In today’s fast-changing world, companies should embrace collective intelligence and co-creation to solve complex problems. The power of co-creation lies in engaging all stakeholders, including partners, suppliers, consumers, … etc. This creative approach also needs to be part of the company’s digital transformation strategy by integrating tech-based solutions to increase efficiency and sustainability.
Why open innovation? Open innovation is an approach to solving complex problems with less time and resources than traditional R&D. It allows organizations to bring together people from different backgrounds in a collaborative environment to come up with solutions that would otherwise never exist.
How can you put together your open innovation strategy in 5 steps?
1. Understand what open innovation means.
The term open innovation was coined by Henry Chesbrough, professor, and author of Open Innovation: The New Imperative for Creating and Profiting from Technology.
He defined open innovation in his book as follows:
“Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. “
In other words, open Innovation uses external sources such as consultancies, companies in different disciplines, startups, or even individual innovators through any form of collaboration. This type of collaboration can lead to innovative solutions that would otherwise never exist.
And to stay in the game, an organization has to expand its boundaries to include external expertise, and to be willing to share its work in progress. This is the key to cutting development costs and building a sustainable innovation pipeline faster. And to eventually create a competitive advantage and persevere in an ever-changing market.
2. Have a clear objective & have your problem defined.
Usually, companies run their open innovation programs for one or more of the below purposes:
- Find innovative solutions to their most persisting problems.
- Grow faster through innovatively optimizing operations, cutting costs, improving their business model, …etc.)
- Develop new products or services faster/cheaper.
- Promote their brand awareness and convey messages to their target audience.
- Engage or co-create with their audience to identify trends and design demand-driven products.
- Attract innovative talent to their organization to partner with or hire.
By defining your objective, you can identify a suitable open innovation approach. There are different open innovation models out there you can start with based on your objective.
3. Pick a suitable open innovation model.
The Co-Creating Model.
In this model, organizations create platforms for consumer communities to co-create products or services based on consumers’ feedback. An example is Unilever’s co-creation platform, where anyone is invited to contribute by sharing their ideas, giving feedback, or proposing technical solutions to certain challenges.
It is worth mentioning that the co-creation model usually results in robust solutions that are at the intersection of the company strategy, consumer needs, and market trends.
The Public-Private Partnership Model.
The public-private partnership (PPP) model is another form of open innovation. PPPs involve two or more parties coming together to share resources and expertise. They often take place between government agencies and businesses.
This model is the main driver for economic growth and digital transformation. For example, the government can request proposals from tech companies to develop solutions for smart cities, Health Tech, Agri Tech, …etc. Also, the banking sector can partner with tech arms to digitize the banking experience, for example.
The Crowd Sourcing Model.
The crowdsourcing model is one of the most popular forms of open innovation. Companies use crowdsourcing to tap into the knowledge and expertise of individuals outside of their organization. They create online communities or open calls where experts share ideas and collaborate together to develop solutions.
Organizations usually pick the crowdsourcing model when their defined problem needs to be solved in a different domain. For example, the use of technology in a solution by an FMCG company, in this case, the company can run an innovation hackathon targeting tech startups.
Another example is idea competitions, where innovators from different backgrounds are invited to come up with an idea or design a solution using their own perceptive for a certain challenge.
The Collaborative Model.
The collaborative model is one of the oldest forms of open innovation. It involves companies partnering with other organizations to develop new products and services. This type of collaboration typically occurs when two or more organizations work together to solve a common problem.
Samsung, for example, has a 4-dimensional approach to open innovation: partnerships, ventures, accelerators, or acquisitions. This approach allows Samsung to fund or even acquire a startup’s solution adding it to Samsung’s offering or integrating it into an existing product.
The Hybrid Model.
The hybrid model uses more than one approach; it could start broad, with a diverse crowd coming up with ideas, then narrow down the scope to develop and refine the most promising ones.
And the opposite is true, doing some R&D with one partner, refining the problem statement, and clearly defining the area of improvement. Then go to the relevant domain and brainstorm solutions with a broader network of collaborators.
The hybrid model is mainly a loop of opening up (crowdsourcing), then narrowing down (partnering), as known as the Explore exploit approach.
As you may have noticed, the explore part of the strategy is where open innovation comes into play. Open innovation accelerates discovering, creating, and validating new products and ideas.
4. Create a plan for implementing your open innovation model.
To start on the right foot, carefully prepare a list of your target partners who share your vision, and choose between them wisely. Your partners could be innovation consultancies that will connect you to potential innovators, or they can be startups, experts, or even universities where students can take part in solving your problem.
Open innovation doesn’t mean your team shouldn’t be involved. Collaboration is at the heart of open innovation, which means that you should involve people within your organization at a certain point. This could be by opening a track for employees to participate or by having relevant teams act as the project owners for implementing solutions. This is a brilliant exercise to grow collaborative skills inside your organization.
Finally, the technology partner is crucial in executing your OI model. When choosing a platform for managing your OI programs, make sure it covers all your processes, from the problem statement, ideation, collaboration, and easily communicating with innovators. Your data lives on the platform; hence, analysis, decision-making, and measuring ROI rely on that platform. The rule of thumb is to find one platform for managing all components in one centralized place.
5. Start your pilot project.
Using a trial and error approach, you can start a small project using a defined problem with a niche target audience outside your organization’s boundaries. Assess, iterate, then move to a broader problem with a wider collaborative approach, adding a consultancy firm or a partner to the target. Work together with all parties to see which partnership you should capitalize on.
The bottom line, the pilot’s objective should be testing every component of your open innovation strategy so you can draw conclusions and generate insights. By breaking your pilot project into pieces, you can identify what worked and what still needs improvement, so you can eventually perfect your open innovation strategy. And once you do, all your investments should start paying off and have a higher ROI.
Finally, build a strong community of people who can collaborate to work on each other’s ideas. Educate them on developing ideas, turning them into viable products, and using design thinking to make those ideas work. This is also one long-term investment for your open innovation strategy.
In conclusion, an open innovation strategy that works is a result of your understanding of your challenges inside out, putting the right collaborators on your radar, and finally, developing the right framework to make all this work effectively.
Our team of experienced open innovation specialists would love to help you put together your winning open innovation strategy. Book your free consultation session and let’s begin the open innovation work!