This is part III of a blog series applying the concepts from the book Driving Digital Strategy by Sunil Gupta.  Read Part I: Data is the New Oil & Part II: The Platform Revolution. 

Innovate or die! Sounds pretty intense. Even so, no sentiment could ring more true in today’s disruptive and digital business environment. For most companies, innovation and R&D are at the forefront of long-term growth strategy — all in the quest to stay relevant, beat out competition, and thrive.

But even for the most aggressively innovative companies, things are changing. Not only the sharp adjustment to more rapid development cycles, but recognizing that your best and brightest may not include, well, you.  Many companies today now incorporate open innovation models, or crowdsourcing, to solve customers’ problems.

What is open innovation?

Be honest, have you ever thought your idea for the next Lay’s potato chip flavor was so good you entered their “Do Us A Flavor” contest?  Congratulations, you’re an open innovator (and sorry no one liked your spaghetti and meatball flavor idea).

The open innovation paradigm is really about letting go of the idea that you can solve every problem in a silo or with your own teams.  Open innovators go beyond basic customer feedback to a model that is inclusive of partners, users, consumers, academics, competitors, suppliers, startups, other industry players, experts, and the the list goes on.  Bringing together new perspectives and collaboration can solve problems at a scale not possible in a traditional development model.

In “Driving Digital Strategy”, Gupta shares:

“As product lifecycles become shorter and R&D costs continue to increase, internal innovation alone is no longer enough to support companies’ growth expectations.  To remain competitive and hit topline growth goals, and to extend the reach of their innovation pipeline and leverage their limited resources, many companies have found open innovation to be a necessity.”

Why it works

There are many measurable benefits to an open innovation model including faster time-to-market, reduction of R&D expense, and community building. That doesn’t even take into account what things are possible that would otherwise not exist if it weren’t for this approach.

No matter who you are, most of the smartest people work for someone else.” [Bill Joy, co-founder of Sun Microsystems]

In the book, Gupta’s research suggests that open innovation works for these main reasons:

  • Diverse approaches. Internally, employees often view a problem with a single lens; in contrast open innovation engages a range of methods and perspectives.
  • Extreme values. Hiring the best people means the best work, right?  On average yes. But innovating is not about average, its about one or two winning ideas.
  • Better customer insight. Research shows that users are the most important source of knowledge across all major technologies [source: “Revolutionizing Innovation: Users, Communities, and Open Innovation“].  Bonus, if you say you are customer-centric (and I know you do) what better way to illustrate your commitment than engaging input?
  • Self-selection. Employees have little choice but to work on assigned tasks based on the priorities of the company, regardless of passion.  People participating in open innovation are self-selecting to work on a problem because of their own passion.

Where to start

It requires a significant cultural shift to move innovation from internal employees to a more open model — but a great way to slowly start thinking differently about innovation is a simple crowdsourcing project or program designed to solve to a well-defined problem in your business.

Once it’s well-defined, then it’s time to make sure it’s well-designed.

Here are a few B2B “harnessing the power of the crowd” ideas:

  • Create a training session once a month that is entirely based on your user suggestions and their popularity (let them suggest topics up vote topics they like).
  • Pose a problem to your customers in a way that generates ideas such as, “What would you change about X if you could” and publish top ideas for discussion. Use the results to drive your R&D.
  • Pose that same question to your clients’ clients or end users.
  • Create an online community or special event in your industry and even invite your competitors to participate in the solving of common challenges in that industry.
    • Alternatively, you can leverage an existing community where your target market is already engaged.
  • Present your latest ideas and plans with alternatives to your industry/target market and let them determine which areas you should focus.

You can’t underestimate the incredible effect crowdsourcing and open innovation has on community building — not only do people appreciate an opportunity to share ideas on their terms (self-selecting instead of “forced”), but it can also be engaging, rewarding and entertaining when executed well.

In the book, Gupta cites an interesting study that explains very specific factors that influence user participation in open innovation: personal need, fun and learning, desire to help others, and the monetary reward.  What is particularly interesting is although monetary reward is on the list, 80% participated because of personal need or fun and learning.

That means there are people out there who are eager to help you innovate for FREE.  Go find them!  

Even with all of the research and proven success, open innovation and crowdsourcing do create some challenges.  Many companies continue to suffer from “not invented here” syndrome whether its a personal perception of a threat or a leadership and prioritization issue.  Additionally, companies can struggle with deciding how to manage intellectual property when ideas come from the outside.  The good news is, many companies (probably one similar to yours) have found ways to overcome these challenges and reap the incredible benefits of open innovation.

Whether R&D challenges are getting in the way of your growth, or you are passionate about external insight, with open innovation and crowd-sourced models you can expect to see things from an entirely new view.

// Julie

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