The idea of open innovation is still fairly new, but we are starting to see a range of companies that are getting value out of their efforts with this new paradigm shift.
GE, LEGO and Samsung are three companies worth looking into not only because of their apparent success with their open innovation initiatives, but also because they seem to be willing to experiment with the innovation processes themselves.
This is a key requisite for innovation success in the future. Experimentation needs to go further than just products, services or technologies; you also need to innovate on how you innovate.
GE:
This leader on open innovation first caught my attention with their Ecoimagination challenges in which they brought an ecosystem of partners (mostly VC’s) together in order to not only bring out great ideas on big issues such as the smart grid and healthcare, but also to make sure that the ideas were actually implemented with the help of GE and its network.
It is interesting to observe how GE tries out new things with regards to their innovation processes. After the Ecoimagination challenges had their run, they went on to partner with Local Motors to launch a new initiative aimed at co-creating for a new world of home appliances.
The initiative, FirstBuild is an online and physical community dedicated to designing, engineering, building, and selling the next generation of major home appliances.
“This is global co-creation paired with a microfactory on site,” said Chip Blankenship, CEO of GE Appliances. “We will innovate and bring products to market faster than ever before.”
Companies need to know why they are pursuing open innovation and they need to be strong communicators on their efforts. Those are two key steps in my framework for open innovation, which I call the 7 Steps for Open Innovation.
Talking about this, it is worth checking out the open innovation website at GE, which starts out with this manifesto:
“We believe openness leads to inventiveness and usefulness.
We also believe that it’s impossible for any organization to have all the best ideas, and we strive to collaborate with experts and entrepreneurs everywhere who share our passion to solve some of the world’s most pressing issues.
We’re initiating a fundamental shift in the way we do business – this is what we’ll stand for in our open collaboration efforts and how we will operate.
• Customer focus, imagination, courage, expertise, inclusiveness, and clear thinking will always guide our collaborative effort.
• We will openly celebrate the efforts of lead solvers who have submitted winning solutions within our public collaborations.
• We’ll collaborate with transparency – publishing evaluation criteria, rules, compensation and IP rights at the launch of our engagements.
• We believe ideas should be compensated – and compensation pools will always reflect level of impact, effort, commercialization risk and IP rights.
• We’ll provide access to pools of IP to enable the Global Brain to create new and beneficial outcomes.
• We’ll never stop experimenting, collaborating and learning – we’ll get smarter as we go, and the Global Brain will evolve and grow with us.”
It is no wonder that GE is an open innovation leader.
Samsung:
In contrast to Apple, Samsung is more active and open about their efforts on building their external innovation capabilities. The below snippets are from an interview with Vice-President of Samsung’s Open Innovation Center, Marc Shedroff, in which the journalist would like to find out more about the ways Samsung wants to innovate like a startup.
“OIC has four legs to it, and it’s sort of the continuum of how you would partner with talented entrepreneurs. The first is a partnerships team — think of commercial partnerships between us and a third party. The second is a ventures group, that is, R&D investments in startups. The third is an M&A team; we think there’s an opportunity to acquire small teams, fit them into Samsung, and have them build products as part of the company. The fourth involves accelerators, which we have opened in Palo Alto and New York City.”
“We can take a group of five or six people per team and give them the benefits of a small company, which is autonomy, nimbleness, and the freedom to build the product they want without going through the approval process. Then we give them the benefits of a big company, which provides financial support, extensive distribution, and other resources. After all, we sell 450 million phones a year and 50 million TVs. The end result, we hope, will be game-changing software products that can connect all of our devices.”
Companies can target different kind of “value pools” i.e. groups of external partners for their open innovation efforts. This includes suppliers, universities, consumers/users and startups.
The latter has become the hottest area of collaboration for many industries and this example of Samsung is just one of many in which companies work to develop better co-innovation capabilities with startups and SME’s.
LEGO:
I have been following the open innovation initiatives at LEGO for several years and I like how the company has grown from a quite risk-adverse company to one that now seems to understand that you need to try out new things in order to build better innovation capabilities.
Erik Hansen is the Senior Director of Open Innovation at LEGO and he did lots of interesting research before he really got LEGO started with the open innovation and crowdsourcing efforts that seem to be working well for this very successful toy company.
A few years ago, Erik Hansen shared some of his insights on how they got started with their efforts at a conference:
Early on, LEGO established a taskforce with the aim of:
• Assessing the opportunities, needs, and benefits for introducing new practices of open innovation across The LEGO Group
• Defining what next practice would look like building on internal practice as well as insight from the best open innovation practitioners in the world
• Making a firm and evidence based recommendation on what and where the value could be, how this could be delivered and what would be needed to achieve this.
• Setting out a viable roadmap – based on how to move forward, balancing risk and rewards etc.
As Erik Hansen set out to learn more about open innovation, he focused on 3 elements:
• Learning from others for which LEGO conducted 12 interviews with leading open innovation companies.
• Learning from the LEGO group which was based on input from over 30 practitioners including 10 interviews.
• Learning by doing by setting up 4 micro pilots to test capabilities, culture and appetite.
When LEGO got started with their open innovation efforts, they ran pilots in the production area (solving hard, “unsolvable” problems), on improving the LEGO core experience, on how to improve core HR processes and on an open innovation platform.
Erik Hansen shared some interesting quotes:
“People don’t have to work for us to work with us” internal LEGO quote
“Consumers of today are intelligent, they are creative and they have an opinion…and they expect you to listen” internal LEGO quote
“I am scared to look at external ideas because we don’t want to get sued.” Internal LEGO quote
“The problem with an innovation culture is that for most of the time and for most of the people you don’t really want one!” David Robertson, IMD
“All our radical innovations come from people who are not domain experts.” Orange Telecom
Erik Hansen also shared these goals for the open innovation program at LEGO:
Going from…
…creativity from the few towards towards systematic creativity from the many
…select strengths put to play towards full potential realized
…succeeding together towards succeeding more together with more people
…a relatively closed culture towards a culture of openness
I think the approach by Erik Hansen is worth having in mind as more and more companies embrace open innovation and/or revisit their efforts. Check out the LEGO Ideas site which is a key part of their efforts.
As open innovation matures in many different industries, we will see a growing range of success stories. Let me know what cases you like the best.
