The big challenge in Open Innovation (Part II)

What’s in it for me? This is the very first question most of the participants in an open innovation initiative will ask. One of the aspects often overlooked with OI is what will the process or organization give back to the participants. It is very easy to give out cash prizes for winning ideas or participation, but is what is the formula for ensuring participants keep coming back in an open Innovation scenario?

Creativity and The Performance Paradox, by Steve Shapiro, is perhaps one of the best explanations I have seen in trying to understand the right balance of motivation that has to be provided in order to get the desired performance. It reflects on the Yerkes-Dodson law, where performance increases with motivation up to a certain point after which performance drops. (I want to credit Stefan Lindegaard who suggested I look up some of Steve’s contributions in this subject, and thus saving me a long dissertation on this topic.)

Keeping this in mind, there is one more element that is sometimes forgotten when implementing the motivation structure in an open innovation culture. The ‘Learning’ element is sometimes forgotten, but one of the most valuable weapons in ensuring that the OI culture matures and becomes highly effective towards the expected goals of the OI initiative. Many participants in an OI activity join because of the rewards, but as they engage the process they find that they also find a reward in what they are learning from the activity and from other’s involvement. (This could perhaps make a case for continued participation without rewards, however, at a given point, as their experience and knowledge grows their ‘learning’ reward begins to diminish.)

From the OI side it’s critical to keep these ‘learned’ individuals coming back. They are no different than employees who you’ve spent significant resources on, and the OI initiative benefits each time they return. These individuals are more adept at the process, and with each return their ideas increase in quality and they become more adept at making those critical ‘idea connections’ that need to occur as multiple individuals from different walks of life collaborate on a particular problem (see Innovation: Collaboration has a multiplier effect.)

In the attempt to ensure the participants return, I usually like to take a page from the Airline Industry’s handbook… frequent flier miles. Making a flight on a particular airline will get you nothing but points, but continuing to loyally fly the airline can eventually get you free tickets. What this means is that there has to be a motivation transition or connection from one OI initiative to the next in order to maintain participant loyalty.

In OI there really is no need to provide a large ‘home-run’ prize, after all, as Steve Shapiro clearly explained, participants will be engaged for the wrong reasons and their creativity, which is essential to OI, will likely be diminished. The learning experience is a significant reward in itself and coupling it with a structure that allows participants to incrementally build towards a reward (like in the frequent flyer case) can be a powerful weapon at securing their loyalty to the process while in return they increase their ability to add-value with each subsequent open innovation challenge.

The big challenge in Open Innovation (Part I)

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The big challenge in Open Innovation (Part I)

I started investigating stats regarding open innovation to see what I could find regarding the idea quality ratio. In simple mathematical terms this ratio is the number of approved (or implemented) ideas divided by the total submitted ideas.

Over the years, data from most idea management processes has shown that programs where this ratio is high, participation, and more importantly return participation, runs high and tends to increase. However, when this ratio is low, participation tends to decline. The reason for this is simple; most people don’t take rejection very well.

I came across this blog entry from Stefan Lindegaard regarding my old employer’s (Daimler) attempt on open innovation. There was a very telling line that he quotes from Daimler’s “Style your Smart” contest where 50,000 design ideas were received from over 100 countries and only six prizes given out. (3 for design and 3 for active participation in the contest by evaluating, uploading and commenting on designs)

The obvious result of this was that for those that came out winners, this was a great experience, and in a heartbeat they would probably participate in the next Daimler open innovation initiative. But what about the thousands of non-winners who entered ideas and helped evaluate and rate the designs? Will they spend the time and effort to do this again?

Daimler’s attempt, to a degree, recognized that engaging individuals required more than declaring a design winner. “Style your Smart” cleverly gave out prizes for participation, thus giving individuals a little more hope that they could win something, but for the most part it was a marketing gimmick that lacked a clear vision of how to re-engage the original participants in Daimler’s next OI initiative.

What is clear is that in the development of an open innovation culture one of the most important questions that has to be answered is... how do you guard against the inherent erosion of contributors?

The big challenge in Open Innovation (Part II)

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Something Different

A new book by Youngme Moon promises to be “Different”. In this age of bigger, better, faster, it’s time for companies and people to be different. Organizations are beginning to realize that they need to instill the innovation culture in their organizations in order to stand out. Whether it’s on the shop floor continually innovating improved processes to eliminate non-value-added steps, to online communities of customers and employees brainstorming the next product breakthrough, managers in today’s business world will need to challenge their teams to break with paradigms and go against the grain in order lead.

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Kaizen Teams = Innovation Teams

The common recommendation by TPS experts is that Kaizen teams must be cross-functional. The common rule is to form the team with 1/3 target area members, 1/3 from upstream and downstream areas, and 1/3 from external areas (i.e.: Finance, engineering, HR).

This makes sense, and sounds reasonable, however I found that perhaps the best way to explain the benefit of the cross-functional structure of the Kaizen team is to look into the ‘science’ of innovation. After all, Kaizen IS Innovation… albeit most people associate the latter, by default, with radical innovation (i.e.: iPODs, blackberrys, NASA, etc.). On the other hand, Kaizen (in 99% of the cases), is about incremental innovation, but the best practices for achieving incremental or radical innovation are the same.

Perhaps one of the best articles I’ve read about innovation was in the New Yorker (see this blog post), and clearly shows how great inventions come from the sharing of the right information at the right time. It goes into detail of how a company, Intellectual Ventures, was founded and how it became one of the greatest inventing organizations of our time. (IV, as it’s known for short, is 100% dedicated to the business of inventing, patenting, and licensing their inventions.) So how do they do it? While most organizations load up their R&D departments with engineers, doctors, chemists, and technical gurus, IV loads up with, lawyers, doctors, pilots, musicians, paleontologists, chemical engineers, programmers, teachers, and everyone you can think of, and launches brainstorming sessions to tackle myriads of problems. What they realized is that inventions seldom come from one individual and instead come from a set of circumstances that bring multiple experiences and information together in one place to help solve a problem.

That’s why a Kaizen team benefits from being cross-functional, and why the ‘thirds’ rule makes good sense. The more varied the experiences, the greater will be the chance to succeed with a solution.

So as I like to say when emphasizing the benefits of teamwork… Nobody has the answer, but everybody has the answer.

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Open Innovation: Corporate citizenship redefined.

One thing that I was taught when I was young was that sharing information with others and not keeping secrets could make you friends with a lot of people. In today’s market, it looks like major corporations are starting to leverage that axiom to further expand their corporate dominance.

Being a good corporate citizen no longer means charitable giving to local communities, and hiring interns from local schools. The definition has been transformed by some of the top corporate citizens to include direct participation from the community in identifying the next products, services and trends. In the case of IBM’s 2006 Innovation Jam, they allowed their corporate crème-de-la-crème to openly collaborate and share ideas with common citizens, and the result was an impressive 46,000 ideas from employees, family, friends, and partners, of which 10 were identified for further funding.

What has become clear is that cloud-based idea management platforms, which are configured for open innovation, are quickly becoming the tool of choice for these modern age corporate citizens to proactively engage their communities.

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