Open Innovation

Hamid Houshmand

Why open innovation

• The global economy and the increasing transparency of knowledge are driving the movement toward open innovation. • Internal and external resources need to work hand - in - hand to make open innovation happen.• Open innovation should be a hot topic in every company because the idea of combining internal and external resources to increase innovation • Productivity and process is just too good a value proposition to ignore• There are champs, contenders, and pretenders in the open - innovation world, with as many as 60 percent of companies falling in the pretender category

Why open innovation

• To move out of the pretender category and into the contender category, you must do these things:

• Ask why your company should be involved in open innovation. Open innovation works only if your reasons align with the overall corporate strategy

• Prior to operation on open innovation, an innovation strategy must be in place

• Definition: open innovation is very much about bridging internal and external resources to make innovation happen.

• Remember your people. A paradigm shift like this requires that employees change their mindset and obtain new skills

The essentials for open innovation

• Your business model:– You may end up working with anyone – even your competitor.

This may affect your business model and your competitive landscape.

• Change in the organization chart:– Systems, processes, values, and cultures across the company

will need to be transformed. People who are focused internally now must focus externally as well

• Your role as manager:– Many managers don’t understand open innovation to be able to

adopt a leadership style that optimize trust, motivation and performance.

How to approach open innovation

• Open innovation is a tool not a goal• Open innovation is a part of a general

innovation strategy• Innovation strategy sets a direction for the

efforts• Innovation strategy defines the role of open

innovation in terms of the company

Elements of open innovation• People who can manage relationship with customers and

partners _ People with soft skills of emotional intelligence• Willingness to work with people outside the company• Job-rotation program that even engage partners and customers• Failures represent opportunities to learn• Willingness to be risk taker• Accepting that open innovation raise IP issues• Accepting that open innovation requires open communications• Building a better business model is better that getting to

market first• Willingness to strive for balance between internal and external

R&D

Skills required for open innovation

• Holistic point of view_the x vision– Working across business functions and with many types of

innovation • Networking– Open innovation is all about networking

• Making an effective elevator pitch– To reach out and influence people you should be able to craft

compelling messages• Managing stakeholders– You need to generate adequate support to champion your

ideas

Key elements that must be in place first

• A clear mandate and a strong strategic purpose

• A stakeholder analysis• A communication strategy• A shared language about innovation• Organizational approaches that achieve top

down, button up and across• Adopt an attitude of striving to be innovative

Your strategic purpose should answer:

• Establish a scope or theme for idea generation• Bring in the “outside” factor in your

organization chart• Build your company’s innovation DNA with

real initiatives that convince all stakeholders • Help employees believe that your company is

innovative by sharing grate stories

How to identify and develop the innovative people

• Companies need two different type of people1. Innovation leader who work on the strategic

and tactical level to build the internal platform 2. Intrapreneurs who work to turn the ideas and

research into real products and services• To identify innovation leaders, look for

optimists who have passion and drive and who are curious and believe in change

Traits to look for in innovation leaders and intrapreneurs

• Holistic point of view• Talent for networking• Communication skills• Optimism• Passion and drive• Curiosity• Belief in change• A sense of urgency • Ability to deal with uncertainty

Why top executive do not get innovation

• The demand for short-term gains always wins the day– Top executive are under pressure to produce strong financial results

each and every quarter• They missed out on innovation education• Top executives are risk-averse • Top executive are control freaks • Leader may lack the X-vision

– X-vision: the ability to work across business functions and with many types of innovations

• No understanding of why a networking culture is important for innovation

• Top executives are too far away from the action

How to operate in this environment

• Challenge and stretch the mindsets of the top executives– Your innovation training initiatives should include top

executives. Try to create a common language around innovation• Help your top executives understand and buy into the idea

that the innovation strategy should be tightly linked to the overall strategy

• Understand what really matters to the top executives • Leverage the power of corporate communications• Do not start too many initiatives • Get some small wins

– Some small successes can help convince top executives

Defeating the corporate antibodies

• Detecting antibodies– We already tried and couldn’t make it work– What we are doing has worked fine for years– Our current product is still profitable. Why we

need to spend our money n something new – If that were a good idea, we’d already have

thought of it– Of course, I support innovation, but just don’t

think this the right time to make a big change

Defeating the corporate antibodies

• The corporate antibodies often play out during the three stage of innovation:– Discovery– Incubation– Acceleration

Defeating the corporate antibodies

• Some solutions:– Make people backers rather than blockers– Stay below the radar– Have frameworks and processes in place– Provide high autonomy

Defeating the corporate antibodies

• Mastering stakeholder management– Identify your stakeholders– Profile your stakeholders– Communicate with your stakeholders

Radical innovation as a blocker

• Companies in their early stages of establishing their innovation capabilities may be biting off more than they can chew if they pursue radical innovation because:– It can take too long to produce results– In most organizations, few people on any level have successful

experiences with radical innovation– Projects that are somewhere in the range between incremental

and radical innovation are more acceptable to risk-averse executives

– It is easier to achieve radical innovation by buying a start-up and integrating it into your company

– Market-leading companies prefer to play it safer rather than cannibalizing and reinventing themselves

To pursue radical innovation successfully

• Have a corporate strategy with room for radical innovation and adequate time to implement that strategy

• Have people who can execute radical innovation projects and processes in place to make them happen

Personal leadership

• The key pathways to your success include:– Following your passion– Setting your personal vision and then identify the

goals that help you to achieve it– Identifying the people who will help you achieve

your vision– Working on your T-shape – Building and communicating your personal brand – Manage your time

Sell your vision and ideas

• The value preposition• The elevator pitch• Always do your homework• When meeting a stakeholder introduce

yourself properly• Know how appropriately close the

conversation and follow up on the action