With today’s rapidly shortening strategy cycles and hyper-speed evolution of business models, the ability to innovate offerings and path to market is more important than ever. In this environment, everyone is talking about open innovation and its benefits: breadth of inputs, technologies and models, and speed of solution development and deployment. This trend makes it all the more important to distinguish between smartly utilizing open innovation techniques versus outsourcing your entire innovation agenda and capability. Does your organization know the difference and act accordingly?
To start, what do we mean when we talk about open innovation? In simplest terms, open innovation brings multiple outside inputs, voices and partners at different points to your innovation efforts to broaden insights and thinking in order to create possible “answers” (ideas, technologies, business models, ventures). Sounds good so far.
But what happens when this is taken to such an extreme that the entire innovation and thought process basically becomes a technology or business model “beauty pageant”? That is, the entirety of your innovation efforts are driven by outside vendor reviews, technologies, and start-ups seeking capital. How do you avoid the trap of approaching innovation as shiny object selection (only!).
To be clear, these mechanisms certainly have their places and uses. But the big health warning we’re offering here is: Don’t let this approach become your entire innovation system. If you do, the odds are you won’t optimize your innovation agenda and results. Defaulting to this approach (or “punting” as they say), means that:
What exactly are the do’s and don’ts that will help you strike the right balance of being the master of your own innovation agenda, while still availing yourself of the advantages of open innovation techniques? If you are doing most or all of these, you should be in pretty good shape. If not, you may want to re-assess your innovation agenda ownership and approach and look to build more robust internal innovation muscle and capability.
Proactively create a point-of-view on strategic innovation focus areas that will broadly but clearly define spaces toward which you want to aim your innovation efforts and investments. Innovating “randomly” or chasing every one-off idea leads to wheel-spinning, wasted investment, and a lack of forward progress that increases skepticism about the innovation “system.”
Have a clear and deliberate innovation approach. Clearly define what “the work of innovation” looks like for your organization. Even if outsourcing portions of insight collection, technology scanning, or solutions design, the leaders of the organization need to have clear line of sight to an intentionally driven and systematic approach. If it’s a nebulous “black box” to you, you’re missing the boat, and putting too much of your innovation agenda in the hands of others.
Selectively find and use partners for outside perspectives, technology scans and potential solutions. Having outside partners who fill some skills or asset gaps and/or bring outside thinking and “fresh air” into the work is good. Short on design skills? A world of options is available. Too tied up in your own orthodoxies? There are many ways to help shake loose with new and fresh perspectives and ideas. Use partners and outsiders as an enabler, not the entirety of your approach.
Don’t make your whole innovation system nothing but a “Shark Tank” process, especially if it’s run mostly or entirely by outsiders (or even if it’s not!). If the whole approach is “We’ll tee up a venture board and a fund, now bring us your good ideas” – you’ve outsourced altogether. It may feel easier than a more insights-based and systemic approach, but the potential for wandering in the woods goes up.
Don’t make innovation about “digital” and “technology search” only. It will quickly start to look like a search for the next shiny object. And worse, you won’t really know why. Can you articulate the business model surrounding the technology, or the model the technology is enabling? That should be the one of the first things you consider rather than the last. Don’t let the technology tail wag the business model dog.
Don’t be in the business of “one-off” innovations. Regardless of what your process looks like, if you have to go all the way back to the beginning and start over for each new idea or concept, you’re in an unproductive “do-loop”. Create a strategic innovation agenda via growth platforms, innovation strategy or roadmap – call it whatever you like. But you need to know where you’re going. If you don’t, then any destination will do. And that’s not a good place to be.
Some industries have honed their skills in practicing these do’s and don’ts of open innovation. Consumer technology and tech service platforms, for example, face the discipline of markets and consumer-connectedness that enforces these disciplines. Other industries that are historically less well-connected to consumers and market forces have a history of quick fixes and have struggled more with this, with a tendency to go for easier answers.
There’s no free lunch. The lesser level of innovation muscle-building and accountability ultimately will show up in your innovation results (or lack thereof). Do yourself a favor – create your innovation system and architecture aggressively and deliberately from the start. You’ll only have to backtrack later if you don’t.