We can call it open innovation, crowdsourcing or co-creation – or something else. In short, it is about bringing external input to an innovation process and this is no longer a buzzword.
Companies are learning that they must embrace this paradigm shift of innovation in order to keep up with the competition and those that are lagging behind, well, they will find themselves to be in big trouble in the coming years.
This list of corporate initiatives is worth looking into if you want to get an idea of what is happening with the open innovation, crowdsourcing and co-creation today.
NOTE: The process of bringing external input into an innovation process requires lots of work that is often not visible to the public. So when you go through this list of examples, please remember that these companies have other initiatives related to open innovation.
In this competition, Audi asks questions such as: How will people work in production? What qualification concepts and/or kinds of cooperation will the future of production require? I like this initiative because it goes beyond the usual quest for ideas on products and services.
This open space allows Akzo Nobel, a producer of paints, coatings and chemicals, to reach out to individuals, companies and the academic world on a non-confidential basis. It is about making the connections, getting the discussions started and then look into what can happen.
Pearlfinder is Beiersdorf’s Web platform for open innovation and the basis for a trusted network with external innovators. External partners are able to access Beiersdorf’s confidential scientific challenges in order to propose appropriate ideas and solutions which may lead to joint collaborations or business.
This is a community in which Clorox works with consumers, inventors and partners. I recently did an interview with Greg Piche, the guy behind this initiative, and he revealed some advanced thoughts and insights on making communities work. Interesting project to follow.
DSM provides a good example on how a b2b industry such a chemicals can develop a more open innovation mindset. DSM has also been a driving force in developing Chemelot as a community for the chemical industry.
This is a platform in which GE reaches out to businesses, entrepreneurs, innovators and students with breakthrough ideas on energy issues. There has been 2 challenges sofar. It has been great to see how GE has experiemented with social media on this initiative. Hopefully, they will continue this initiative.
The G-WIN program at General Mills has received several industry awards. You can get an idea on why by checking out these five tips by Jeff Bellairs on how to jumpstart an open innovation program – great insights!
HP Labs’ Open Innovation team pursues and coordinates collaborations with researchers and entrepreneurs in academia, government and business. Well, it seems to be more about academia and government than business. Does HP have other business-directed initiatives?
Although Lego is one of the companies in the world with the most external touchpoints (especially towards their consumers/users) and great successes such as MindStorms, they did not have a formal open innovation strategy until recently. This is changing and it shows. One example is LegoCuuso, which I briefly described in this blog post. Lego is one of m favourite companies : – )
The MWV Exchange seems like a fairly standard system for MWV to engage with external stakeholders. However, I have met with the people behind this initiative and I like their aggressive thinking, which I imagine will help them turn this into some interesting in the near future.
I believe medtech companies have lots of potential for open innovation, but we don’t see many whole-hearted initiatives. I give Medtronic credit for trying, but there is definitely room for improvement.
As Nokia fights for its life, the company also turns to consumers with their IdeasProject. Not so long ago, I attended a presentation on IdeasProject and I liked how they talked about the rise of the amateurs. This might be too late, too little from Nokia, but they are at least trying now.
The poster boy of open innovation showed us the way, but now the Connect+Develop site needs to develop. They have taken the first step with a design redo – a good start – and I know they are working on further developments. I look forward to see how the great people at P&G will rise to the challenge and revive the innovation engine at P&G once again.
Although, Philips seems to lack a portal or entry site for their open innovation efforts, they are still very much committed to working with external partners. I have learned this through my interactions with them and it is clearly stated on their website.
The Global SAP Co-Innovation Lab (COIL) Network enhances the capabilities of SAP’s partner and customer ecosystem through an integrated network of world-wide expertise, and best-in-class technologies and platforms. Sounds good, right? I also like SAP’s efforts on communities as I believe they are a very important source for innovation today and even more so in the future.
MyStarbucksIdea was one of the early crowdsourcing-like initiatives that gained widespread attention. This is rightfully deserved, but when you learn that only about 0.05% of the ideas submitted are executed, you need to consider what kind of success this is. I often say that the marketing guys can hijack innovation initatives. This is a great example of marketing success and less of a good innovation story.
This entry site for collaborating with Unilever is pretty much what you can expect from a global FMCG company. If you go behind the scenes, I like how Gail Martino, an open innovation manager at Unilever, looked into how to identify and develop critical personal competencies for open innovation success a few years ago.
Here you get an overview of valuable – and FREE – books and reports related to open innovation, co-creation and crowdsourcing.
Drop a comment if you know of other books, reports or longer articles that are available for free and worth sharing.
Social Media for Corporate Innovators and Entrepreneurs: Add Power to Your Innovation Efforts by Stefan Lindegaard
“How can my company use social media to bring out better innovation faster?” This is the key question that I explore in this book, which covers issues such as:
• What are the benefits of using social media for innovation efforts?
• What are the challenges and how can you overcome them?
• How can the different social media platforms help bring out better innovation faster?
• How can innovation leaders get a better understanding of social media and start maximizing the value of their virtual networks?
Practical, engaging and direct! This is the style of Making Open Innovation Work, which explores the open innovation intersection between big and small companies by covering the following topics:
• Why big companies need small companies as part of their open innovation ecosystems.
• The benefits of open innovation – and the challenges it poses for companies of different sizes.
• How to make open innovation work when the partners are of unequal size
• How to identify and develop the people who will drive open innovation within an organization.
Open Innovation and Public Policy in Europe by Henry Chesbrough and Wim Vanhaverbeke
This report combines new research and analysis on open innovation with focused interviews of major participants in the European innovation system. The recommendations comprise an informal ‘charter’ for EU open innovation policy.
Open Innovation in SME’s by Wim Vanhaverbeke, Ine Vermeersch and Stijn De Zutter
This study found that open innovation can create new opportunities for all types of SME – from start-ups in high-tech markets to players in traditional markets – because they can change business models without having the required technologies in-house.
This report looks into how the role of intellectual property has fundamentally changed based on these four key points:
• firms are investing historically unprecedented amounts in the creation of intangible assets
• innovation-driven growth is no longer the prerogative of high-income countries alone
• the act of inventing new products or processes is increasingly international in nature and seen as more collaborative and open.
• knowledge markets are central within this more fluid innovation process.
Here you don’t get free reports, but you do get a very interesting overview of blog posts and reports by MITsloan on open innovation. Some of the excerpts are quite elaborate which is why I include this link.
The Social Economy: Unlocking Value and Productivity through Social Technologies by McKinsey Institute
“While 72 percent of companies use social technologies in some way, very few are anywhere near to achieving the full potential benefit. In fact, the most powerful applications of social technologies in the global economy are largely untapped.
Companies will go on developing ways to reach consumers through social technologies and gathering insights for product development, marketing, and customer service. Yet the McKinsey Global Institute (MGI) finds that twice as much potential value lies in using social tools to enhance communications, knowledge sharing, and collaboration within and across enterprises.”
NineSigma launched the first open innovation social media destination which is free to innovation seekers and solution providers. NineSights is a secure and collaborative online community that connects innovators of all sizes with the resources and relationships needed to drive business value. The platform allows innovation seekers to post innovation needs and solution providers to submit proposals and post technologies and solutions that are “for sale.” NineSigma ensures quality on the site by vetting both seekers and providers.
“We have listened to our clients and solution providers who told us that a social media enabled platform where quality trumps quantity is what the world needs right now. As a result of this unique platform, organizations are able to make better connections faster and thus accelerate time to market.”
NineSights is being launched in response to a recent NineSigma survey of professionals in a range of industries that found no innovation platform existed to effectively meet the needs of solution seekers and providers online. With NineSights, that marketplace need is being met.
For solution providers, this includes exposure of their technologies, new business development opportunities, connections outside their industries, and direct access to solution seekers. Organizations reaching out to solution providers see the same benefits, particularly the opportunity to connect with others outside of a single vertical segment.
The site also hosts featured “galleries” that spotlight innovation requests and technology offers from organizations like Philips, and provides forums for discussions among users.
NineSights: Knowledge broker
The community fits the highly fragmented (but transparent) information economy. Knowledge brokering will spur knowledge valorization, create better, faster and cheaper output, by being the connector between entities.
Difficult market conditions force SMEs to adapt or reinvent their businesses through new technologies or unique value propositions, but they often lack resources and technical capabilities and must thus collaborate with others to compete. Those that succeed in this transition often employ open innovation. A study by Dr Wim Vanhaverbeke, in collaboration with Ine Vermeersch and Stijn De Zutter found that open innovation can create new opportunities for all types of SME – from start-ups in high-tech markets to players in traditional markets – because they can change business models without having the required technologies in-house.
Key actors in 10 diverse Flemish, Dutch and Danish SMEs that changed strategy were interviewed and revealed how they devised new business models to leverage value from technologies in other organisations or co-developed with partners.
This analysis of a phenomenon well known among large companies is the first anywhere to focus in depth on the little-understood theme of how SMEs employ open innovation.
The researchers learned that SMEs in both high- and low-tech industries which know how to manage a network of innovation partners can seize new opportunities to become highly profitable – but networks are only sustainable when the value jointly created is significantly larger than that realised by partners on their own. Next, the value which is jointly created should be ivied in an equitable way to ensure the cohesion of the network in the long run. Value creation and value capturing is not an automatic process and has to be managed by a central partner in the network.
Their findings call for close attention to links between open innovation and business modelling and they identify how best to manage partnerships and networks.
By Dr Wim Vanhaverbeke in collaboration with Ine Vermeersch and Stijn De Zutter, (Flanders DC Knowledge Centre at Vlerick Leuven Gent Management School)
How do Apple, Google, and 3M continue to disrupt their markets? The truth doesn’t lie in common myths about visionary leaders or business strategy, but rather simpler truths, argues Jeffrey Phillips in “Relentless Innovation.”
In the United States alone there are hundreds of large, successful firms with recognizable brand names that we encounter every day. We constantly hear innovation success stories about firms like Apple and Procter & Gamble, but we rarely hear about innovation in their direct competitors, Dell and Unilever, much less about innovation in any of the thousands of firms worldwide that compete in these markets. In every region and industry the same pattern is repeated: A small handful of firms are recognized as consistent innovators, used as case studies and examples, while we hear little or nothing about innovation in the vast majority of the other firms in those industries.
So what is it that differentiates a successful, consistent innovator from its close competitors, firms of the same relative size that compete in the same industries and geographies, that aren’t viewed as innovative? What factors or attributes accelerate innovation in these successful companies? Are those factors or attributes lacking or underrepresented in lower performing firms? Or are firms like Apple and Google better at attracting marketing and publicity? Is it safe to say that the majority of firms in every region of the globe are not innovative, or is it simply that they don’t receive as much media attention? What happens at Target that does not take place at Kmart? What is Apple doing that Dell is not? And what about 3M compared to Avery Dennison?
Several possible factors spring to mind, including the executive management, the nature of the industry, or the capabilities of a firm’s research and development teams. Much of the mythology built around innovation identifies these factors as the main components of innovation success and it is true that each of them may contribute to a stronger innovation capability. But in the long run, none of them are the key drivers. Let’s review the myths and debunk the conventional wisdom, then confront the simpler realities.
Myth: Individual, innovative leadership accounts for the majority of a firm’s success.
Truth: Sustained innovation success does not rely on visionary leaders alone.
In the 1990s, a cult of personality arose around some senior executives, especially individuals like Jack Welch of General Electric and Lou Gerstner of IBM. The media led the public to believe that these CEOs accounted for much of their firms’ success while they were at the helm. During Welch’s tenure at GE he implemented several programs that were attributed with driving new value and differentiation for the company, including ranking employees into categories and only participating in markets or industries in which GE could be one of the top three players. Many analysts have also attributed much of GE’s success in the 1980s and 1990s to Welch’s leadership.
Strong, visionary leaders matter, but do visionary leaders account for the differences in innovation competence? Certainly, to some degree. For example, everyone recognizes Steve Jobs’s influence on Apple and the company’s decade-long dominance in consumer electronics and innovation. Jobs, however, isn’t the only visionary leader in the computing space, which was created by a number of innovative trend-setters.
Look no further than Kenneth Olson, the founder of Digital Equipment Corporation (DEC), who disrupted the mainframe market with minicomputers, but failed to see the further disruption of the minicomputer market by the personal computer. He is attributed as saying “there is no reason anyone would want a computer in their home.” Although he was a visionary leader, Olson did not foresee the imminent changes in the computing market, and DEC was soon disrupted by personal computer (PC) manufacturers such as Compaq, which made the first “portable” PC.
Michael Dell at Dell Computer is every bit as dynamic a leader as Jobs is at Apple, and he was heralded as an innovative leader in the 1990s, constantly on the cover of magazines like Fortune and Forbes. Dell disrupted the existing business model in the PC market, which enabled his company to grow faster and supplant many larger and well-established firms, including Compaq. In fact, far more people own Dell PCs than own Apple PCs, yet Jobs is constantly feted as an innovator while Dell is hardly considered in the same league.
Dell and Olson were both recognized for their vision and innovative capabilities at a point in time, but their firms did not sustain innovation over time. But, back to the initial question of how much impact a CEO has on innovation. If we assert that Jobs is a unique case, can we identify innovative firms that don’t have visionary CEOs? Certainly; W. L. Gore is an excellent example.
W. L. Gore is a privately held firm with more than $2.5 billion in revenue, headquartered in Newark, Delaware. Gore manufactures Gore-Tex, the waterproof, breathable fabric that is used in a wide range of outdoor clothing and gear. The company has sought and found numerous uses for its PFTE polymer, creating dental floss, coatings for guitar strings, medical devices, and other applications. Beyond product innovation, however, Gore is also an innovator in organizational structure. Gore has an exceptionally flat organizational structure with no formal reporting hierarchies or organizational charts–its CEO was actually elected by its employees. Innovation at the company is therefore driven not by a single visionary CEO, but by the individuals and teams throughout the business.
Further, consider Target or 3M, firms identified earlier, which are far more innovative than their competitors. While these firms are recognized as innovation leaders, I suspect most people would have difficulty picking out any member of the executive team of either firm in a police lineup.
Another thought experiment may help clarify whether or not executive leadership is a significant driver or barrier for innovation. Let’s assume that Steve Jobs could be magically and instantly transported to Austin, Texas, where he becomes the CEO of Dell. If this were to happen, do you think Dell would become dramatically more innovative overnight, or even in several years? If Target’s CEO was recruited to Kmart, or 3M’s CEO was remanded to become the CEO of an abrasives company, would those firms instantly become innovative? Would these firms attain the level of relentless innovation of the leaders in their industries or markets, even over time?
I’d stipulate that the answer is no. Simply put, there’s more to sustained innovation than a visionary executive. Visionary, innovative, executive leadership may occur periodically, and while it may contribute to sustained innovation, it is not the only contributor to successful, long-term innovation. Sustained innovation success does not rely on visionary leaders alone.
Industry Competition and Specifics
Myth: The level of industry competition dictates the amount of innovation.
Truth: Industry competition is a factor in fostering innovation, but it doesn’t guarantee innovation leadership.
If executive leadership alone doesn’t account for innovation success, then perhaps the level of industry competition fosters more innovation. After all, it seems some industries are more innovative than others. A look at the mobile phone handset market provides perspective on a highly competitive and innovative industry. Consumers expect their wireless devices to offer valuable new features and capabilities. Yet, recent history suggests that while many firms in the space have been considered innovative, few of them have sustained leadership for any length of time. Nokia is a great case study in this regard as it was considered the market leader in innovative handsets for many years.
Nokia is an example of a company that has reinvented itself as times and needs changed. Originally a paper company, the firm has shifted its focus and business model at least three times over the course of almost 150 years. Nokia entered the cellular handset market in the late 1980s and as of 2010 was the leading handset manufacturer in terms of volume. Yet its market share has dropped precipitously according to industry analysts as it has failed to anticipate new needs and offer compelling new products.
At the time Nokia was the leading handset developer, its researchers actually designed a touchscreen mobile handset (this was years before Apple’s iPhone), but the concept was rejected by executive management, which had become complacent and comfortable with current profits. In early 2011, Nokia’s CEO wrote an open letter to his employees, describing Nokia’s position in the handset space as a “burning platform” based on the company’s shrinking market share.
As Nokia stumbled, Motorola took its place as the innovation leader in the handset industry with the RAZR phone, for a short period. The designers of the RAZR were featured in the business press and were hailed as the new leaders in cell phone design. Yet in just a few years Motorola was dethroned by Apple, showing that it was no more able to innovate consistently over time in the cell phone space than Nokia. It remains to be seen whether Apple will suffer a similar fate with the introduction of the Android operating system and new smartphones based on that technology.
While the competitive nature of an industry does increase the likelihood of innovation, it does not guarantee a firm will sustain innovation focus.
The point is that within less than a decade several firms wore the crown as the “innovation” leader in cell phone/smart-phone development and design, and all of them demonstrated periodic innovation. Yet only Apple appears to be able to sustain innovation. Just because one firm held the leadership mantle and received higher profits during its own leadership period has not meant that such firms could sustain innovation over time.
The Fast Follower
Myth: It is possible for firms to copy the product or service offerings of market leaders while retaining competitive advantage through low costs or higher service.
Truth: To remain competitive, firms must increase their innovation capabilities instead of playing ‘follow the leader.’
A quick review of firms in the United States demonstrates that most industries or markets have one well-established innovator and several “fast followers.” The majority of firms in any industry don’t heavily invest in innovation. Most companies assume they can copy the strategies of the leader in their market and still retain competitive advantage through low cost or higher service–or simply through the lethargy of their customer base. Such organizations will even argue that their strategy is to be a “fast follower.” This strategy, however, is usually a difficult one to pursue and it is increasingly a dangerous proposition. There are at least four problems with a business plan of this kind.
The first problem is in the word “fast.” Customer demand and expectations are changing much more quickly than many firms have the ability to keep up with. Few products or services have the luxury of extended life cycles or little competition. A growing base of consumers with new expectations and new demands only fuels the fire for more products and services. Firms that claim to be fast followers are often merely just followers. As a firm grows and matures, its bureaucracy, decisions, and approvals inhibit its ability to bring a new product to market quickly. The company can’t respond fast enough to innovators or consumer demands. In this period of rapid change and global competition, innovation isn’t a “nice to have” but an important core competence; those firms that can’t keep up will inevitably perish.
The second problem with “fast” followers is that they become accustomed to following. Since these companies don’t exercise any creativity or innovation skills, those capabilities have atrophied or they aren’t valued within their organizations. This lack of innovation skills leaves the fast follower with only one recourse: to eliminate costs and inefficiencies since they can’t hope to command the attention and margins that accrue to innovators. Given new economic shifts, global competition, and customer demand, firms that cannot create new, interesting products and services exist on the very brink. To remain competitive, firms that haven’t relied on innovation as an advantage must increase their innovation capabilities, not try replicating others’ successes.
Third, “fast” followers often don’t understand what features or benefits the customer values in a product, and what challenges or issues exist in those products. By simply copying an existing product or service, they risk duplicating all the problems or issues that exist within the innovative product. Since the “fast” follower does little research, the company often doesn’t know which features or benefits are important and should be emphasized, or what hidden issues or concerns exist with the product. “Fast” followers often make the same mistakes as innovators do, but they have less opportunity to respond and encounter a customer base that has recognized both the benefits of the product or service and the issues or constraints.
Finally, “fast” followers suffer the most as new innovations enter a market. They are more accustomed to implementing the business models and offerings of the innovation leaders after the models have been proven. Fresh entrants, unbound by the shape and structure of the market or competition, will enter to disrupt the existing order and make older products, services, and companies obsolete. Innovators by their very nature are constantly scanning the horizon, looking for emerging threats and new entrants. They spot disruptive trends and shift nimbly into new opportunities. Industry laggards and fast followers are impacted by disruptions far more than innovators, but the impact is more severe on fast followers since laggards really had little to lose. Since such companies are neither fast nor particularly insightful, they lose the most in a market disruption as they can’t shift away from their existing models and structures quickly enough.
The “fast follower” strategy is increasingly a difficult business proposition. Firms that focus their efforts on innovation rather than fast duplication will succeed.
As Michael Treacy established in his book The Discipline of Market Leaders, there are three differentiated positions in any market: product leadership, operational excellence, and customer intimacy. Innovation is a tool that can help an organization achieve leadership in any one of these differentiated pursuits, but clearly only one firm in an industry can be the “best” at any of these strategies. For example, we could argue that in the retail space, Target is the product leader, partner-ing with leading designers to bring interesting, attractive, and affordable products to the mass market. Wal-Mart is the operational efficiency leader, innovating new data streams and distribution tactics to keep costs and prices low. Nordstrom is the customer intimacy leader, creating a completely unique and valuable relationship with its customers. Every other retail firm lags behind these firms in one or more of the three strategic areas, and new competitors seek to enter the retail space and disrupt the leaders, much less the laggards.
Myth: Due to changes in a globalizing world, no firm can sustain innovation leadership over the long term.
Truth: Sustained innovation resides in factors that companies can control.
Some observers argue that given heightened competition, accelerating global trade, and increasing customer demands, no firm can sustain innovation leadership over the long term. This argument, however, ignores the results of a firm like 3M. Except for a brief period between 2000 and 2005 under former GE executive James McNerney, whose focus was on profitability and efficiency, 3M has had a long history of innovation leadership, creating a range of products and services. Certainly the Post-It is probably the most well known, but over the last 50 years 3M has entered countless markets and industries, tailoring new innovations to different geographies, technologies, and market needs. Though 3M continued to innovate in spite of McNerney’s focus on efficiency, when George Buckley replaced him as CEO, one of Buckley’s first actions was to reemphasize innovation as a core capability, providing fresh focus and funding for those activities.
In my experience, it is completely possible for a firm to develop and sustain an innovation capability over time, just as a firm is able to create and sustain market leadership over time. Innovation capability resides less in markets, strategies, technologies, or leadership than we typically suppose, and more specifically in factors that companies can control–culture, business attitudes and perspectives, focus, and intent. That’s the real lesson we can learn from relentless innovators: what drives long-term, successful innovation are the same factors that shape the way people think and act in any business–operating models, strategies, rewards, culture, and processes.
Hmmm…. 2012…. Not your average date in the calendar, according to everyone from the ancient Mayans to hordes of New Agers who are busy getting ready for “galactic alignment”, to popular fiction’s high priest of secret mystical knowledge, Dan Brown, to Hollywood’s master of the cataclysmic blockbuster, Roland Emmerich. 2012 has been the inspiration for hundreds of books and hundreds of thousands of websites focused on spiritual transformation, the end of “The Great Cycle”, “Harmonic Convergence”, and “Balancing the Cosmos”. In fact, NASA’s public outreach website “Ask an Astrobiologist” has already received over 5,000 questions from the public about what next year might bring, some asking whether they should kill themselves, their children or their pets as we approach impending doom!
So when we sat down to write our 10 predictions for 2012 we did so with a degree of humility, certainly not claiming to know anything more about next year than any of the reputable parties mentioned above. But we did come up with a few developments that we believe we could be looking back on one year from now – that is, if we’re all still here by next December 21st, after we reach “Timewave Zero” and “Geomagnetic Reversal”, not to mention Earth’s collision with the planet “Nibiru”.
First, we have a few predictions about the evolving state of innovation itself, followed by some more general stuff about innovation geopolitics, and then a few of the intesection points between technology, lifestyle and popular culture where we believe innovation will touch our daily lives in exciting new ways.
But, as a precursor to all of that, here’s our quick summary of 2011 and its impact on the innovation profession.
This year we saw amazing growth in the number of organizations pursuing Innovation Excellence around the world. Clearly, the innovation movement is picking up momentum, with companies of every stripe and from every industry trying to embed innovation into the DNA of their organizations and make it a deep enterprise capability – just as we describe it every day on this site. Countless new innovation infrastructures and teams were created around the world; new processes, mechanisms and systems were installed; new innovation partnerships were formed; and hundreds of internal/external innovation campaigns and challenges were run. There was a real buzz in the innovation practitioner community, too, as we have picked up in our daily posts, with lots of newly appointed “process champions” working hard to formalize their funding models, selection criteria, and communications strategies, and to lead brave cultural transformations inside their companies in order to support and enable continuous innovation. 2011 also marked a big switch in how a large number of organizations were thinking about innovating with their employees, and we saw a lot of them switch from an electronic suggestion box model to a predominantly challenge-driven innovation model as innovation professionals sought to maximize their limited resources.
So what do we see ahead for 2012?
When got together over a great bottle of wine and ruminated on all the great contributions you’ve made this year, we came up with these 10 predictions for innovators — for the people who do the real work. As you will see, we started out somewhat narrowly focused on the way we see innovation evolving, and ended up a lot wider in scope… even – dare we say it? – a little more spiritual in our thinking. Why not see for yourself?
2012 will be the Year of Open Innovation. As more and more organizations build their internal innovation capabilities and feel comfortable soliciting ideas from employees, we will see more organizations in 2012 open up their quest for continuous innovation to ideas from suppliers, partners, and even customers or the general public. This will cause an increase in the competition for ideas, which means that organizations must be much more deliberate and systematic in how they approach their community of potential open innovation partners – if they hope to become THE partner of choice. Failure in Open Innovation typically comes from poor communications or the absence of cultural readiness. While success at Open Innovation requires changing the perspective and culture of your organization from ‘Not Invented Here (NIH)’ to the famous words of Procter & Gamble (P&G) – ‘Proudly Found Elsewhere’. But beyond a changing mindset, organizations wishing to utilize Open Innovation to accelerate their innovation efforts must also re-structure themselves, and possibly even the evaluation of their employees, to facilitate and encourage the acceptance and commercialization of valid ideas coming in from the outside. Which organizations will succeed and which will fail at Open Innovation in 2012? You tell us…
In 2012 companies that fail to innovate will continue to fail. In 2011 we saw the acquisition of Motorola Mobility by Google and of Blockbuster by Dish Network, the absorption of Sony-Ericsson into Sony after a buyout, accompanied by the failure of Borders. All of these companies were once very successful and even innovative, but missed a wave of innovation in their industries and left themselves weak and vulnerable. All successful companies were innovative at one time. The trick is to create an organization with the ability to continuously renew, reinvent, and reconsider what will make your organization successful and innovative in the future. This is what Innovation Excellence is all about – making innovation a deep and sustainable capability of your organization – not a one-time thing. In 2012 will Research in Motion (RIM) or Nokia find themselves acquired or out of business? What other once proud innovators are in danger of being acquired or going bankrupt in 2012?
2012 will mark the rise of systematic innovation efforts in small business. While 2011 was a year in which an increasing number of big companies joined the ranks of those pursuing Innovation Excellence, in 2012 we will see an increase in the volume of small to medium-size companies seeking to make innovation a deep organizational capability or core competence. We are not talking about startups here. The startup phase is all about sorting out whether the company’s founding idea is an innovation or an invention. Those startups that possess an innovation – which starts to meet a large niche or mass market demand – will become obsessed with meeting that demand. Startups formed around an idea that only proves to be an invention will shrivel and die. As a result of their limited resources, startups should focus more on building the foundations of Innovation Excellence, primarily a culture of experimentation, information sharing, and rapid learning. In the short run, these will help to evolve the founding idea for market success, while giving the startup something to build on when growth slows and the resources become available to make innovation a deep, renewable capability. The big questions we’ll continue to see from small and medium-sized businesses in 2012 when it comes to innovation will include: How can we encourage innovation without allocating a team of 20 people to it? How can I fund innovation projects if I don’t have millions of dollars to set aside? Am I too small to engage in Open Innovation? Finally, here’s one for you: If you are in a small or medium-sized business, what questions do you have about how to make innovation happen?
In 2012, national and regional governments will become increasingly involved in nurturing innovation. As Britain’s Economist magazine has noted: “Innovation is now recognized as the single most important ingredient in any modern economy.” That’s why, a couple of years back, President Obama pledged $100 billion in government funding to support and encourage American innovation. And the European Union recently followed suit with their 80 billion Euro “Horizon 2020” fund to create what they are ambitiously calling the “Innovation Union”. What we will witness in 2012 is an increase in government programs that are set up to encourage long-term economic growth through innovation. We are already seeing this at a more local or regional level inside many countries, and it’s not necessarily the countries that regularly make it to the top of the Global Innovation Index. For example, Argentina ranks 58 in INSEAD’s latest index, and Colombia is down there in the 70s, but both countries have recently established government agencies in some of their most important regions to financially support companies that want to improve their innovation capability. Colombia even has agencies at the city level, such as Ruta N in Medellin which is focused on supporting local companies in their innovation efforts. In fact, one of our other predictions for 2012 would be that Latin America will continue to rise as an important innovation region, not necessarily in terms of overall R&D expenditure, number of patents filed or trademarks registered, number of Ph.D.-holders in the population, and so on, but in terms of the number of companies that are working hard to embed in innovation into their organizations, often resulting in important non-technological innovations such as new services and business models. Tell us, What is the government doing in your own country to support companies that truly want to become innovation champions?
Turning our innovation lens out to some of the other big trends that are happening around us, and in particular to areas where technology, lifestyle and popular culture are coming together in exciting new ways, we came up with these further six predictions
In 2012, self-expression will transcend entertainment. And become the growth enterprise. Steve Jobs anticipated it with i-Life, giving us our own Spielberg toolkit. Arianna Huffington harnessed it, and now has her hands on the wheel of AOL, which will become a relevant platform, once again. Michelle Obama certified “collage vs. matchy-matchy,” adding JCrew and Target items and sensibilities to her first lady appearances. One Literary Agent friend laments that more people are writing books that reading them. Our Self Publishing editor, Joan Holman, tracks this phenomenon for us closely, and with her help we’ll be making it easier for all of you to do just that in the New Year. It might just be that Tom Peters’ claim that “Everyone is a Michaelangelo” is the pendulum swing out of greed, financial decline and uncertainty that “Occupy Wall Street” is only hinting at. Or why else would Russell Simmons be signing on to produce?!? Russell Simmons isn’t calling you?No worries! You can produce yourself. All it takes is a little courage, technical resource and the willingness to take a risk publicly — aka fail! Do you have exciting new plans to self-publish in 2012? If so, let us know. If you’re a regular contributor to Innovation Excellence you’re already a self-publisher!
All this self-expression spells trouble for Old School leaders — but good news for “Transformational Innovation Leaders” who as “game-changers, think outside the box, and see what others don’t,” say Jane Stevenson and Bilal Kaafarani in their new book Breaking Away. Because they’re also “technically insightful and intuitive” these leaders should have no problem incorporating Facebook, Twitter and the much larger super highways of their own employees’ ideas, ideals, passions, insights and networks into their organizations, products, services and brands. Should be fun. There will more conversations and less one-way interruptions. Is this something you’re already doing in your own organization? And how about embedding Innovation Excellence into your corporate Intranet?
In 2012, eBooks will reinvent the traditional book publishing industry. All part of the same self-expression trend, but with a twist in the tale. Of course, we don’t doubt for a moment that 2012 will continue to see traditional print sales collapsing and bookstores closing, while e-books sales rise exponentially and self-publishing becomes more popular with both new and veteran authors. But there’s also a chance that traditional publishers will finally start to catch up, learning to embrace the “strange new digital world” instead of denying that it’s actually destroying them. Having seen the future, in the shape of the iPad and the growing array of multimedia eBook apps on Apple iTunes, not to mention the array of new SW tools now available to the self-publishing crowd for creating more sophisticated ebooks, the publishing industry will be forced to use its financial muscle to innovate and improve the quality of its own products. Amazon is the player to watch, as always, not just as Kindle continues to evolve as an eBook platform, but as Amazon continues to move into publishing, and experiments with alternative author compensation models, from its Lending Library to subscription services and ad-supported e-reading sites. If business history is anything to go by, who do you expect to ultimately win the battle? Traditional publishers or self-publishers? Our money is on the latter, and look out the first of our own Innovation Excellence eBooks later next year.
In 2012, Apple will reinvent Television. First it was computers, then portable media players, then cellphones, then tablets. With each of these revolutionary moves, Apple reinvented a critical media platform, and the company has skillfully used these innovative platforms to change the way we work, rest and play. What’s next? Well, the only major platform that’s left is television. Our prediction is that in 2012, Apple will launch the iTV, a beautifully designed TV set that delivers content a la carte – like TV channels, streaming movies from Lovefilm and Netflix, and live sport from ESPN or Sky – as iOS-style apps. If Apple released this product in 2012, would you want to buy it? And would you like to see an Innovation Excellence TV channel app?
Purpose will Prevail. No longer contented just to consume more or sell more, people, organizations and businesses everywhere will be focused more and more on figuring out and working toward some kind of purpose. Purpose is a funny thing. It galvanizes, excites and motivates. And it’s the Valhalla of work. Jim Stengel (former CMO of P&G and currently writing his own book on the subject) made the idea mainstream for marketers, and we all witnessed the results in his uncanny partnership with A.G. Lafley and a decade of growth at P&G. (We keep trying to tell them to just open up as a school!) On the other coast, Umair Haque takes his typically mild-mannered (NOT!) tone and advocates nothing less than “A political philosophy that defines the highest good that a society elevates and pursues”, something that “anchors a society’s preferences and expectations”. He asks us what our own purpose is, as a society, as a civilization, and argue that it’s missing entirely. “We don’t have a vision of the highest good that matters, resonates, and means much in human — let alone social — terms.” In telling the Emperor that he has no clothes, Haque may have given us the key to a strategy for sustainable recovery. What’s your own view? How important is a sense of purpose to an innovation team, and to society in general?
In 2012, Mexico’s tourism industry will boom. Finally, a quirky little prediction that Mexico’s tourism industry will have a record year in 2012 as the country’s national tourist board leverages one of its most strategic assets: the Mayan ruins. International tourists have been frightened away in recent years by violent drug wars and kidnappings. What better way to lure them back than to invite them to come and experience the end of the world – right there alongside the ancient civilization that actually predicted it? Now there’s a great innovation. At least this way Mexico can make a ton of money out of curious tourists and New Age flakes before the whole planet gets swept off to oblivion. How about you? Where are you planning to spend your own “last-ever” vacation?
:We couldn’t finish this post without making a confident prediction for Innovation Excellence itself. In 2012, we pledge to grow in relevance as a platform for YOU. In the coming year we’ll make it even easier for you to get your ideas, your innovation experiences, your videos, your projects in need of resources, and your feedback up on our web pages and shared with the community of innovation practitioners across 175 countries. It’s a feedback loop like no other. You do the heavy lifting of innovating and we’ll work hard to share your thinking with a very targeted audience: people who “get” innovation and are committed to using its incredible power to change the world.
May your New Year be creative, satisfying and impactful beyond your dreams! — Rowan Gibson, Braden Kelley, and Julie Anixter.