd
ihc acc and dcgicc io which wc could iclcasc inloimaiion.
So, ii was noi uniil wc lioughi all ol oui aiincis iogcihci in
Scicmlci ihai wc wcic allc io shaic ihc wholc mcssagc ol
how wc aic iiansloiming oui ioccsscs, oui ioducis, and oui
ovciall locus io suoii ihc adoiion ol ocn innovaiion inio
oui lusincss. Now ihai ihcy lully undcisiand ihc locus, ihcy
aic cxciicd aloui ihc diicciion wc aic hcadcd as a comany.
To oui aiincis, ii is ciiiical io communicaic ihc mcssagc
ihai ocn innovaiion is noi |usi a Psion iniiiaiivc, lui iaihci
an indusiiy hcnomcnon. Iuiihci, ihcy nccd io undci-
siand ihai ocning u oui lusincss iovidcs an ooiiu-
niiy loi ihcm io claim a laigci siaIc ol ihc valuc cquaiion
ly dcvcloing uniquc-io-ihcm soluiion clcmcnis ihai aic ol
high valuc loi ihc cusiomci. This is a ciiiical lacioi in ihcii
aliliiy io win dcals in a dillcicniiaicd way.
What were the biggest surprises or learnings when you
765C6@D 6: ?<A:9A@ =:IC ;5C6<@C7 ?< 64?7>
#::<@M How osiiivc ihcii icaciion was. As wc woiIcd
on ihis in ihc lacIgiound, ihcic was a dcgicc ol conccin
aloui how ii would icsonaic wiih aiincis. Ol couisc wc
had shaicd ihc lull sioiy wiih a handlul ol aiincis loi lccd-
lacI and wc had donc a loi ol gcncial aiinci icscaich, lui
ii was noi uniil wc shaicd ihc mcssagc wiih ihc cniiic aii-
nci communiiy ihai wc could scc ihc iiuc osiiivc icaciion.
Also, cnalling aiincis io lundamcnially incicasc ihcii
siaIc in ihc valuc cquaiion did noi ncccssaiily mcan ihai
ihcy would wani io. Bui many aic icalizing ihai ihcy can
licaI oui ol a commodiiizcd maiIci wiih somcihing
uniquc. Thc mcssagc io cusiomcis is ihai ihcy havc acccss
io soluiions ihai lciici mcci ihcii nccds. As onc aiinci
said, ihis maIcs ihcm lccl moic liIc a aii ol ihc lamily."
Oi, as anoihci siaicd on oui ocn innovaiion Wcl lai-
loim, IngcnuiiyWoiIing.com, wc now havc a cohcsivc siiai-
cgy ihai gocs lcyond a mcic icscllci agiccmcni."
I ihinI oui liggcsi suiiisc was ihc dcgicc io which aii-
ncis did wani io lc a aii ol ihis. ]usi as oui OSM allows us
io dillcicniiaic in ihc maiIci, ii also cnallcs oui aiincis
io dillcicniiaic. Collcciivcly, wc aic ollciing a moic comcl-
ling choicc io cusiomcis who gci io iailoi soluiions io whai
ihcy ically nccd-noi |usi whai`s lcing ollcicd. So, cvcn
ihough ii may icquiic somc invcsimcni liom many ol oui
aiincis, ihcy undcisiand ihai ihcy aic invcsiing in iiuc
dillcicniiaiion.
Iinally, ihcy also scc ihc ooiiuniiy loi cioss-ollina-
iion wiihin ihc aiinci communiiy. This is ciiiical lccausc
dcsiic ihc iools wc havc cicaicd, noi all aiincis aic inici-
csicd in dcvcloing uniquc icchnologics, oi ihcii locus
is in a sccihc aica. Howcvci, ly augmcniing ihc ocn
Mcking lI Wcrk
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innovaiion iniiiaiivc wiih oui collaloiaiivc communiiy, wc
havc also cicaicd ihc aliliiy loi soluiions/icchnologics io
lc shaicd acioss aiincis, acioss icgions. This cxands ihc
maiIci loi ihosc ihai do uisuc dcvclomcni iniiiaiivcs and
iovidcs moic oiions loi ihosc ihai donì.
Interview #: P&G Perspectives on Small Companies
5<D ';@< ,<<:A56?:<
Hcic is aii ol an inicivicw I did wiih Chiis Thocn, loi-
mcily ai P8G on ihc iniciscciion ol lig and small coma-
nics in ocn innovaiion.
How well inIormed do you nd small companies to be
5L:I6 :;@< ?<<:A56?:<>
!4:@<M How wcll a comany undcisiands and adois
ocn innovaiion isnì linIcd io iis sizc, lui moic so io ihc
locus ol iis lcadcishi, iis ocnncss io ncw idcas, and iis
commiimcni io innovaiion. Wc`vc sccn small comanics
dccly cngagcd in lcvciaging ocn innovaiion io giow ihcii
lusincsscs. And oihcis ciihci noi commiiicd, oi siill woiI-
ing io undcisiand whai ii mcans and how ii can ically woiI
loi ihcm and ihcii goals.
What have been your key learnings in working with small
companies on open innovation projectsr What advice
would you give small companies that want to innovate with
big companiesr
!4:@<M A ciiiical lcaining loi us, and a Icy iccc ol advicc
io oihci comanics, is io ically undcisiand whai a ioscc-
iivc aiinci nccds and cxccis. Ioi a laigci comany, ii`s
imoiiani ihai io iaIc ihc iimc u lioni io cxlain glolal
lusincss nccds, iimc lincs, IP issucs, and sialhng siiuc-
iuics. Thai way, youi ioscciivc aiinci Inows whai io
cxcci. Iaigci comanics also nccd io chccI any ossillc
aiiogancc ai ihc dooi-ihcy cannoi assumc ihai ihcy Inow
lcsi whai a aiinci mighi nccd.
Boih sidcs nccd io shaic and ically undcisiand cach oih-
ci`s luscs and minuscs and whai`s imoiiani io cach sidc.
Thai calls loi a high lcvcl ol icscci. Ii`s also unwavciingly
ciucial.
How can big companies improve their ways oI innovatG
ing together with small companiesr
!4:@<M To maIc any collaloiaiion woiI and woiI wcll,
you nccd io cnsuic you havc ihc iighi colc wiih ihc
iighi sIills ai ihc iallc whcn you 6#<-' ialIing, and ihcn
woiI io luild and dcvclo ihc iclaiionshi as ihc io|-
cci iogicsscs. In many cascs, ihc inclinaiion is io liing
in youi liighicsi minds. Bui ihai`s noi ihc iighi answci
il ihosc colc aic also aiiogani and hxcd in ihcii own
aioachcs. Kcc ihosc lolIs in ihc lal. Insicad, liing
in ihc icam ihai is caallc ol maIing dccisions, lui also
undcisiands ihai ihcy aic noi ncgoiiaiing dcals, ihcy aic
luilding iclaiionshis.
Mcking lI Wcrk
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What are the benets oI innovating with small
companiesr
!4:@<M Thcic aic a numlci ol icasons lig comanics
looI loi ooiiuniiics io cngagc wiih small comanics
and cniicicncuis. Kcy is ihai ihcy olicn aic ai ihc lcad-
ing cdgc on a vaiiciy ol lionis. Thcy aic noi lound ly ihc
samc lusincss limiiaiions as wc aic in lig hims, and donì
havc a laigci, csiallishcd lusincss io dclcnd and ioicci.
Thcy can lc iisI iaIcis, and ihus ihcii aioach and mind-
sci aic dillcicni. Thai can lc iclicshing, insiiing, and a
licaIihiough loi laigci hims, and also can lc ihc souicc
loi iiuly disiuiivc innovaiion.
What are some early signs oI danger/promise when you
engage with small companiesr
!4:@<M Whcn wc siaii ialIing io a oicniial innovaiion
aiinci, wc hisi looI io cnsuic wc havc an Ire.I, nL."
Docs ihc oihci comany havc ihc samc cihics and valucs. Il
noi, ii will liIcly suilacc laici in ioduci qualiiy issucs and
in iclaiionshi challcngcs. Sccond, is ihcic chcmisiiy. Do
wc hi, can wc collaloiaic, and do wc ically liIc cach oihci.
Can wc luild ihis iclaiionshi inio onc ol ical iiusi. I canì
siicss cnough ihai ihis is all aloui iclaiionshis, noi |usi
dcal ncgoiiaiions. Wc havc walIcd away liom ioscciivc
dcals whcic ihc innovaiion was iomising, lui ihc hi was
simly noi iighi. IooIing lacI, ihosc wcic clcaily ihc iighi
dccisions-loi loih us and ihc oihci comany.
What has surprised you the most when working with
small companiesr
!4:@<M I donì Inow ihai I`d usc ihc icim suiiiscd," lui
onc ol ihc ihings wc scc a loi is comanics misundcisiand-
ing, and ihcn misicicscniing ihcii own valuc. Quiic olicn,
ihcy ciihci liing io ihc iallc an inlciioiiiy comlcx oi a
suciioiiiy comlcx. Each scivcs as a disadvaniagc io ihcm
and ihc ioscciivc aiincishi.
Whcn ihcy undcivaluc ihcmsclvcs, ihcy aic aliaid io lully
cngagc. Thcy woiiy ihai ihcy mighi noi havc ihc icchnical
and/oi commcicial Inowlcdgc io lc a woiihwhilc aiinci.
On ihc oihci hand, somc cnici a mcciing ihinIing
ihcy`vc invcnicd hoi waici and wani io lc comcnsaicd
in laiinum. In ihcsc cascs, discussions aic almosi always
doomcd io lail lccausc ii`s haid io icach ically cllcciivc
collaloiaiion.
Ii`s ciiiical loi cvciyonc io lc icalisiic aloui whai ihcy
Inow and havc, and icscni ii aioiiaicly io oicniial
aiincis. Donì undci- oi ovci-scll.
Mcking lI Wcrk
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K@= )45;6@C !5E@5F5=7
- Important groundwork that should be done at the start oI
an open innovation relationship includes reaching agree-
ment on goals and dening the desired outcome so every-
one is condent that the relationship will produce a win-win
that is acceptable to both parties. It also includes establish-
ing boundaries, such as deciding up Iront how any disagree-
ments will be settled as well as being very clear on what the
expectations are as Iar as the resources that will be devoted
to the project Irom both sides.
- Avoid condentiality and IP issues in the early stages and
Iacilitate the building oI a community.
- Consider town hall events to eIciently make meaningIul
connections around the globe with potential partners. Use
these events to explain the heart and mission oI your com-
pany, what you're looking Ior, and what opportunities you
have Ior the attendees to partner with you.
- Put in place a strategy to bring existing partners into your
open innovation ecosystem.
WHY IHlNGS GC
WFCNG
(
I
i is incviiallc ihai noi all ocn innovaiion clloiis will woiI as
lanncd. By looIing ai ihc icasons why oihcis havc lailcd, you can
cihas lc lciici icaicd io avoid such iollcms. Hcic aic somc ol
ihc chicl icasons I`vc sccn ihai ocn innovaiion clloiis go oll iiacI:
- Companies have diIculties making innovation happen
internally. Now they hear about open innovation and think
oI this as an approach that will make everything better. Not
true. II you cannot make innovation happen internally, you
will have even more diIculties doing this with external
partners.
Olviously, ihc iimc io looI closcly ai ihc innovaiion iiacI iccoid
ol youi ioscciivc aiinci is lcloic you |oin loiccs loi an ocn in-
novaiion clloii. Bui il ihai wasnì donc and you hnd youiscll wiih a
aiinci ihai docsnì sccm io havc iis innovaiion ducIs in oidci, ii may
WFCNG
I
i is incviiallc ihai noi all ocn innovaiion clloiis will woiI as
Why Ihing: Gc Wrcng
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107
lc ossillc io analyzc |usi whcic ihc aiinci is coming u shoii and
scc il youi oiganizaiion can hcl ii imiovc in ihc asccis ol iis inno-
vaiion caaliliiics ihai aic lacIing. This is aiiiculaily iiuc loi laigc
coioiaiions aiinciing wiih small comanics, you may vciy wcll havc
Inowlcdgc and cxciicncc ai youi disosal ihai can hcl ihc smallci
oiganizaiion siicngihcn ihcii ovciall innovaiion caaliliiics. Ol
couisc, ihc invcisc mighi also lc iiuc in somc cascs, somc small com-
anics may havc colc who aic wcll-vciscd in innovaiion.
Il ihc aiincishi holds gicai oicniial-loi cxamlc, il youi aii-
nci has a cuiiing-cdgc icchnology ihai could lc ically usclul io you-
ii may lc woiih youi whilc io hcl ihc aiinci idcniily ihc ioadllocIs
ii`s luming inio and woiIing iogcihci io hcl ii ovcicomc ihcm. You
mighi ica gicai icwaids ly hcling ihcm sic u ihcii gamc. On ihc
oihci hand, ihcic mighi lc somc insianccs in which youìc |usi lci-
ici oll walIing away oncc you discovci ihai youi aiinci`s innovaiion
sIills aicnì whai ihcy nccd io lc loi ihc aiincishi io succccd.
- One oI the most common reasons open innovation eIIorts
run aground is misuse oI idea generation platIorms. Many
companies start oII with idea generation platIorms, hoping
that external contributors will contribute with great ideas
and/or technologies. Most oI these platIorms do not deliver
on the expectations, getting more trash than gold.
Whcn I wioic aloui ihis on my llog, Ellcn DiRcsia, loundci ol ihc
ioduci dcvclomcni consuliancy Synaiics Giou, commcnicd, I`vc
had lois ol cxciicncc wiih comanics iiying io siaii wiih idca gcn-
ciaiion lailoims. Whcn ihcy lail io dclivci on cxcciaiions I usually
hnd ihc samc iooi causc. Thcy siaii gcnciaiing ncw idcas in a iandom
lashion wiihoui hisi iaIing ihc iimc io dchnc, in maiIci icims, ihc
ciiiciia loi a succcsslul idca. Thcy ihcn lccomc ovciwhclmcd wiih a
laigc numlci ol iiiclcvani idcas, and ihcn icsoii io choosing ihc oncs
ihai ihcy Inow can lc imlcmcnicd."
Dcloiah Mills-Scohcld, an innovaiion advisoi and aiinci wiih
Glcngaiy IIC, an caily-siagc vcniuic caiial him, ollcicd ihcsc ica-
sons loi ocn innovaiion lailuics:
- Management-Trying to 'manage' the process vs. 'modG
erating' the process. While well-intended and rationalized,
85<= :;@< ?<<:A56?:< A@<6IC@7 5C@ <:6 D:<@ :< 5 9@A@9 ;95=G
ing eld. II it's a large company starting it, they tend to be
condescending or paternalistic instead oI viewing the other
'innovators' as equals, and this sets a very strong tone.
- Trust, or lack thereoI -This is somewhat related to above,
but there is a Iear oI losing control over intellectual propG
erty (and hence money), and I've even had clients mention
losing people-that the open innovation Iorum becomes a
means oI recruiting away their best talent (which in and oI
itselI is a symptom oI bigger issues).
Addiiional icasons ocn innovaiion clloiis ciash and luin includc
- Companies copy competitor's initiatives rather than creatG
ing their own unique initiatives that match their business
reasons Ior doing open innovation.
- ):8;5<?@7 B5?9 6: 85E@ 64@?C @8;9:=@@7P ;5C6<@C7P 5<D
customers understand what open innovation means to the
company, and they Iail to explain the impact oI such a new
direction to the internal and external stakeholders.
- The various organizational units-and in particular the
operational ones-are not Iully aligned with the innovation
initiatives, making it diIcult to execute in Iull on otherwise
well-devised initiatives.
- Executives Iail to understand that issues surrounding
the handling oI risk and Iear oI losing control are key to
Why Ihing: Gc Wrcng
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10
successIul open innovation and thus they don't deal with
them head-on.
- Companies put their best people in charge oI open innoG
vation, Iailing to recognize that the best people who do
great by doing things as usual are not necessarily what is
needed in order to succeed with open innovation. It is a
paradigm shiIt and you oIten need diIIerent perspectives
to succeed.
- Companies Iocus more on their own gains rather than workG
ing toward creating a true win-win scenario.
- Compensation policies and other reward systems don't
align with open innovation. II people aren't being rewarded
and recognized Ior taking steps that will move your open
innovation eIIort Iorward, such as building relationships
throughout your ecosystem, then they have no real motivaG
tion to adapt new ways oI thinking and new approaches to
their work.
):C;:C56@ "<6?L:D?@7
Hcic`s anoihci lig icason ocn innovaiion clloiis can lail: ihcy aic
olicn Iillcd ly coioiaic aniilodics icsisiing ihc changcs lioughi ly
ocning u io cxicinal aiincis. Thcsc aniilodics can cxisi in loih
laigc and small comanics. Il youìc hcaiing siaicmcnis such as ihcsc,
coioiaic aniilodics may lc ai haid ai woiI, icsisiing changc:
- We already tried that and couldn't make it work.
- What we're doing has worked ne Ior years; there is no
need to change.
- Our current product is still protable; I don't see why we
need to spend money on something new that might not even
work out.
- We already explored that idea years ago but decided against
it.
- II that were a good idea, we'd already have thought oI it.
AIter all, we are the experts on this. (Said about an idea
coming Irom the outside.)
- Let me just play devil's advocate here..
- OI course, I support innovation, but I just don't think this
is the right time to make a big change. The market isn't
ready.
Pcolc maIing such siaicmcnis may iiuly lclicvc ihai ihcy havc ihc
comany`s lcsi inicicsis ai hcaii. Oi ihcy may lc uiiing ihcii ci-
sonal inicicsis ahcad ol comany loyaliy. Somc colc also lccomc
aniilodics lccausc ihcy donì lccl ihcii oinions aic givcn cnough
wcighi. Such lcclings can causc colc io coniinuously iaIc ihc ncga-
iivc sidc oi lay dcvil`s advocaic. Thc hiasc I haic io liing ihis u,
lui." comcs liom ihcm a loi, lollowcd ly a loaiload ol ncgaiiviiy.
This is noi io say ihai anyonc who qucsiions ihc nccd loi changc oi
ihc diicciion ihai changc is iaIing is lcing unncccssaiily ncgaiivc.
Sound lccdlacI is nccdcd liom many quaiicis loi ical innovaiion io
occui. Bui whai I`m ialIing aloui is noi consiiuciivc ciiiicism. Raihci, ii
is ihc iclcnilcss ncgaiiviiy, looi diagging, and ihiowing u ol nccdlcss
ioadllocIs ihai osc a iiuc ihicai io innovaiion cvci lccoming a icaliiy.
Rccognizing ihai coioiaic aniilodics aic liIcly io show u ai somc
oini in youi innovaiion ioccss and having siiaicgics in lacc io dcal
wiih ihcm should hcl you dciail somc ol ihc colc who wani io
imcdc changc and mainiain ihc siaius quo. Hcic aic somc oicniial
soluiions:
- Make people backers rather than blockers.
Ii`s ncvci ioo caily io siaii ihis. Youi iniiial siaIcholdci analysis
and icsuliing communicaiions siiaicgy will mcan ihai youìc lcing
Why Ihing: Gc Wrcng
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ioaciivc iaihci ihan icaciivc. By communicaiing ioaciivcly, you can
somciimcs co-oi ihc aniilodics inio ihc ioccss in a way ihai saiishcs
ihcii cgos and maIcs ihcm lccl ihcii idcas and auihoiiiy aic lcing
aioiiaicly iccognizcd. You may discovci ihai youi ioaciivc clloiis
wcicnì cnough, lui you can coniinuc io communicaic io siaIchold-
cis ihai ihcy can lay a valuallc iolc in shaing ihc comany`s luiuic,
including ihcii own dcsiiny. Biing colc iogcihci io laciliiaic Inowl-
cdgc shaiing and ihc luilding ol ncw iclaiionshis ihai lioadcn cv-
ciyonc`s ciscciivcs. Kcc colc involvcd in ihc innovaiion ioccss.
- Stay below the radar.
In somc siiuaiions, ihc lcsi choicc is io siay lclow ihc iadai as long
as ossillc. Donì lccomc ioo inicicsiing ioo caily. This will hcl you
avoid colc who wani io own ihc idca oi ioccss, oi who wani io a-
ly siandaid coioiaic ioccsscs io ihc io|cci cvcn ihough ihis can
Iill ii. This, ol couisc, is moic alicallc io laigc comanics ihan io
small oncs, whcic cvciylody Inows whai`s going on and ii`s haid io
Icc anyihing quici.
- Have Irameworks and processes in place.
Many inicinal innovaiion dclaclcs can aiily lc avoidcd ly sciiing
inicinal iulcs aloui how io liing innovaiion io|ccis loiwaid. Wiih a
liamcwoiI and ioccss in lacc, ii lccomcs casici io movc io|ccis loi-
waid wiihoui having ihcm gci hung u in dcsiiuciivc inicinal wailaic.
- Provide high autonomy.
In laigci oiganizaiions, having innovaiion councils wiih high au-
ionomy oi uniis wiih ihcii own assigncd ludgcis and goals aic oihci
ways io gci aiound ihc damagc ihai can lc donc ly coioiaic aniilod-
ics. Such siiuciuics hcl shclici ncw idcas againsi siiuaiions in which
cxccuiivcs aic noi willing io scnd ihcii oliiical caiial in suoiiing
innovaiion oi whcn ihcy lclicvc ihc changc will imaci ihcii own ca-
icci ncgaiivcly.
K@= )45;6@C !5E@5F5=7
- The reasons open innovation partnerships go oII track inG
clude (1) a lack oI capabilities to make innovation happen
internally, (2) using idea generation platIorms without rst
dening the criteria Ior a successIul idea, (3) a lack oI abilG
ity to build trust, and (4) the larger partner trying to manage
the process instead oI collaborating.
- Open innovation eIIorts are oIten killed by corporate antiG
bodies that resist the types oI change that being part oI an
open innovation ecosystem requires.
- Solutions Ior corporate antibodies include (1) making peoG
ple backers rather than blockers, (2) staying below the raG
dar, (3) having a Iramework and processes in place, and ()
providing high autonomy.

113
lNNCV/IlCN
M/FKEIFL/CES
/ M/J CF F E S CUFCE F CF
CFE N l NNCV/I l CN
)
A
s ocn innovaiion lccomcs moic widcsicad and ccosysicms
aic csiallishcd, ihc nccd incicascs loi innovaiion maiIcilac-
cs ihai can scivc as inicimcdiaiics io which comanics can quicIly
conncci io mcci nccds and solvc iollcms. Somc ol ihcsc inicimcdi-
aiics will scivc nichc maiIcis, whcicas oihcis will lc moic gcncial.
Somc will lc sci u ly comanics io mcci ihcii sccihc nccds, and
oihcis will lc sci u ly ihiid aiiics ihai wani io osiiion ihcmsclvcs
as an inicilacc lciwccn comanics sccIing soluiions and ihc smaii
colc-oi comanics-wiih soluiions. No maiici whai ihcy looI liIc,
succcsslul inicimcdiaiics aic-oi will lccomc-Icy laycis in innova-
iion ccosysicms, as ihcy aic an imoiiani souicc ol Inowlcdgc and
CFE N l NNCV/I l CN
A
A
A
lnncvcIicn McrkeIp|cce:
114
115
soluiions ihai should lc uscd caily on whcn comanics dcvclo ihcii
ocn innovaiion iniiiaiivcs.
Such inicimcdiaiics havc a iolc io lay wiih small comanics as wcll
as wiih laigc oncs. Onc ol ihc challcngcs small comanics nccd io
iacIlc whcn ihcy considciing cngaging in ocn innovaiion is gciiing
cmloyccs u io sccd on ihc sIills ihai aic icquiicd io lc aii ol an
ocn innovaiion icam. Inicimcdiaiics can hcl mcci ihis nccd.
Thc sIills icquiicd includc collaloiaiion, icam luilding, and com-
municaiion. Dccnding on how a small comany ociaics, colc aic
olicn asIcd io iacIlc iollcm solving on ihcii own iaihci ihan cngag-
ing in icam clloiis. So ooiiuniiics may lc lcw and lai lciwccn loi
luilding ihc sIills ihai will maIc colc cllcciivc as aii ol an ocn
innovaiion icam. Onc soluiion io ihis iollcm could lc io asI youi
colc io iiy woiIing as cxciis oi soluiion iovidcis on icams ai
ocn innovaiion inicimcdiaiics.
Onc ol ihc lciici Inown and csiallishcd inicimcdiaiics is
InnoCcniivc, a ihiid-aiiy innovaiion maiIcilacc ihai ociaics wiih
a iizc-lascd ocn innovaiion modcl. InnoCcniivc connccis coma-
nics, acadcmic insiiiuiions, ihc ullic sccioi, and noniohi oiganiza-
iions wiih a glolal nciwoiI ol moic ihan 160,000 cxciis and iollcm
solvcis in 17 couniiics aiound ihc woild. InnoCcniivc was oiiginally
dcvclocd ly haimaccuiical giani Eli Iilly as an in-housc innovaiion
inculaioi. An indccndcni oiganizaiion sincc 200, InnoCcniivc ini-
iially saw succcss wiihin ihc haimaccuiical maiIcilacc, lui ii is now
aciivc in many oihci indusiiics, including consumci acIagcd goods,
whcic comanics such as P8G havc had succcss using InnoCcniivc.
InnoCcniivc`s ioccss woiIs liIc ihis: An oiganizaiion {a sccIci)
iovidcs a challcngc io solvcis all ovci ihc woild who can win cash
iizcs loi solving ihc iollcm. Moic ihan a ihiid ol ihc solvcis havc
docioiaics. Piollcms havc lccn icscnicd in cngincciing, comuici
scicncc, maih, chcmisiiy, lilc scicnccs, hysical scicnccs, and lusincss.
InnoCcniivc gcis a osiing lcc and a hndci`s lcc il ihc iollcm is
solvcd.
Ol couisc, InnoCcniivc has comciiiion. Hcic aic lcw oihci ocn
innovaiion maiIcilaccs:
- IdeaConnection bills itselI as the world's largest open innovaG
tion intermediary. Founded in 2007, the company takes on
challenges Irom large and small companies. They use teams
oI Iour to ve experts led by Iacilitators. Their Iocus is on proG
viding well-researched, in-depth solutions. Awards Ior probG
lem solvers range Irom $00 to $20,000 per team member.
- NineSigma provides an extensive global network oI sciG
entists, university research departments, and technology
incubators to cross-pollinate ideas and provide solutions.
Founded in 2000, the company has become a leader in
expert-sourcing, oIIering clients such as GlaxoSmithKline,
Phillips, KraIt, Unilever, and Xerox access to its network as
well as an extensive database oI existing solutions that span
all industries and technical disciplines.
- Founded in 1000, yet2.com brings together buyers and sellG
ers oI technologies so all parties maximize the return on
their investments. Yet2.com Iocuses on later-stage technoloG
gies, rather than on ideas.
- TopCoder bills itselI as the world's largest competitive
soItware-development community, with more than 17,000
developers representing more than 200 countries. The comG
munity builds soItware Ior a wide-ranging client base through
a competitive, rigorous, standards-based methodology.
- YourEncore connects companies with retired scientists and
engineers, who provide expertise within the liIe sciences,
consumer sciences, Iood sciences, specialty materials, and
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117
aerospace and deIense industries. YourEncore was Iounded
in 2003, with P&G and Eli Lilly as initial clients and the manG
date to tap into an underutilized asset: the growing number
oI retired and veteran scientists.
IdcaConncciion gocs ihiough a lig ioccss in cicaiing iis icams,
aiily ly ciowdsouicing, ly soliwaic, ly iohlc, ly scll-sclcciion, ly
mcmlci and laciliiaioi inui, and ly IdcaConncciion cisonncl.
Tcams aic laciliiaicd ly IdcaConncciion modciaiois. You can also
loim icams ai InnoCcniivc, lui hcic you aic asIcd io loim and iun
ihcm youiscll.
This givcs colc who aic uscd io woiIing in isolaiion ihc ooiiu-
niiy io |oin wiih oihcis io solvc innovaiion challcngcs oscd ly coma-
nics who aic willing io ollci icwaids io havc cxciis liom aiound ihc
woild iacIlc ically haid iollcms.
Timc is, ol couisc, a Icy conccin, lui cihas wc can ihinI ol ihis
as lcaining ly doing and as an alicinaiivc io aiiiciaiing in a conlci-
cncc oi a iiaining iogiam. ]oining wiih ccis aiound ihc woild who
aic iacIling a challcngc mcans youìc lcaining noi |usi aloui ocn in-
novaiion lui also aloui dcaling wiih issucs ol divcisiiy.
Small comanics can usc ihc ocn innovaiion inicimcdiaiics io
osc ihcii own challcngcs and havc icams ol cxciis liom aiound
ihc glolc woiI io solvc a iough R8D oi lusincss iollcm ihai may lc
llocIing ihcii succcss. Scvcial ol ihc ocn innovaiion inicimcdiai-
ics woiI wiih small comanics as wcll as laigc. IdcaConncciion, loi
cxamlc, has solvcd challcngcs loi comanics as small as onc cison.
Similaily, InnoCcniivc woiIs wiih small comanics and noniohis, as
wcll as wiih ma|oi coioiaiions. In coniiasi, NincSigma, anoihci wcll-
Inown inicimcdiaiy, iimaiily locuscs on Ioiiunc 00 coioiaiions.
Whcn you ollci u a challcngc io onc ol ihc inicimcdiaiics, you
quicIly gci a woild-class icam ol cxciis woiIing iogcihci io solvc
youi iollcm oi challcngc. Ioi cxamlc, IdcaConncciion has ihou-
sands ol icsciccncd cxciis, many wiih PhDs, and many wiih ai-
cnis io ihcii namc. Thcy aic iolcssionals in a laigc vaiiciy ol hclds.
InnoCcniivc`s Glolal Solvci nciwoiI includcs colc liom moic ihan
200 couniiics. Wiih so many ol ioday`s lusincss iollcms icquiiing
a glolal ciscciivc io achicvc a soluiion, liinging io lcai ihc liain
owci ol a glolal communiiy io hcl you solvc a iollcm has hugc
oicniial. In addiiion, youi cmloyccs can also aiiiciaic on ihc
icam, allowing ihcm io gain Inowlcdgc liom ihcsc cxciis and luild
iclaiionshis ihai may wcll iovc lcnchcial long alici ihc challcngc
is solvcd.
Bccausc ihc ocn innovaiion inicimcdiaiics alicady havc all ol ihc
sysicms in lacc io iacIlc a challcngc, ihcic is no iam-u iimc nccd-
cd. Insicad ol waiiing uniil you`vc luili youi own inliasiiuciuic io
suoii ocn innovaiion, you can iaIc immcdiaic advaniagc ol ihc
ocn innovaiion lailoim ihc inicimcdiaiy has alicady luili.
Bcloic you assumc you canì alloid io usc onc ol ihc inicimcdiaiics,
you should Inow awaids loi a ihcoiciical soluiion ai IdcaConncciion
aic usually lciwccn S20,000 and S100,000. Ai InnoCcniivc, awaids
havc siaiicd as low as S,000 as gonc u io S1 million loi ihc mosi
comlcx challcngcs. Il you havc a iollcm ihai has siymicd youi cm-
loyccs and is osing a ma|oi laiiici io youi comany`s succcss, us-
ing onc ol ihc ocn innovaiion inicimcdiaiics mighi maIc hnancial
scnsc. This is aiiiculaily iiuc il ii sccds youi iimc io maiIci oi hcls
you lcai oui a comciiioi.
Bcing allc io dcal wiih divcisiiy is a Icy sIill ihai small comany
cmloyccs nccd io luild lcloic vcniuiing inio ihc woild ol ocn in-
novaiion, lui olicn ii`s noi somcihing ihcy havc much ol a chancc io
iacIlc in ihcii daily woiI livcs. In addiiion, ihc cxosuic io dillcicni
siylcs ol ihinIing can lc somcihing ihai such cngagcmcni ollcis ihai
isnì always icadily availallc wiihin a small oiganizaiion.
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11
Thcic`s anoihci oicniial imoiiani lcnchi hcic as wcll. Il a small
comany cmloycc hacns io havc succcss wiih a challcngc hc oi
shc woiIs on ihiough onc ol ihc inicimcdiaiics, ihis will gcnciaic cn-
ihusiasm loi adoiing ocn innovaiion wiihin youi oiganizaiion. So
considci iniioducing ihcsc inicimcdiaiics io youi cmloyccs. Thcn
suoii ihcii cngagcmcni wiih challcngcs, Inowing ihai ihcy aic
lcaining valuallc sIills ihai will, in ihc long iun, suoii youi com-
any`s ocn innovaiion clloiis.
Case Study: InnoCentive and Precyse Technologies
Hcic`s a casc siudy ihai shows how an inicimcdiaiy, in ihis casc
InnoCcniivc, can ioducc icsulis loi a comany in scaich ol innova-
iivc soluiions.
Keeping tabs on physical assets in a world that's always on
Ii`s S:00 a.m. Do you Inow whcic youi oiganizaiion`s mosi
valuallc hysical asscis aic. You Inow, ihc cnginc invcnioiy
you musi havc siagcd on ihc ioduciion linc |usi in iimc
io lc asscmllcd, ihosc icnial vchiclcs ihai wcic iciuincd,
washcd, and luclcd lui mysiciiously do noi acai as icady-
loi-icni on ihc onlinc sysicm, oi ihc IV ums and EKG
machincs ihai movc so hcciically lciwccn hosiial uoois.
Ovci ihc asi iwcniy ycais, oiganizaiions in indusiiics
liIc manulaciuiing, dclcnsc, iciail, hcalihcaic, and many
oihcis havc invcsicd lillions ol dollais in suly-chain
auiomaiion soliwaic such as ERP, lcaving ihc lasi milc
lciwccn ihc daia ccnici and ihc hysical woild ol moving
asscis un-auiomaicd. As a icsuli, asscis aic always missing
and oiganizaiions iuin io ovcisiocIing, dccnd on manual
laloi io icgisici and iiacI asscis, and sullci liom dclays and
ooi ioccss qualiiy.
How is ihis iollcm solvcd ioday. By haincssing ihc owci
ol aciivc RIID {iadio-licqucncy idcniihcaiion) iags-small
ccll honcs loi ihings" ihai iovidc hysical asscis wiih a
way io communicaic ihcii locaiion and siaius io a nciwoiI
ihai auiomaiically idcniihcs, locaics, and moniiois ihcm.
Ioundcd in 2009, Piccysc Tcchnologics is onc ol ihc
cmciging lcadcis in ihis iaidly giowing indusiiy. Wiih
NS, ihc hisi lidiicciional wiiclcss nciwoiI siandaid liom
Piccysc, ii is ossillc io dcloy ical-iimc assci iiacIing, scn-
soi nciwoiIing, and molilc-io-molilc lunciionaliiy undci a
singlc wiiclcss nciwoiI ihai cnsuics hvc ycais ol laiiciy lilc
loi ihc assci-aiiachcd aciivc iag. Bui somciimcs asscis aic
lcing shicd ouisidc ol ihc laciliiy. By wiiclcssly swiiching
RIID iags oll and on, loi cxamlc as ihcy ass ihiough ihc
lacioiy gaic, ii is ossillc io luiihci cxicnd laiiciy lilc io
much ovci hvc ycais, suoiiing a siiongci iciuin on invcsi-
mcni loi cusiomcis and imioving ihc iags` ciloimancc.
Somc indusiiy vcndois aic using shoii-iangc HI oi UHI
assivc iadio waIcu-calls io swiich RIID iags on and oll,
lui ihis icchnology dclivcis only icn lcci ol iangc, icquii-
ing cusiomcis io changc ihcii lusincss ioccsscs and loic-
ing asscis io lc iunnclcd ihiough naiiow gaics wiih undci
90 ciccni icad iaic.
Piccysc dicamcd ol a soluiion ihai will allow a ioccss-
iiansaicni dcloymcni wiih a hundicd-looi wiiclcss
waIcu iangc. Thc comany undcisiood liom ihc siaii ihai
iaIing a iiadiiional aioach io R8D could cosi wcll ovci
S1 million. Ii was moncy ihis lasi-iiacI giowih comany
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iclciicd io invcsi in diicci maiIciing and salcs. Wc
assumcd a vciy amliiious goal. Noi only was going down
ihc convcniional dcvclomcni aih iohiliiivcly cxcnsivc,
ii was simly ioo slow and had no guaianicc ol succcss. Wc
wanicd io lc hisi-io-maiIci, noi ihc lasi onc io ihc iallc,"
cxlains Piccysc co-loundci and CMO Rom Eizcnlcig.
Thai`s whcn Piccysc iuincd io InnoCcniivc.
The Challenge: Improve Mobile Device PerIormance
5<D #566@C= $?B@
Wc icalizcd ihai io maIc ihc mosi ol oui always-on, lidi-
icciional wiiclcss icchnology, wc had io cxicnd laiiciy lilc
lcyond ihc indusiiy siandaid loui- io hvc-ycai ciiod," says
Eizcnlcig. Wc wcic looIing loi a way io waIc u aciivc
iags as ihcy aiiivc liom iiansii oi cnici a cusiomci lacil-
iiy-wiihoui diaining ihc laiiciy`s cncigy lisicning io ihcsc
waIc-u calls. And wc wanicd io do ihai wiihoui allcciing
cxisiing cusiomci ioccsscs. Wc had ihc vision io dchnc
ihc iollcm, lui wc didnì havc ihc icchnical sIills in-housc
io solvc ii. Ioiiunaicly, InnoCcniivc ollcicd a vciy acal-
ing alicinaiivc.
Righi away, ihc wholc concci ol ciowdsouicing cxciicd
us. Having ihousands ol ihc lcsi and liighicsi scicniisis and
icscaichcis woiIing io hcl us dcvclo a ncw icchnology
ihai could liicially changc ihc indusiiy was amazing. Thc
laci ihai wc wcic only icquiicd io ay a Solvci should wc
idcniily a soluiion ihai hi oui nccd was anoihci gicai advan-
iagc. Wc wcic lasically luying an oiion on a gamc-chang-
ing inicllcciual iociiy," Eizcnlcig adds.
InnoCcniivc woiIcd iogcihci wiih Piccysc io loimulaic a
Challcngc, sccIing an innovaiivc way io icmoicly waIc u
a wiiclcss dcvicc wiihoui using a laiiciy-ai a diamaiically
longci iangc ihan any maiIci availallc icchnology would
allow. This Challcngc was osicd io InnoCcniivc`s ocn
innovaiion maiIcilacc whcic ii was visillc io InnoCcniivc`s
glolal Solvci nciwoiI ol ovci 200,000 scicniisis and cngi-
nccis in moic ihan 200 couniiics.
The Solution: An Innovative Way to Harvest Energy
BC:8 -5D?: 15A@7
Thc InnoCcniivc communiiy cmliaccd ihc Piccysc
Challcngc wiih iicmcndous cnihusiasm and in gicai num-
lcis. In all, moic ihan 00 InnoCcniivc Solvcis liom 64
couniiics coniiiluicd ihcii idcas and icchnical cxciiisc io
hcl solvc ihc Piccysc Challcngc. Wiihin 90 days, Piccysc
icccivcd SS iclcvani sulmissions-scvcial ol which ollcicd
novcl, innovaiivc soluiions.
I was imicsscd ly ihc qualiiy ol ihc idcas and ihc divci-
siiy ol ihc icchnical aioachcs io solving oui Challcngc,"
says Michacl Biaiman, Piccysc co-loundci and CTO.
InnoCcniivc gavc us ihc liccdom io soii ihiough a widc
numlci ol Solvci soluiions and icI ihc lcsi ol liccd."
Alici naiiowing ihc sulmissions down io ihicc, Piccysc
sclccicd a soluiion ihai was iiuly licaIihiough, loih in iis
aioach and cxccuiion. Accoiding io Eizcnlcig, Oui io-
iiciaiy assivc waIcu icchnology allows oui ncw Smaii
Agcni iags io haivcsi cncigy liom iadio wavcs 100 lcci away
liom a gaic iiansondci. This ncw icchnology will allow us
io cxicnd laiiciy lilc much lcyond ihc cuiicnily availallc
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123
hvc ycais and givcs us ihc ucxililiiy wc nccd io add ncw
lcaiuics as oui icchnology cvolvcs."
The Results: Faster to Market, More Power to Precyse
Wc now havc a ioduci ihai dclivcis a moic clhcicni
aioach io cncigy saving, lowcis ihc cosi ol iiacIing hysi-
cal asscis, and imiovcs woiIuow loi many ol oui cusiom-
cis," says Eizcnlcig. Oui icchnology docs loi ihings` whai
ihc ccll honc and ihc Inicinci did loi colc. Ii allows
invcnioiics in a suly chain oi ioducis on a manulaciui-
ing linc io ialI io onc anoihci, io colc, oi io comuicis
moic clhcicnily and wiih a lasici ROU ihan cvci ossillc
lcloic. Coniinuing io innovaic ncw ioduci caaliliiics
on io ol coic ioduci dcvclomcni icquiics you io scalc
iaidly whilc mainiaining a lcan and ucxillc siiuciuic.
Taing inio ihc ciowdsouicing owci ol InnoCcniivc`s
ocn innovaiion maiIcilacc icscnicd us wiih a cosi-clh-
cicni way io scalc whilc Iccing R8D cosis in chccI."
K@= )45;6@C !5E@5F5=7
- Innovation marketplaces can help small companies meet
the challenge oI getting employees up to speed on the skills
that are required to be part oI an open innovation team.
- Small companies can also use the open innovation interG
mediaries to pose their own challenges and have teams oI
experts Irom around the globe work to solve a tough R&D
or business problem that may be blocking their success.
- II a small company employee happens to have success with
a challenge he or she works on through one oI the interG
mediaries, this will generate enthusiasm Ior adopting open
innovation within the organization.
- InnoCentive, NineSigma, IdeaConnection, TopCoder,
and YourEncore each oIIer a diIIerent model; you should
explore them all to see which one suits your needs best.
125
lFF /ND CFEN
l NNCV/I l CN
!*
O
nc ol ihc hisi conccins ihai os inio many colc`s minds
whcn ihcy hisi lcain aloui ihc concci ol ocn innovaiion
is, Whai aloui oui inicllcciual iociiy. How can wc ioicci ihai
il wcìc woiIing in an ocn innovaiion cnviionmcni." Inicicsiingly,
I havc sccn a shili ovci ihc lasi coulc ol ycais as moic comanics
havc lcgun io hnd succcss wiih ocn innovaiion. Qucsiions aloui IP
havc lccomc lcwci. So whilc ihis is siill a vciy imoiiani issuc, I havc
noiiccd ihai ii is no longci onc ol ihc main ioics in ihc icscniaiions
you hcai liom coioiaic colc icscniing ai conlcicnccs. Thc ica-
son loi is ihai ihc comanics ihai aic lcading ihc way in ocn innova-
iion undcisiand ihai lusincss nccds io comc lcloic lcgal issucs, and
ihcy havc gaincd cxciicncc in maIing ihis hacn.
Thc lcgal dcaiimcnis ai ihcsc lcading comanics havc lccn iuincd
aiound. Thcy now ihinI ollcnsc iaihci ihan dclcnsc. Ycs, ihcic will
lc challcngcs wiih ihis aiincishi, lui ihcic aic also ooiiuniiics.
l NNCV/I l CN
O
nc ol ihc hisi conccins ihai os inio many colc`s minds
lFF cnc Cpen lnncvcIicn
12
127
Ici`s hnd a way io woiI aiound ihc challcngcs." Anoihci ihing is ihai
ihcy havc dcvclocd a iangc ol simlc documcnis and aioachcs
ihai lciici allows ihcm io cngagc wiih oicniial innovaiion aiincis.
Thcsc simlc aioachcs allow ihcm io locus on ooiiuniiics lc-
loic ihcy nccd io looI inio ihc moic comlcx lcgal issucs.
A ncws cdiioi loi K-:#5 magazinc inicivicwcd mc on ihis ioic. Hcic
is an cxccii liom ihc inicivicw:
Wired: Do you think the current legal system is able to deal with
64@ ?D@5 :B :;@< ?<<:A56?:<>
Ycs. Comanics ihai aic succcsslul wiih ocn innovaiion havc no nccd
io changc ihc lcgal sysicm. Thcy havc |usi lound ways io ciicumvcni somc
issucs ihai could hindci ocn innovaiion-- and ihcsc issucs aic almosi
all wiihin ihcii own oiganizaiions. Thc Icywoid is mindsci." Aic ihc
lcgal colc ihinIing ollcnsc oi dclcnsc. Can ihcy scc ihc ooiiuni-
iics oi |usi ihc challcngcs. Busincss-mindcd lawycis aic nccdcd loi ihis.
Wired: How do you balance the idea oI intellectual property and
open innovationr Are they opposed to each otherr
No. Thc challcngc is io maIc ihcm woiI iogcihci. You can aiguc
ihai comanics only do ical ocn innovaiion whcn ihcy cicaic ncw IP.
Ii is casy cnough io dccidc who liings whai io ihc iallc and how io
comcnsaic loi ihis. Thc ical challcngc siaiis whcn you co-cicaic ncw
IP. This gocs lacI io my icly io ihc hisi qucsiion.
Wired: What is the biggest challenge Ior lawyers/companies when
it comes to trying to become more open and share knowledger
In my vicw, ihcy sccm io lc iiaincd-and somc aic vciy wcll
iiaincd-io minimizc iisIs iaihci ihan io scc ooiiuniiics. This is
ihc liggcsi challcngc.
Wired: How do companies move Irom being very closed and secreG
tive to being open and collaborativer
This is a changc ioccss. You cannoi |usi do ihis ovcinighi. Ii iaIcs
ycais in which you siaii oui small, gci somc caily succcsscs, and ihcn
convincc moic colc wiihin youi comany and iclcvani ccosysicms
ihai ihc ocn and collaloiaiivc aioach liings moic lcnchis ihan
whai comcs liom lcing closcd and scciciivc. Ii is also imoiiani io lc
allc io show lcnchis noi only loi ihc comany, lui loi ihc individual
cison as wcll.
Legal Aspects oI Open Innovation Ior Small Companies: The P&G
View
I asIcd Chiis Thocn, who ai ihc iimc was managing diiccioi ol
ihc Glolal Ocn Innovaiion olhcc ai P8G, ihis qucsiion: Small
comanics olicn havc limiicd lcgal icsouiccs. Whai can ihcy do io gci
lciici dcals and ioicci ihcii inicllcciual iociiy." Hcic is his icly:
This is an aica ol ciiiical imoiiancc-io loih aiiics
involvcd. Unlcss cvciyonc is comloiiallc wiih and clcaily
undcisiands ihc goals, aiamcicis, and cxcciaiions ol a
io|cci and ol loih aiiics, ihc iclaiionshi will ncvci giow
inio ihc dcc and iiusicd collaloiaiion nccdcd io dclivci
mcaninglul, maximum icsulis.
Olicn, small comanics do noi havc ihc samc acccss io
dcc and cxciicnccd lcgal icams ol ihcii laigci aiincis.
Bccausc ol ihis, and ihc signihcani cosi associaicd wiih
hiiing ouisidc counscl, ihcy will lci ihc laigci comany iaIc
ihc lcad, which usually mcans ihc hisi sic is dialiing u a
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12
lull coniiaci. Thc icsuli can lc a vciy lcngihy lull-ucdgcd
documcni comlcic wiih lcgal |aigon and scnicnccs ihai iun
ovci ihicc agcs ihai no onc ically undcisiands. Invaiially,
ihc smallci comany will siill havc io ay an aiioincy
sulsianiial lccs io hisi iianslaic cvciyihing and ihcn cvcn
moic io lc involvcd in hnalizing all ihc icims.
Whilc a lull coniiaci will lc nccdcd cvcniually, ii`s noi a
good way io siaii woiIing iogcihci. Whai wc`vc sccn woiI
cxcciionally wcll is loi ihc comanics io lcgin ly cicaiing
a simlc, siiaighiloiwaid onc- io iwo-agc lciici ol undci-
sianding ihai ouilincs, in simlc languagc cvciyonc can
undcisiand, ihc ovciall woiIing iincilcs loi ihc aiinci-
shi. This will hcl uush oui whcihci ihcic is alignmcni as
io Icy lcgal and icchnical nccds loi cach aiiy io cnsuic a
mcciing ol ihc minds` in advancc ol iimc and moncy lcing
ui inio ihc lcgalcsc ol a coniiaci.
Small comanics should cnsuic ihai ihc lciici clcaily
addicsscs
- How ihc aiincishi will dcal wiih IP gcnciaicd ly
ongoing woiI and wiih lacIgiound` IP ihai is lioughi
inio ihc iclaiionshi. Will ihcic lc cxclusiviiy.
- Whai hacns in ihc cvcni ol succcss and moic
imoiianily, whai hacns il ihc |oini woiI is noi
succcsslul. Ioi cxamlc, can ciihci comany iaIc
ihcii woiI, and whai oiiion ol ii, and iiy again wiih
anoihci aiinci."
Biggest IP Legal Mistakes Small Companies Make When Working
with Large Companies
]acIic Huiici, an IP siiaicgisi wiih Thc Huiici Giou, IIC, lclicvcs
ii`s ossillc loi lig and small comanics io woiI iogcihci in ocn in-
novaiion. Bui io do so ihcy musi avoid ihcsc IP misiaIcs ihai ]acIic
has idcniihcd. Hcic`s whai ]acIic has io say on ihc ioic on hci llog
1
:
This is a sul|cci vciy ncai and dcai io my hcaii, as I am
cuiicnily moonlighiing as gcncial counscl ol a siaii-u
cncigy comany ihai is moving iowaid liccnsing oui icch-
nology inio laigc comanics. Also, as a scnioi IP lawyci ai
a mulii-naiional consumci ioducis comany, I was on ihc
oihci sidc ol such dcals on moic occasions ihan I can couni.
Piioi io ihai, I was a law him aiinci icicscniing laigc
and small coioiaiions in aicnis and liccnsing issucs, and
in doing so, I now icalizc ihai I Iillcd moic dcals ihan I
cvci laciliiaicd-a siiuaiion ihai is moic iyical ol law him
lawycis ihan ii should lc, unloiiunaicly.
In vicw ol ihis muliilaccicd cxciicncc, I icscni ihis lisi
ol ihc hvc mosi common misiaIcs ]small| comanics maIc
whcn woiIing wiih laigc comanics in ocn innovaiion.
1. ThinIing you havc all ihc answcis loi ihc laigc coma-
ny`s iollcms: As a small comany, you olicn havc only havc
a singlc idca oi icchnology and you quiic iocily locus
youi aiicniion in ihis diicciion. This can lc damaging io
youi aliliiy io comlcic an ocn innovaiion dcal wiih a lig
comany, howcvci. Thc laigc comany may noi caic aloui
whai you scc as ihc valuc ol youi icchnology lccausc ihcy
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131
aic ihc cxciis in ihcii ioducis and cusiomcis. Indccd,
you may lc wholly wiong aloui why ihc laigc comany is
inicicsicd in scaIing io you. Il you wani io scll oi liccnsc
youi icchnology io a laigc comany, youi lcsi lci is io locus
on ihc sccihc icchnology asccis, and lcavc ihc lusincss
and cusiomci issucs io ihc oihci sidc, ai lcasi ai ihc caily
siagcs ol discussion.
2. Biinging ihc wiong lawyci io ihc iallc: Vciy olicn, small
comanics assumc ihc lawyci who handlcs ihcii inicllcc-
iual iociiy issucs is ihc aioiiaic cison io liing io a
convcisaiion wiih ihc lig comany. Howcvci, ihc lcgal sIills
a small comany nccds io oliain iis aicni iighis aic vciy
dillcicni ihan whai aic nccdcd io gci a dcal donc. Whilc
ioicciion ol youi small comany`s IP should lc aiamouni
in any dcalings wiih ihc laigc comany, uiiing u comli-
caicd icsiiiciions aloui ihc usc and owncishi ol youi IP
cvcn lcloic you Inow a dcal is liIcly io hacn, which is
ihc naiuial inclinaiion ol mosi IP aiioincys, can olicn cnd
u in ihc oihci aiiy walIing away lcloic a dcal is cvcn
undciway.
I havc lound ihc lcsi lawycis io ncgoiiaic dcals in ihc
ocn innovaiion conicxi aic lusincss-locuscd aiioincys,
who icnd io lc colc who havc scivcd a siini in ihc coi-
oiaic woild and who mighi cvcn havc liiilc cxciicncc
wiih high-cnd IP issucs. Ii can lc iough io hnd somconc
wiih ihcsc cicdcniials, howcvci. As an alicinaiivc, I liIc io
woiI wiih liccnsing cxciis, mosi ol whom havc succcsslully
closcd moic dcals in a ycai ihan many law him IP lawycis
scc in ihcii cniiic caiccis. Thcsc liccnsing cxciis aic lic-
qucnily noi lawycis, lui ihcy havc ncgoiiaicd cnough agicc-
mcnis io lc vciy good ai soiiing ihc lcgal issucs and, in
ihis icgaid, ihcy olicn do a lciici |ol ihan lawycis.
S. Puiiing ihc lcgal issucs ahcad ol ihc lusincss issucs:
Evcn il you hiic a lusincss-locuscd aiioincy oi liccnsing
consuliani io dcal wiih ihc laigc comany in an ocn inno-
vaiion conicxi, dcals can siill go awiy whcn lcgal issucs aic
discusscd lcloic a lusincss agiccmcni is madc in iinci-
lc. Whcn woiIing wiih small comanics sccIing io liccnsc
ihcii icchnology, I iyically icll ihcm ihai ihc lasi cison
ihcy wani in ihc iniiial discussions is a lawyci. {Inicicsiingly,
ihis is ihc oosiic advicc I gavc whcn I was a lawyci lilling
my clicnis on an houily lasis.)
I can coach a comcicni lusincsscison aloui ihc lasic
lcgal issucs ihcy nccd io Inow whilc luilding a icim shcci
wiih ihcii couniciaiis ai ihc laigc comany, lui as a law-
yci, I can ncvci lully undcisiand ihcii lusincss and hnan-
cial dciails ai ihc lcvcl nccdcd io sulhcicnily soi ihcsc
issucs. Il ihc lusincss aiiics havc csiallishcd a good woiI-
ing iclaiionshi, ihcn ii should lc laiily casy io icncgoiiaic
a icim shcci il ii is laici lound oui ihai ihc lusincss agicc-
mcni has icsulicd in lcgal issucs aiising. Ol couisc, a dcal
could siill gci donc il ihc lawycis lcad ihc ioccss, lui I can
almosi guaianicc you ihai ihc ioccss will noi only cosi you
signihcanily moic moncy, lui also moic aggiavaiion il you
ui youi aiioincy oui in lioni.
4. Noi undcisianding ihc cconomics and low iolaliliiy
ol succcss ol ioduci dcvclomcni: Olicn, small coma-
nics lclicvc ihai liccnsing io a laigc comany mcans ihai
a lig ayoll will lc loiihcoming immcdiaicly and loi a
long ciiod in ihc luiuic. Hyoihciically, il I was io liccnsc
my siaii-u icchnology io a laigc comany ioday, I should
cxcci ihai a ioduci would noi lc in ihc maiIci loi iwclvc,
cighiccn, oi iwcniy-loui monihs oi moic, and ihai ii will
cosi ihc laigc comany hundicds ol ihousands oi olicn
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133
moic ihan a million dollais io iniioducc a ioduci inio ihc
maiIci, dccnding on ihc sccihc ioduci. Moicovci, ihc
lailuic iaic ol ncw ioducis is wcll alovc 7 ciccni, so ii
can lc cxccicd ihai cvcn ihc lcsi icchnology has a lciici
ihan cvcn chancc ol lailuic.
Ol couisc, ly ihc iimc ihc small comany cnicis inio
ncgoiiaiions wiih ihc laigc comany, ihc small comany
has loinc all ihc iisI, howcvci, moving loiwaid, ihc laigc
comany will now acquiic sulsianiial iisI. Raihci ihan sccI
a lig ayoui on ihc lioni cnd, I siiongly suggcsi dcvclo-
ing a liccnsing aiiangcmcni diiccicd iowaid iisI shaiing
ly loih aiiics. Cciiainly, ihc laigc comany liIcly has a
gicaici aliliiy io lcai iisI ihan a small comany, lui whcn
ihc small comany shows ii is willing io havc sIin in ihc
gamc," dcals aic moic liIcly io gci donc.
. Assuming ihc laigc comany inicnds io siicI ii io you:"
Thc icvailing vicw ol ihc dynamics ol whcn a small com-
any sccIs io liccnsc oi scll iis icchnology io a laigc com-
any is ihai ihc laiici wishcs io ay as liiilc as ossillc oi,
cvcn lciici, io ciush ihc liiilc guy so ihcy donì havc io
ay ai all. This ciscciivc is lolsicicd ly Hollywood and
ihc lusincss icoiicis who liIc io hnd siiuaiions involving
diama, liIc ihc ihcli ol aicni iighis oi ihc liIc.
In icaliiy, howcvci, laigc comanics cngaging in ocn
innovaiion ioday havc madc ihc dccision ihai ihcy nccd
aiincis io lc succcsslul in ihcii ioduci dcvclomcni
clloiis. Thc dccision io go ouisidc ol onc`s own comany is
onc ihai signihcs a collaloiaiivc cnviionmcni ai a laigc coi-
oiaiion, and ii is lcss liIcly ihai a comany ihai has iiuly
cmliaccd ocn innovaiion will lc moiivaicd io ciush" oi
oihciwisc dcliliiaic ihcii aiinci. Why would ihcy. Il ihc
small comany ihiivcs, ihc laigc comany will liIcly cnd u
maIing cvcn moic moncy.
Thc laci ihai idcniilying and dcvcloing a ncw aiinci
cosis much moncy and ooiiuniiy cosis also cannoi lc
ignoicd whcn considciing ihc moiivaiions and aciions ol
ihc laigc comany. This is noi io say ihai ihcic will noi lc
disagiccmcnis in ihc dcalings lciwccn ihc laigc and small
comanics, lacI ol alignmcni is incviiallc in any siiuaiion
involving collaloiaiion. Howcvci, in ioday`s ocn innova-
iion cnviionmcni, I ihinI ii is wiong loi a small comany
io qucsiion ihc laigc comany`s moiivcs whcn a disagicc-
mcni aiiscs. This is a luiihci icason loi lusincss colc ai
ihc icscciivc comanics io dcvclo a iclaiionshi lcloic
liinging in ihc lawycis, lccausc licwing disagiccmcnis
can lc moic casily sciilcd ly colc who undcisiand ihcii
aiinci`s lusincss goals lcloic a lull-llown conuici aiiscs.
Thc alovc lisi is a modcsi aiicmi io idcniily ihc issucs
ihai I havc olicn sccn aiising whcn laigc and small com-
anics dcal wiih cach oihci. Ol couisc, lois moic can go
wiong in ocn innovaiion dcalings ihan I havc laid oui in
ihis osi. Thc lcsi advicc I can givc io small comanics ihai
aic sccIing io scll oi liccnsc ihcii icchnology io a laigc com-
any is aIin io ihc advicc many long-icim maiiicd coulcs
olicn givc io oihcis who wani io Inow whai ihcii sccici" is:
lccomc liicnds hisi, iiy io undcisiand whai ihc oihci aiiy
wanis oui ol ihc dcal and donì lc aliaid io ialI oui youi dis-
agiccmcnis. In ihc cnd, all succcsslul lusincss aiincishis
ccnici on luilding iclaiionshis and siiong communicaiion,
and ocn innovaiion is no dillcicni.
134 135
K@= )45;6@C !5E@5F5=7
- Concerns about intellectual property issues in open innova-
tion have been decreasing because the companies that are
leading the way in open innovation understand that business
needs to come beIore legal issues and they have gained ex-
perience in making this happen. The legal departments oI
these leaders now think oIIense rather than deIense.
- Common mistakes that small companies make when work-
ing with large companies in open innovation include (1)
thinking they have all the answers to the large company's
problems, (2) bringing IP lawyers instead oI business-Io-
cused lawyers to the table, (3) putting legal issues ahead oI
business issues, (4) not understanding the economics and
low probability oI success oI product development, and ()
assuming the larger company has bad intentions.
1 ]acIic Huiici, Ocn Innovaiion Insighis: Biggcsi IP Icgal
MisiaIcs Small Comanics MaIc Whcn WoiIing wiih Iaigc
Comanics," (L M33#, G+N-?-O#: C/)<, Icliuaiy S, 2011, hii://iassci-
maximizcillog.com/.1247.
++ ++
USlNG SCCl/L
ME Dl / I CCL S
S
ocial mcdia, ly mosi dchniiions, llcnd icchnology and social
iniciaciion loi ihc co-cicaiion ol valuc. This his wcll inio whai I
scc as ihc undcilying concci ol ihc iniciscciion lciwccn social mcdia
iools and ocn innovaiion: ii is aloui how wc can involvc vaiious siaIc-
holdcis in cicaiing lciici innovaiion ouicomcs. Ii is woiih noiing ihai
almosi all ol ihc inicimcdiaiy comanics ociaic via social mcdia.
Also, ihc cxicnsivc nciwoiIing ihai is a icicquisiic ol ocn innova-
iion maIcs ii a naiuial loi linIing colc iogcihci ihiough social mc-
dia. This chaici looIs ai how social mcdia can assisi you in luilding
lciici aiincishis and siiongci ocn innovaiion clloiis.
Thc moic I woiI on ihc iniciscciion ol social mcdia iools and ocn
innovaiion, ii lccomcs clcaici io mc ihai comanics nccd a mulii-
iaigci aioach io clloiis in ihis iniciscciion.
ME Dl / I CCL S
S
ocial mcdia, ly mosi dchniiions, llcnd icchnology and social
U:ing Sccic| Mecic Icc|:
13
137
Onc icason is ihai mosi ocn innovaiion clloiis lic in ihicc dillci-
cni ciiclcs. Thcic is olicn a signihcani ovcila, lui wc siill nccd io looI
ai cach ol ihcm scaiaicly. Thcsc ciiclcs aic:
- The innovation community: Here we have thought leaders,
academics, consultants, service providers, and corporate
voices on innovation. This community can bring credibility
to the innovation capabilities oI a company, and this credG
ibility can turn out to be very important in the next circle,
the innovation ecosystem.
- The innovation ecosystem: This is the most important cirG
cle Ior companies serious about open innovation, as this is
where things actually happen. The ecosystem includes the
partners (primarily other companies, institutions, and uniG
versities) that help create the innovation output. It is very
much about business-to-business.
Today, vciy lcw comanics aic limiicd io |usi onc choicc whcn ii
comcs io icIing innovaiion aiincis. This iaIcs us lacI io ihc cicd-
ililiiy ihai can lc caincd in ihc innovaiion communiiy. Ici`s say a
oicniial aiinci Googlcs youi comany and discovcis ihai youi
comany is mcniioncd in llogs oi aiiiclcs and ihai you oi youi col-
lcagucs ialI ai conlcicnccs. This will ui you in a lciici osiiion ihan
oihci oicniial aiincis noi having ihis cicdililiiy. Ol couisc, ihis
gocs loih ways, you also wani io chccI on ihc cicdililiiy ol oicniial
aiincis.
- )I76:8@C7 5<D I7@C7M Some companies and industries more
than others need to pay serious attention to the third circle,
which is made up oI their own customers and users as well
as those oI their partners in the innovation ecosystem. This
is more about business-to-consumer than the business-to-
business Iocus we see in the innovation ecosystem.
Thc imoiiancc ol cach ciiclc vaiics liom comany io comany and
so docs ihc ovcila lciwccn ihc ciiclcs. Comanics nccd io hnd oui
how ihis woiIs loi ihcm and sincc ihc ciiclcs aic dillcicni, ihcy also
nccd io aly dillcicni social mcdia iools io ihcm.
How Social Media Can Help
Social mcdia ollcis iwo Icy asccis ihai suoii ocn innovaiion:
{1) communicaiion ol iclcvani mcssagcs and {2) collaloiaiion, includ-
ing shaiing ol idcas and soluiions. Hcic aic somc lcnchis ol cngaging
in social mcdia in youi ocn innovaiion clloiis:
- Better access to and interaction with stakeholders
- Feedback loop on ideas and projects
- Business intelligence
- Marketing and promotion oI projects and innovation
outcomes
- Thought leadership position
- Training on innovation skills
Many sIciics do noi scc much valuc in using social mcdia loi ocn
innovaiion ioday. This is laii cnough as ii is indccd haid io hnd good
cascs and cvidcncc on such clloiis, lui lcasc icmcmlci ihai wc aic
siill in ihc vciy caily hascs on ihis iniciscciion ol social mcdia iools
and ocn innovaiion. I uigc cvciyonc io looI iwo ycais ahcad. This is
whcic ihings will ically siaii io lall inio lacc as wc all gci moic cxcii-
cncc wiih iools and sciviccs ihai coniinuc io dcvclo ai a lasi acc and
in diicciions ihai aic haid io loicscc.
I asI you io lc ihc visionaiy comany in youi indusiiy. Exosc youi
cmloyccs and youi cxicinal siaIcholdcis io social mcdia and lcain as
you go. Ycs, ihcic will lc iniiiaiivcs ihai do noi woiI, lui you will adai
138
13
and ihc cxciicnccs gaincd can liing comciiiivc advaniagcs in ihc
shoii-, mid-, and long-icim.
1456 1:CE7
Andicas Kalan and Michacl Hacnlcin, iwo acadcmic icscaichcis ai
ESCP Euioc, siaic ihai ihcic aic six dillcicni iycs ol social mcdia: col-
laloiaiivc io|ccis, llogs and miciollogs, conicni communiiics, social
nciwoiIing siics, viiiual gamc woilds, and viiiual communiiics.
1
Wiihin ihcsc caicgoiics, I hnd ihcsc iools io lc ihc mosi iclcvani loi
ocn innovaiion clloiis:
- $?<E@D,<M Knowledge is the key element to innovation, and
LinkedIn is a great tool Ior identiIying people with knowlG
edge. This works especially well iI you upgrade to a business
account. It is also possible to get good replies iI you start
a discussion in the LinkedIn groups, but there is unIortuG
nately also too much noise (spam) in these groups.
- !F?66@CM First, a heads-up. Twitter is practically useless unless
you use an application such as TweetDeck, which allows you
to lter through the crazy stream oI content. Once this is up
and running, you have a great business intelligence tool that
allows you to track topics that are oI interest to you. Twitter
can also be used to broadcast your messages, although you
do need several thousand Iollowers-and relevant conG
tent-to see real results Irom this.
- ):88I<?6?@7M Open innovation has many channels Ior busiG
ness opportunities-virtually as well as physically. There is
a growing need Ior companies to have a strong destination
site, and I believe we will see a shiIt in which this has to look
more like a community rather than pure needs/assets sites
such as P&G's Connect + Develop. Communities will have
a mix oI content, business Iunctions such as needs/assets
listings, and social networking Ieatures.
I do noi includc IacclooI as ihis is a cisonal iool loi mc. Howcvci,
in indusiiics wiih lois ol consumci iniciaciion, IacclooI mighi also
lc a usclul iool loi ocn innovaiion clloiis. In addiiion, whilc I lc-
licvc IinIcdIn and Twiiici aic ihc mosi iclcvani social mcdia iools loi
ocn innovaiion ai ihis oini, you should cciiainly considci YouTulc,
llogs, SlidcShaic, Quoia, and oihcis as wcll. This also includcs scivicc
iovidcis and inicimcdiaiics such as InnoCcniivc, NincSigma, Yci2.
com, Sigii, and HYPE Innovaiion as ihcy havc lcgun luilding social
clcmcnis inio ihcii ollciings. Thc Icy is io looI ai and woiI wiih many
dillcicni iools and luild a sysicm" in which you caiuic valuc oui ol
all ihcsc iools ai ihc samc iimc.
An imoiiani clcmcni ol caiuiing valuc is io lc allc io diicci inici-
csicd colc and comanics io ihc dcsiinaiion siic"-ihc coioiaic
siic whcic you noi only havc a viliani communiiy whcic siaIcholdcis
can lcain liom cach oihci and co-cicaic valuc lui also a lacc whcic
you can scc ihc nccds and asscis ol ihc hosi comany. Oncc you siaii
gciiing convcisaiions going and conicni lcgins io dcvclo, you nccd
io siaii u ioccsscs ihai allow you io cxiiaci valuc oui ol ihis inloima-
iion and iniciaciion. No douli, inloimaiion ovciload will occui, lui
I vicw ihis as a luxuiy iollcm comaicd io having no inloimaiion
ovciload ai all.
A woid ol cauiion: I havc sccn scvcial comanics iiy io do social
mcdia ihc casy way. Thcy ihoughi ihcy could sci u a IinIcdIn giou
and lc donc. Ioi cxamlc, a ma|oi glolal comany sci u a IinIcdIn
giou aiound ihcii indusiiy locus. Thcy managcd io collcci ovci scvcn
hundicd mcmlcis lui aciiviiy in ihc giou slowcd io a iiicIlc, aiily
lccausc ihcy sci u vciy iigid ioccsscs, loi cxamlc, mosi ol whai ihc
comany could shaic wiih ihc IinIcdIn giou had io lc aiovcd ly
ihc communicaiions dcaiimcni. Iiiiing ihc managcmcni ol a social
140
141
mcdia clloii inio an alicady lull woiIload is haid cnough, lci alonc
having muliilc hoos io |um ihiough lcloic you can do anyihing.
Action Plan
Siiivc io lccomc ihc iclciicd aiinci ol choicc wiihin youi inno-
vaiion ccosysicms. This siaius can lc achicvcd ly laciliiaiing a com-
muniiy ihai is acInowlcdgcd as a Icy innovaiion icsouicc ly iclcvani
innovaiion aiincis in lusincss aicas ihai aic imoiiani io youi com-
any. Thc siaius can lc luild on ihicc clcmcnis: {1) ihc dcsiinaiion
siic, which is a comany-coniiollcd lailoim/wclsiic ihai lunciions as
ihc hul ol ihc communiiy and shows youi innovaiion nccds/asscis,
{2) ihoughi lcadcishi aciiviiics ihiough social mcdia channcls, and
{S) hysical cvcnis ihai allow ihc communiiy mcmlcis io mcci lacc-
io-lacc. Nciihci hysical noi viiiual aciiviiics can siand ly ihcmsclvcs,
ihcy nccd io lc inicgiaicd wiih cach oihci.
Hcic`s youi aciion lan:
Short-term actions (0 -3 months)
- Build an understanding oI your strengths and weaknesses
related to achieving the vision.
- Develop a better understanding oI social media tools and
how they can be used.
- ,D@<6?B= ?<6@C<59 5<D @Q6@C<59 8@8L@C7 5<D B:C8 5 6@58
that can help the company become more visible through
social media tools.
- IdentiIy key target people Ior the community.
- Develop a process Ior creating relevant content and develop
a strategy on how to share this content.
- Develop a strong storyline Ior upcoming communication
eIIorts (communication will be a key element internally as
well as externally).
- IdentiIy the key obstacles to developing a company-conG
trolled platIorm/website and begin lobbying in order to
overcome these obstacles (most oIten internally).
- IdentiIy and secure speaking slots at relevant conIerences.
- IdentiIy key inuencers within the innovation community
and within the innovation ecosystems, and develop a stratG
egy on how to inuence them.
Mid-term actions (3-12 months)
Bcsidcs a coniinucd dcvclomcni ol ihc shoii-icim aciions, you
should
- Launch a beta version oI a company-controlled platIorm/
website.
- Develop a Iormat Ior physical events and begin hosting
events.
- Educate senior executives on open innovation in general
and the intersection oI social media tools and open innovaG
tion in particular. (Goal: have one or more senior executives
join the team.)
Long-term actions (12-24 months)
Bcsidcs a coniinucd dcvclomcni ol ihc alovc aciions, you should
launch a lull-lcaiuic comany-coniiollcd lailoim/wclsiic and con-
iinuously cxloic ways ol dcvcloing ihis inio a siiong communiiy.
1456 ,6 !5E@7 6: 05E@ 5 ):88I<?6= 1:CE
Thc hisi qucsiion colc asI whcn ihc ioic ol luilding a commu-
niiy comcs u is How can I maIc ihis woiI." I havc wiincsscd scvcial
iniiiaiivcs and iun my own gious and nciwoiIs in loih ihc viiiual
and hysical woild. Bascd on ihis cxciicncc, I lclicvc ihcsc hvc clc-
mcnis aic Icy io succcss:
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143
1. A Genuine Need: Many communiiy owncis oi iniiiaiois iaIc ii
gianicd ihai ihcii inicndcd iaigci giou has a nccd loi ihis giou
oi communiiy. This is noi always iiuc, and you nccd io icmcmlci
ihai you aic asIing loi ihc mosi iccious ihing oicniial aiiicianis
havc-iimc. You nccd io hnd somc good icasons loi loihciing" ihcm
wiih yci anoihci communiiy oi giou.
2. Value: Il ihcic is a gcnuinc nccd loi conncciing and cnalling
siaIcholdcis wiihin a communiiy oi ccosysicm, you siill havc io oini
oui ihc sccihc valuc. Onc liiilc cxamlc could lc io hcl iovidc an
ovcivicw ol whai is going on in ihc givcn ccosysicm. Inloimaiion ovci-
load is a lig iollcm, lcaving ooiiuniiics loi communiiy owncis io
hcl solvc ihis.
3. People: You nccd io havc colc luilding ihc communiiy who
ically lclicvc in ihc nccd loi such a communiiy and scc iis oicniial
loi valuc cicaiion. Thcy musi lisicn io ihc siaIcholdcis in oidci io
luild ihc lcaiuics nccdcd, and ihcy musi aci as laciliiaiois, hcling
ihc siaIcholdcis gci io Inow cach oihci and hcling ihcm io gci valuc
liom ihc communiiy.
4. Communication: Il you aic sclling a vision, as you do whcn you
launch such a communiiy, you nccd io havc a siiong communicaiion
lan. Whai sioiics can lc uscd io icciuii ihc iighi mcmlcis and maIc
ihc cuiicni uscis cvcn moic aciivc. Rcmcmlci ihai communicaiion
on youi ocn innovaiion mcssagcs is |usi as imoiiani as communicai-
ing on ioducis and sciviccs.
. Persistence: Ii is vciy dilhculi io cicaic succcsslul communiiics
ihai aic woiihwhilc io ihc siaIcholdcis whilc also liinging innovaiion
oi lusincss ooiiuniiics io ihc owncis. Ii icquiics lois ol cxciimcn-
iaiion io hnd ihc iighi modcl, and ihis icquiics lois ol cisisicncc-
and iimc.
This is also causcd ly ihc laci ihai a wcll-iun communiiy succccds
noi only ly dclivciing valuc loi ihc siaIcholdcis, lui also lccausc ol
ihc iiusi and icscci ii has gaincd. This iaIcs iimc.
Are There Any Negatives About Using Social Media Ior Open
,<<:A56?:<>
Hcic`s a quoic liom a USA ToJn, aiiiclc ihai iacIlcd ihc downsidc
ol social mcdia-inloimaiion ovciload: Pcolc aic diowning in a dcl-
ugc ol daia. Coioiaic uscis icccivcd aloui 110 mcssagcs a day in
2010, says maiIci icscaichci Radicaii Giou. Thcic aic 110 million
iwccis a day, Twiiici says. Rcscaichci Bascx has cggcd lusincss io-
duciiviiy losscs duc io ihc cosi ol unncccssaiy iniciiuiions` ai S60
lillion in 2007."
2
Thc conccins aloui ihc haidshi ol Iccing u wiih a consiani
laiiagc ol iwccis, icxis, llogs and insiani mcssagcs aic ical cnough.
Howcvci, social mcdia iools will lc Icy loi maIing innovaiion hacn
in ihc luiuic so wc nccd io hnd ways ol coing wiih ihis.
My advicc is quiic simlc:
- -@57:<M Find out what you want to get out oI the tools.
Is it to gain or share insights or bothr II you put some
thought into this, you are better prepared when you look
into the many options.
- Focus: Once you know what you would like to get out oI
social media tools, you need to Iocus. There are so many
options and you cannot cover them all. Focus, Iocus,
Iocus.
- (?96@CM This ties back to Iocus. Tools such as TweetDeck
(a Twitter application) are very good at helping you lter
144
145
the inIormation ow and thus keep your Iocus. Find and
use them.
Hcic`s anoihci ossillc conccin aloui social mcdia and
innovaiion: Whai hacns wiih innovaiion il cxccuiivcs
and managcis lcgin io lcai social mcdia iools liIc Twiiici,
YouTulc, IacclooI-and cihas cvcn IinIcdIn.
I wondci how lig ihis issuc ically is alici having icad
aloui a suivcy liom Chcl.sc, a Swcdish wclsiic loi cxccu-
iivcs and managcis. Ii showcd ihai an incicasing numlci ol
cxccuiivcs and managcis aic aliaid ol cnding u-involun-
iaiy-on ihc alovc siics. Iuiihcimoic, 1S ciccni said ihcy
Inow ol incidcnis whcic cmloyccs had osicd inaioii-
aic oi lalsc inloimaiion aloui ihcii comanics using social
mcdia iools.
I havc always scnscd somc icluciancc iowaid ihc ncw
social mcdia iools liom ihc uci ianIs. Unloiiunaicly, ii
lccomcs somcwhai undcisiandallc wiih ihc alovc inloima-
iion, alihough I siill lclicvc lcnchis such as lasici commu-
nicaiion and lciici icach clcaily ouiwcigh diawlacIs ihai
icnd io cvolvc icgaiding loss ol coniiol issucs.
Pcihas ihis is noi such a lig ihing ioday, lui ii mighi
giow in ihc coming ycais. I goi io ihinIing ol a icccni com-
mcni madc io a llog osi ly Michacl Ialling Socicnscn,
CEO ol Nosco, an idca managcmcni soliwaic comany:
Today, iccns iaIc iidc in shaiing and collaloiaiing as
much as ossillc-and aic consianily sccIing io cxand
ihcii nciwoiI-all viial laciois in gciiing an innovaiivc cul-
iuic u and iunning.."
I ihinI ihis is quiic iiuc and ii cvcn cxicnds u io colc
in ihc caily iwcniics. This will havc an imaci on innovaiion
culiuic in many comanics as ihis gcnciaiion cnicis ihc
woiIloicc in lull siicngih. Thcii mindsci his cilccily wiih
clcmcnis nccdcd loi a moic ocn and cxicinally locuscd
innovaiion culiuic so wc can cxcci io scc inicicsiing-and
dillcicni-ihings liom ihis woiI giou. Thai is, il ihc cxcc-
uiivcs and managcis scc ihis as an ooiiuniiy and iclcasc
ihc oicniial iaihci ihan iicaiing ii as a ihicai and as a sign
ihai ihcy havc io ccdc coniiol.
Twitter and Innovation: A Great Example Irom Psion
Iasi ycai I oiganizcd a Twiiici chai wiih and loi Psion, ihc maIci ol
iuggcd molilc comuicis.
Thc ioic was Ocn Innovaiion: A Vicw liom ihc To." Psion madc
a siiong commiimcni ly having ihicc io cxccuiivcs aiiiciaic, in-
cluding ihcii CEO. Somc ouicomcs includcd
- Many tweets and retweets (spreading the word about Psion)
- More Iollowers to the Psion team
- Blog posts written by others about the chat (You can nd an
example at http://wp.me/pXewP-dR.)
Mosi imoiianily, ihis gavc ihc Psion icam lois ol insiiaiion on
whai you can aciually do wiih Twiiici io iomoic youi innovaiion ca-
aliliiics and iniciaci wiih cuiicni and luiuic siaIcholdcis in youi
ccosysicms.
Psion`s Diiccioi ol MaiIci Dcvclomcni Todd Boonc is hcavily in-
volvcd in imlcmcniing Psion`s ocn innovaiion siiaicgy and ihis is
how hc icuccicd on ihc Twiiici chai:
14
147
As Psion evolves its business, it's imperative to begin
the shiIt Irom strategic ideas to actual practice-operaG
tionally in terms oI how we approach the business actively
marketing the thought leadership aspect oI our transition.
The expectation is to demonstrate this thought leadership
through an increasing number oI initiatives-both events
and virtual transactions that enable us to target a broader
audience then we would traditionally communicate with.
This Twitter chat was an ideal rst step toward doing
this-instead oI constraining ourselves to our typical cusG
tomers, partners, and even competitors, we saw this as an
opportunity to instead reach out to a broad group Iocused
on the same open innovation philosophies that we are.
It is still early days, but our expectation is to expand our
network and knowledge base dramatically over the coming
months.
I liIc how Psion is cuiious and liavc cnough io iiy oui ncw ihings,
and I ically liIc how Psion is willing io shaic iis cxciicnccs wiih oih-
cis. All ol ihcsc chaiaciciisiics aic imoiiani io maIing ocn innova-
iion woiI.
I`vc donc oihci Twiiici chais on ocn innovaiion wiih coioiaic
cxccuiivcs, including chais wiih P8G and Gcncial Mills and wiih ocn
innovaiion cxciis such as Hcniy Chcsliough. This has iovcn io lc
quiic usclul loi shaiing conicni and idcas and loi mcciing" inicicsi-
ing colc. Considci how you could oiganizc such chais wiih mcm-
lcis ol youi own ocn innovaiion ccosysicm io shaic insighis. You
should also looI inio cxisiing chais such as InnoChai {www.innochai.
com), which hacns cvciy Thuisday ai noon {Easicin US iimc).
What's Nextr
Thc acc ol cvoluiion in social mcdia is asionishing, so lcloic lcav-
ing ihis ioic wc nccd io considci whcic ihings aic hcadcd. Il wc looI
hisi ai comanics who aic doing a gicai |ol now, wc can looI ai Iniuii
{hii://www.iniuiicollaloiaioiy.com) and P8G {www.gconnccidc-
vclo.com). Iniuii docs wcll ai mciging viiiual and hysical aciiviiics
and P8G cxccls ai cxlaining ihcii nccds and availallc asscis and wiih
ocning ihcii siic io colc aiound ihc glolc ihiough having ihc siic
availallc in dillcicni languagcs.
Dcsiic ihc good woiI ihcsc comanics aic doing, I ihinI ihcii siics
{and oihcis) nccd io cvolvc inio ncxi gcnciaiion siics ihai includc
moic communiiy lcaiuics. Thicc comanics ihai havc alicady movcd
in ihis diicciion includc GE {challcngc.ccomaginaiion.com), Psion
{www.ingcnuiiywoiIing.com), and SAP {www.sdn.sa.com/ii|/sdn/
coil). Whai I liIc aloui ihcsc iniiiaiivcs is ihai ihcy aic sciu loi inici-
aciions and convcisaiions. Thcy hcl cicaic loiums whcic cvciyonc
can lcain liom cach oihci whilc giving ihc hosi comanics somc in-
icicsiing ooiiuniiics io caiializc on all ihcsc iniciaciions-il ihcy
managc io sci u sysicms and ioccsscs io cxiiaci ihis valuc. Thcy aic
noi |usi aloui showing nccds and asscis-ihcy go social io cicaic a
communiiy. Il you wani io lc ihc aiinci ol choicc in youi ccosysicm,
ihis is ihc diicciion io uisuc.
This iniciscciion lciwccn ocn innovaiion and social mcdia iools
is inicicsiing, as ii liings ncw ooiiuniiics. Iuiihcimoic, ihcic is a
hugc lacI ol Inowlcdgc and cxciicncc on how io do ihis, so coma-
nics ihai aic willing io cxciimcni io lcain and dcvclo havc ihc o-
icniial io ica imoiiani advaniagcs ovci comciiiois who aic slowci
io adai ihcsc imoiiani ncw ocn innovaiion iools. I ically looI loi-
waid io sccing how comanics will do ihis and I lan io caiuic such
insighis and lcainings and usc ihcm oi my ucoming looI on ihc
iniciscciion ol ocn innovaiion and social mcdia.
148 14
K@= )45;6@C !5E@5F5=7
- Companies need a multi-target approach to using social me-
dia in their open innovation eIIorts because these eIIorts lie
in three diIIerent yet overlapping circles: (1) the innovation
community, (2) the innovation ecosystem, and (3) custom-
ers and users.
- Social media oIIers two key aspects that support open in-
novation: (1) communication oI relevant messages and (2)
collaboration, including sharing oI ideas and solutions.
- LinkedIn, Twitter, and communities built around destination
sites created by companies are the three most useIul social
media tools Ior open innovation today. But this is a constantly
evolving eld so you need to stay alert Ior new developments.
- To help build a status as a preIerred partner oI choice within
your ecosystem, use three elements: (1) the destination site,
which is a company-controlled platIorm/website that Iunc-
tions as the hub oI the community and shows your innova-
tion needs/assets, (2) thought leadership activities through
social media channels, and (3) physical events that allow the
community members to meet Iace-to-Iace.
- The ve elements needed to make an open innovation com-
munity successIul are (1) a genuine need, (2) value, (3) people,
(4) communication, and () persistence.
1 Andicas M. Kalan and Michacl Hacnlcin, Uscis ol ihc Woild,
Uniic! Thc Challcngcs and Ooiiuniiics ol Social Mcdia," C03-'#33
B):-O)'3 S, no. 1 {]anuaiy-Icliuaiy 2010): 9-6S.
2 ]on Swaiiz, Social Mcdia Uscis Gialc wiih Inloimaiion
Ovciload," USA ToJn, {Icliuaiy 2, 201{1), hii://www.usaioday.com/
icch/ncws/2011-02-01-icch-ovciload_N.him.
+" +"
KEY CH/FIEF
I /K E /W/YS FE C/F
Chapter 1: Denitions
Kcy Chaici TaIcaways
- Ocn innovaiion is aloui liidging inicinal and cxicinal
icsouiccs and aciing on ihosc ooiiuniiics. This coniiasis
wiih closcd innovaiion, whcic you do noi aiicmi io assimi-
laic inui liom ouisidc souiccs inio ihc innovaiion ioccss,
and you avoid having io shaic inicllcciual iociiy oi iol-
iis wiih any ouisidc souicc.
- Ocn innovaiion should iaIc lacc ihioughoui youi inno-
vaiion ioccss, noi |usi in ihc caily hascs duiing whai wc
call ihc lioni cnd ol innovaiion. You will miss oui on ihc lull
oicniial ol ocn innovaiion il you moic oi lcss dclilciaicly
shui down io cxicinal icsouiccs laici in ihc ioccss.
I /K E /W/YS FE C/F
Chapter 1: Denitions
Key ChcpIer Ickecwcy: Feccp
150
151
- Wiih ocn innovaiion comcs ihc nccd io cicaic valuc nci-
woiIs-oi ccosysicms-ihai includc all ihc oicniial caic-
goiics ol cxicinal souiccs ihai can suoii youi innovaiion
clloii. This may includc cusiomcis, sulicis, acadcmic
insiiiuiions, and cvcn comciiiois.
- Bcloic |uming inio ocn innovaiion, dciciminc why ocn
innovaiion is iclcvani io youi comany, iis icscni siiuaiion,
and iis mission and vision.
- Each comany nccds io hnd iis own aioach io ocn
innovaiion, onc ihai maichcs iis ol|cciivcs, caaliliiics and
icsouiccs.
Chapter 2: The Benets oI Open Innovation
- ]usi lccausc small comanics donì scc ihcmsclvcs as inno-
vaiois docsnì mcan ihcy aic noi innovaiois. In laci, ihcy
usc ihc maiIci as ihcii innovaiion lal as ihcy consianily
icsond io ihc nccds ol ihcii cusiomcis.
- Accoiding io Iniuii, ncccssiiy, ooiiuniiy, and ingcnuiiy
diivc innovaiion in small lusincsscs.
- Ocn innovaiion can sccd ihc dcvclomcni and maiIci
launch ol ncw ioducis and sciviccs, liing moic divcisiiy
io innovaiion, imiovc ihc succcss iaic ol ncw ioducis and
sciviccs, and divcisily iisIs and shaic loih maiIci and icch-
nological uncciiainiics ol innovaiion.
- Ocn innovaiion addicsscs ihc issucs oscd ly iaidly
advancing scicncc and icchnology and ocns u youi com-
any io ialcni liom aiound ihc woild, cnalling you io hll
gas in cxciiisc.
- Thc uisuii ol ncwncss ihiough ical innovaiion is whai sc-
aiaics ihc comanics ihai ihiivc liom ihc oncs ihai languish
in ihc doldiums oi cvcn lail aliogcihci.
- Thcic is a siiong ossililiiy ihai ihc lcsi colc and ihc
lcsi idcas aic io lc lound ouisidc youi oiganizaiion. Iailuic
io iccognizc ihis can hold a comany lacI liom icalizing iis
lull oicniial.
- Bcloic cmlaiIing on a |ouincy iowaid ocn innovaiion,
you musi cxloic whai ocn innovaiion will do io youi lusi-
ncss modcl, undcisiand how youi oiganizaiion will changc
io accommodaic ocn innovaiion, and dciciminc whcihci
you and youi oiganizaiion ically undcisiand ocn innova-
iion and whai ii iaIcs.
Chapter 3: When Big Companies Meet Small Companies in the Open
,<<:A56?:< %BB:C67
- Small comanics liing ihcsc advaniagcs io coioiaiions
ihai aic siiiving io lccomc iclciicd aiincis ol choicc
wiihin innovaiion ccosysicms: {1) Small comanics olicn
aic ai ihc lcading cdgc ol licaIihiough oi disiuiivc
innovaiion. {2) Small comanics can iaIc iisIs ihai laigc
comanics canì alloid io iaIc lccausc ihc liggci cniiiics
havc io ioicci and dclcnd ihcii csiallishcd coic lusincss
ociaiions. {S) Smallci comanics aic olicn closci io ihc
maiIcis ihcy scivc ihan laigc coioiaiions aic io ihcii mai-
Icis. {4) Thc aioach and mindsci ol ihosc ociaiing in
152
153
small lusincsscs can iovidc a licaih ol licsh aii io laigc
coioiaiions.
- Ocn innovaiion is a aiadigm shili in which comanics
musi lccomc much lciici ai comlining inicinal and cxici-
nal icsouiccs in ihcii innovaiion ioccss and aci on ihc
ooiiuniiics ihis cicaics.
- Il you wani io liing in cxicinal aiincis io youi innova-
iion ioccss, ihcsc aiincis cxcci you io havc youi own
housc in oidci. Adaiing ocn innovaiion will noi climi-
naic youi inicinal innovaiion iollcms, you nccd io solvc
ihosc hisi.
- Whcn you lcgin io innovaic wiih aiincis, you will scc ihai
ihcsc aiincis ciihci locus on ihcii own nccds-and ihcn
innovaiion will dchniicly lail-oi you will scc ihai ihcy comc
iogcihci and lunncl ihcii icsouiccs iowaid a maiIci nccd.
Il ihc laiici hacns, ihcn you havc a gicai chancc io suc-
cccd wiih innovaiion.
- Whcn small and laigc comanics iniciscci loi ocn innova-
iion, ihcy nccd io ovcicomc dillcicnccs ihai may includc
sccd ol dccision maIing, aiiiiudcs iowaid iisI, willingncss
io dcvclo ncw iulcs insicad ol lollowing ihc old oncs, allo-
caiion ol icsouiccs, dchniiions ol innovaiion, and vaiying
ioccsscs oi a lacI ol ioccsscs. Thcy also nccd io lc clcai
aloui cach oihci`s lusincss modcl and who is in chaigc.
- As you woiI wiih cxicinal aiincis, you aic cxoscd io oihci
ways ol gciiing ihings donc. You liing divcisc ihinIing inio
ihc oiganizaiion. This can maIc you considci whcihci youi
cuiicni iaciiccs aic good cnough, oi whcihci you havc io
ad|usi ihcsc oi cihas cvcn dcvclo ncw ncxi iaciiccs loi
youi oiganizaiion.
- Iaigc comanics ihai hoc io succccd in lccoming aii-
ncis ol choicc musi do ihcii lcsi noi io usc ihcii sizc io gci
ihcii way all ihc iimc in ocn innovaiion aiincishis.
Chapter 4: Getting Your Organization Ready Ior Open Innovation
- Il youi siiaicgic lan is scvcial ycais old, lcloic iiying io
answci qucsiions aloui youi innovaiion siiaicgy and youi
ocn innovaiion, you`ll nccd io udaic youi lan io maIc
suic youi siiaicgy siill his wiih shilis ihai havc occuiicd in
youi maiIcilacc as a icsuli ol comciiiivc oi cconomic
changcs oi icchnological advanccs.
- Iinding a dchniiion loi ocn innovaiion ihai mccis youi
comany`s individual nccds, icsouiccs and maiIci siiuaiion
is csscniial. Oncc you`vc hguicd oui why you nccd ocn
innovaiion and how youìc going io dchnc ii loi youi ai-
iiculai comany, ii lccomcs casici io woiI oui a siiaicgy
and imlcmcni ii.
- To havc youi ocn innovaiion siiaicgy succccd, you musi
ui in lacc ihcsc hvc clcmcnis: {1) siaIcholdci analysis,
{2) communicaiion siiaicgy, {S) common languagc,
{4) aicciaiion ol cmloyccs, and {) nciwoiIcd innova-
iion culiuic.
- Kcc ocn innovaiion in ihc loiclioni ol cmloyccs` minds
ly {1) maIing ii iclcvani and showing succcss, {2) iomoi-
ing ii, and {S) maIing ii casy and maIing ii siicI.
- Kcy comoncnis ol a good nciwoiIing culiuic includc
{1) clcai siiaicgic icasons why cmloyccs nccd io dcvclo
and nuiiuic inicinal and cxicinal iclaiionshis, {2) an
154
155
undcisianding ol ihc iycs ol nciwoiIs you hoc io luild io
suoii youi innovaiion clloiis, {S) lcadcis who show a gcnu-
inc and highly visillc commiimcni io nciwoiIing, who walI
ihc walI, noi |usi ialI ihc ialI, and who shaic cxamlcs ol ihcii
nciwoiIing cxciicnccs whcncvci ossillc, {4) nciwoiIing
iniiiaiivcs ihai mcsh closcly wiih youi coioiaic culiuic, and
{) loih viiiual and lacc-io-lacc nciwoiIing ooiiuniiics.
- Pcolc musi lc givcn ihc iimc and mcans io nciwoiI and lc
iovidcd wiih hcl io olish ihcii cisonal nciwoiIing sIills.
- Pay closc aiicniion io ihc ihicc iycs ol nciwoiIcis in youi
oiganizaiion: ccniial conncciois, lioIcis, and ciihcial
colc.
- Avoid ihcsc ioadllocIs io luilding a nciwoiIing culiuic:
noi cnough iimc oi sIills and lacI ol locus, commiimcni,
siiuciuic, and communicaiions.
Chapter : Getting Your People Ready Ior Open Innovation
- Pcolc maiici moic ihan idcas whcn ii comcs io maIing
innovaiion ol all iycs hacn.
- Youi innovaiion icam nccds io includc colc who aic
good ai woiIing in ihc ihicc-hascd discovciy-innovaiion-
accclciaiion {D-I-A) modcl ol innovaiion ui loiwaid ly ihc
Radical Innovaiion Giou. Rcmcmlci ihai noi all colc
aic good ai all hascs, so you nccd dillcicni colc loi dil-
lcicni hascs.
- Whcn looIing loi colc loi youi icam, looI loi colc wiih
ihcsc scvcn sIills: {1) iniiaicncuiial sIills, {2) ialcni loi
iclaiionshi luilding, {S) siiaicgic inuucncing, {4) aliliiy
io lc a quicI siudy {) lalanccd oiimism, {6) iolciancc loi
uncciiainiy, and {7) assion.
Chapter 6: What to Consider BeIore Leaping into a Partnership
- Tiusi is an csscniial comoncni ol ocn innovaiion icla-
iionshis. As you movc iowaid ocn innovaiion, you should
lcgin io looI inio iwo qucsiions: {1) Whai docs ii iaIc loi
you io iiusi oihcis. {2) How do you convincc ihc colc in
ihc oiganizaiions you wani io diaw inio youi ocn innova-
iion ccosysicm io luild iiusi in you and youi comany and
ihcn siaii loiging siiong iclaiionshis wiih ihcm.
- Tiusi is hisi and loicmosi csiallishcd lciwccn colc and
ihcn cihas lciwccn oiganizaiions, so ii is moic imoiiani
io looI ai ihc colc sidc ol innovaiion ihan ihc ioccss sidc.
- Thc laiiicis againsi luilding iiusi and siiong iclaiionshis
wiih siaIcholdcis in youi ccosysicm may includc {1) an
inicinal iaihci ihan an cxicinal ciscciivc, {2) vicwing
cxicinal aiincis as somconc aid io dclivci sccihc sciviccs
iaihci ihan souiccs ol co-cicaiion and ocn innovaiion,
{S) lcing moic locuscd on ioicciing youi own Inowlcdgc
and inicllcciual iociiy ihan ocning u and cxloiing
ncw ooiiuniiics, {4) lcing sIciical aloui ihc caalili-
iics ol small comanics, and {) lcing ioo lusy io maIc ii
hacn.
- SiaIcholdci managcmcni is a ciiiical discilinc io masici as
you iiy io losici a culiuic in which iiusi is a Icy comoncni
and in which icsisiancc io changc is minimizcd so ocn
innovaiion can ihiivc.
- You can gci an idca ol siaIcholdci managcmcni-loi loih
inicinal and cxicinal siaIcholdcis-ly ihinIing in icims ol
ihicc sics: idcniihcaiion, iohling, and communicaiion.
15
157
- Small comanics musi do ihcii homcwoiI io lcain as much
as ossillc aloui ihc coioiaiion ihcyìc aloui io |oin
loiccs wiih, aiiiculaily wiih icgaid io ihai oiganizaiion`s
hisioiy ol dcaling wiih smallci comanics. This will hcl
you avoid cniciing inio a win-losc iclaiionshi in which you
gci ihc shoii cnd ol ihc dcal.
- Thc moic you Inow aloui a oicniial ocn innovaiion ally
liom ihc gci-go, ihc lciici icaicd you will lc undcisiand
how youi comany mighi lc ol hcl io ihc laigci comany.
This mcans you will lc lciici icaicd io showcasc youi
him`s asscis.
- Ii`s casici io siaii a aiincishi ihan ii is io cnd ii. Bui
donì lc so cagci ihai you donì iaIc iimc io lully considci
whcihci ihis is ihc iighi aiinci loi you.
- A ciiiical iasI loi smallci comanics is io cvaluaic whcihci
a coioiaic aiinci is iighi loi ihcm, givcn ihai ihcy havc
limiicd icsouiccs ihai a laigci comany can quicIly diain.
- Small comanics can iovidc ooiiuniiics loi ihcii
cmloyccs io gain ocn innovaiion sIills ly using innova-
iion inicimcdiaiics, icaming u wiih oihci lusincsscs in
clusicis, sciving as coioiaic wild caids, oi liinging in con-
sulianis io iovidc iiaining.
Chapter 7: Making It Work
- Imoiiani gioundwoiI ihai should lc donc ai ihc siaii ol
an ocn innovaiion iclaiionshi includcs icaching agicc-
mcni on goals and dchning ihc dcsiicd ouicomc so cvciy-
onc is conhdcni ihai ihc iclaiionshi will ioducc a win-win
ihai is accciallc io loih aiiics. Ii also includcs csiallish-
ing loundaiics, such as dcciding u lioni how any disagicc-
mcnis will lc sciilcd as wcll as lcing vciy clcai on whai ihc
cxcciaiions aic as lai as ihc icsouiccs ihai will lc dcvoicd
io ihc io|cci liom loih sidcs.
- Avoid conhdcniialiiy and IP issucs in ihc caily siagcs and
laciliiaic ihc luilding ol a communiiy.
- Considci iown hall cvcnis io clhcicnily maIc mcaninglul
conncciions aiound ihc glolc wiih oicniial aiincis. Usc
ihcsc cvcnis io cxlain ihc hcaii and mission ol youi com-
any, whai youìc looIing loi, and whai ooiiuniiics you
havc loi ihc aiicndccs io aiinci wiih you.
- Pui in lacc a siiaicgy io liing cxisiing aiincis inio youi
ocn innovaiion ccosysicm.
Chapter 8: Why Things Go Wrong
- Thc icasons ocn innovaiion aiincishis go oll iiacI
includc {1) a lacI ol caaliliiics io maIc innovaiion ha-
cn inicinally, {2) using idca gcnciaiion lailoims wiihoui
hisi dchning ihc ciiiciia loi a succcsslul idca, {S) a lacI ol
aliliiy io luild iiusi, and {4) ihc laigci aiinci iiying io
managc ihc ioccss insicad ol collaloiaiing.
- Ocn innovaiion clloiis aic olicn Iillcd ly coioiaic anii-
lodics ihai icsisi ihc iycs ol changc ihai lcing aii ol an
ocn innovaiion ccosysicm icquiics.
- Soluiions loi coioiaic aniilodics includc {1) maIing
colc lacIcis iaihci ihan llocIcis, {2) siaying lclow ihc
158
15
iadai, {S) having a liamcwoiI and ioccsscs in lacc, and
{) ioviding high auionomy.
Chapter 0: Innovation Marketplaces: A Major Resource Ior Open
,<<:A56?:<
- Innovaiion maiIcilaccs can hcl small comanics mcci
ihc challcngc ol gciiing cmloyccs u io sccd on ihc sIills
ihai aic icquiicd io lc aii ol an ocn innovaiion icam.
- Small comanics can also usc ihc ocn innovaiion inici-
mcdiaiics io osc ihcii own challcngcs and havc icams ol
cxciis liom aiound ihc glolc woiI io solvc a iough R8D
oi lusincss iollcm ihai may lc llocIing ihcii succcss.
- Il a small comany cmloycc hacns io havc succcss wiih
a challcngc hc oi shc woiIs on ihiough onc ol ihc inici-
mcdiaiics, ihis will gcnciaic cnihusiasm loi adoiing ocn
innovaiion wiihin ihc oiganizaiion.
- InnoCcniivc, NincSigma, IdcaConncciion, ToCodci,
and YouiEncoic cach ollci a dillcicni modcl, you should
cxloic ihcm all io scc which onc suiis youi nccds lcsi.
Chapter 10: IPR and Open Innovation
- Conccins aloui inicllcciual iociiy issucs in ocn innova-
iion havc lccn dccicasing lccausc ihc comanics ihai aic
lcading ihc way in ocn innovaiion undcisiand ihai lusi-
ncss nccds io comc lcloic lcgal issucs and ihcy havc gaincd
cxciicncc in maIing ihis hacn. Thc lcgal dcaiimcnis
ol ihcsc lcadcis now ihinI ollcnsc iaihci ihan dclcnsc.
- Common misiaIcs ihai small comanics maIc whcn woiI-
ing wiih laigc comanics in ocn innovaiion includc
{1) ihinIing ihcy havc all ihc answcis io ihc laigc coma-
ny`s iollcms, {2) liinging IP lawycis insicad ol lusincss-
locuscd lawycis io ihc iallc, {S) uiiing lcgal issucs ahcad
ol lusincss issucs, {4) noi undcisianding ihc cconomics
and low iolaliliiy ol succcss ol ioduci dcvclomcni, and
{) assuming ihc laigci comany has lad inicniions.
Chapter 11: Using Social Media Tools
- Comanics nccd a mulii-iaigci aioach io using social
mcdia in ihcii ocn innovaiion clloiis lccausc ihcsc
clloiis lic in ihicc dillcicni yci ovcilaing ciiclcs: {1) ihc
innovaiion communiiy, {2) ihc innovaiion ccosysicm, and
{S) cusiomcis and uscis.
- Social mcdia ollcis iwo Icy asccis ihai suoii ocn
innovaiion: {1) communicaiion ol iclcvani mcssagcs and
{2) collaloiaiion, including shaiing ol idcas and soluiions.
- IinIcdIn, Twiiici, and communiiics luili aiound dcsiina-
iion siics cicaicd ly comanics aic ihc ihicc mosi usclul
social mcdia iools loi ocn innovaiion ioday. Bui ihis is a
consianily cvolving hcld so you nccd io siay alcii loi ncw
dcvclomcnis.
- To hcl luild a siaius as a iclciicd aiinci ol choicc
wiihin youi ccosysicm, usc ihicc clcmcnis: {1) ihc dcsiina-
iion siic, which is a comany-coniiollcd lailoim/wclsiic
10 11
ihai lunciions as ihc hul ol ihc communiiy and shows youi
innovaiion nccds/asscis, {2) ihoughi lcadcishi aciiviiics
ihiough social mcdia channcls, and {S) hysical cvcnis ihai
allow ihc communiiy mcmlcis io mcci lacc-io-lacc.
- Thc hvc clcmcnis nccdcd io maIc an ocn innovaiion
communiiy succcsslul aic {1) a gcnuinc nccd, {2) valuc,
{S) colc, {4) communicaiion, and {) cisisicncc.
APPENDIX A
THE TEN TYPES OF
INNOVATION
('')*+,-)'
Cneo.,
('')*+,-)'
T,e
F#37:-&,-)'
o ,e
C03-'#33 #N+?&/#
Finance S
Busincss
modcl
How you
maIc
moncy
Dcll icvoluiionizcd ihc cisonal
comuici lusincss modcl ly col-
lcciing moncy lcloic ihc con-
sumci`s PC was cvcn asscmllcd
and shicd {icsuliing in nci
osiiivc woiIing caiial ol scvcn
io cighi days).
T
NciwoiIs
and
allianccs
How you
|oin loiccs
wiih oihci
comanics
loi muiual
lcnchi
Consumci goods comany
Saia Icc icalizcd ihai iis coic
comcicncics wcic in consumci
insighi, liand managcmcni,
maiIciing, and disiiiluiion.
Thus ii divcsicd iiscll ol a ma|oi-
iiy ol iis mlg. ociaiions and
loimcd allianccs wiih mlg. and
suly chain aiincis.
/ppencix /
12
13
Process 3
Enalling
ioccss
How you
suoii
ihc com-
any`s
coic io-
ccsscs and
woiIcis
SiailucIs can dclivci iis iohi-
allc sioic/collcc cxciicncc
io cusiomcis lccausc ii ollcis
lciici-ihan-maiIci comcnsa-
iion and cmloymcni lcnchis
io iis sioic woiIcis, who aic usu-
ally aii-iimc, cducaicd, iolcs-
sional, and icsonsivc colc.
4
Coic
ioccsscs
How you
cicaic and
add valuc
io youi
ollciings
Wal-Maii coniinucs io giow
iohially ihiough coic ioccss
innovaiions such as ical-iimc
invcnioiy managcmcni sysicms,
aggicssivc volumc/iicing/
dclivciy coniiacis wiih mcichan-
disc iovidcis, and sysicms ihai
givc sioic managcis ihc aliliiy
io idcniily changing luyci lc-
haviois in and icsond quicIly
wiih ncw iicing and mcichan-
dising conhguiaiions.
OIIerings N
Pioduci
ciloi-
mancc
How you
dcsign
youi coic
ollciings
Thc VW Bccilc {in loih iis oiig-
inal and iis ncwcsi loim) iooI
ihc maiIci ly sioim, comlining
muliilc dimcnsions ol ioduci
ciloimancc.
U
Pioduci
sysicm
How you
linI and/
oi iovidc
a lai-
loim loi
muliilc
ioducis.
Miciosoli Olhcc lundlcs a
vaiiciy ol sccihc ioducis
{Woid, Exccl, PowciPoini, cic.)
inio a sysicm dcsigncd io dclivci
ioduciiviiy in ihc woiIlacc.
V
Scivicc
How you
iovidc
valuc io
cusiomcis
and con-
sumcis lc-
yond and
aiound
youi
ioducis
An inicinaiional uighi on any
aiilincs will gci you io youi
inicndcd dcsignaiion. A uighi
on Singaoic Aiilincs, howcvci,
ncaily maIcs you loigci ihai
you aic uying ai all, wiih ihc
mosi aiicniivc, icsccilul, and
amciing ic-uighi, in-uighi
and osi-uighi sciviccs you can
imaginc.
/ppencix /
14
.@9?A@C= W
Channcl
How you
gci youi ol-
lciings io
maiIci
Icgal iollcms asidc, Maiiha
Sicwaii has dcvclocd such
a dcc undcisianding ol hci
cusiomcis ihai shc Inows |usi
whcic io lc {sioics, TV shows,
magazincs, onlinc, cic.) io
diivc hugc salcs volumcs liom
a iclaiivcly small sci ol homc
living" cducaiional and ioduci
ollciings.
0
Biand

How you
communi-
caic youi
ollciings
Alsolui conqucicd ihc vodIa
caicgoiy on ihc siicngih ol a
liilliani ihcmc and vaiiaiions"
advciiising concci, siiong loi-
ilc and acIaging dcsign, and a
whill ol Noidic auihcniiciiy.
10
Cusiomci
cxciicncc
How youi
cusiom-
cis lccl
whcn ihcy
iniciaci
wiih youi
comany
and iis
ollciings
Hailcy Davidson has cicaicd
a woildwidc communiiy ol
millions ol cusiomcis, many ol
whom would dcsciilc lcing
a Hailcy Davidson ownci" as
a aii ol how ihcy lundamcn-
ially scc, ihinI, and lccl aloui
ihcmsclvcs.
Copyright Doblin. All rights reserved. Used with permission.

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