Groundbreaking ideas from every possible source can work wonders for an organization. Not limiting the sources to in-house thinking, picking up ideas from a larger section of the society definitely helps the companies grow
Connectivity effect has not left anything untouched; everything we do is being rehashed and reborn, and
innovation is no exception. Most of the leading organization’s strategy reads x percent revenue from new services or products. The accelerated demand for innovation outcome has made companies look for additional avenues to get innovation done.
So what is “open innovation?” Open Innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at UC Berkeley. In his words “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology”.
Open innovation is not an open source in software. The open term here signifies the openness on the seeker's part to get the innovation done, irrespective of the innovation source, get benefited from it and move on to the next one. Open innovation also does not mean innovation outsourcing but open innovation is based on pull from the solver to solve it; outsourcing is based on push, where enterprises contract fixed set of vendors to get the repeatable job done.
From an open innovation seeker point of view, it is an act where one goes out to seek the innovative solution or an idea from a source which is either unknown or not appointed to do the specific job. If your account department guy has an idea for sales department, it could as well be called an open innovation (though happening inside the organization). Another example would be if BP accepts the solution to contain the spill from the Indian scientist, it is also an open innovation.
Open innovation may or may not have a monetary reward associated with it, however most of the examples you would find have rewards (either monetary or non-monetary) to primarily increase the motivation level of solvers.
Try any leading company name with “Open innovation” as keywords in Google and you will be amazed to find the traction this term has got. Almost all leading companies either have or are planning to have an open innovation strategy.
Just in case you are thinking why would open innovation work better than the traditional way of innovating? Part of the answer lies in following four points: a) Power of many — the probability of problem-to-solution match increases manifold when a particular challenge is shared with more talent sources b) Power of diversity — many of our solutions and sometimes even problems are biased by the similarities existing in either the people who handle these problems and create solutions, the environment or the educational or cultural background of the people. It has been found that the diversity of any nature can dramatically increase success and also bring in some refreshing change c) Pull--typically gets more results than the push mechanism; open innovation is based on the pull mechanism and is primarily driven by the passion of the solvers. Reward and recognition add up to make open innovation far more effective than any other form of innovation for an enterprise d) “Open innovation” is like cloud computing for your innovation needs — pay as you go.
P&G gets more than 50 percent of its ideas and solutions generated outside of P&G. Nokia has changed its stand to do only in-house innovation and is aggressively pursuing open innovation. The world famous and legendary open innovation case study is from Goldcorp, whose CEO Rob McEwen, when faced with a financial crisis because of the increased cost of finding gold in their mines, took a call to open innovate in 2002. They received 1400 responses from 50 countries; mind you, all from the people who did not belong to Goldcorp and had never visited Goldcorp mines. They all provided the solution using the theoretical data Goldcorp had made available in locating the gold.
The results were astonishing, 110 additional sites identified by the solvers, of which 50 percent were new, 80 percent of which produced gold. Total of eight million ounces of additional gold was found. Company value went up from $100 million to $9 billion (Pre-contest and post-contest).
Having known the benefits of open innovation, the fundamental challenge an organization faces is how to go about doing it. To address this issue, there are quite a few intermediary platforms which enable organizations to realize the benefit of open innovation.
Jayesh Badani
Jayesh Badani is Founder & CEO of ideaken, an open innovation platform provider. Jayesh is passionate about how innovation is achieved using collaboration and how this experience be made more rewarding and enjoyable.
To write to the author, please send an email to dare@cybermedia.co.in with the subject line 'Jayesh Badani'.
Disclaimer: The views expressed here are that of the author and do not represent the magazine's.
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