Tuesday, December 22, 2009

Open Innovation - What is the role of internal teams?

“If I practice Open Innovation, and get solutions to my problems from outside the company, then what does my internal team work on? How can I rely on outsiders to provide solutions to our company problems?” These were some of the questions that were posed to me when I was discussing Open Innovation with one of my class mates who was running his own business. Good question and I thought this needs further clarification – so here is my attempt.

It is a misconception that Open Innovation is the solution to all problems. Also it is very risky to rely only on Open Innovation to get answers to all your problems. Most of the problems we face at companies are filled with contextual information. This is generally information which only insiders or employees of that particular organisation understand. This could be either names of application software or hardware platforms being used or other specific information which may be unique. These cannot be exposed directly to the outside world due to security reasons and also since outsiders will not be able to appreciate the complexity involved. Hence there is quite some work in filtering this information and identifying the core problem for which you intend to seek outside help. This work needs to be done by the team inside the organisation since they are the only people who understand this. Only the core issue, stripped of any contextual information, should be identified and presented to the outside world for solutions/ideas. This has only been proven to get the desired results.

The most important and crucial phase is the realisation of ideas. Ideas or solution approaches are only the beginning. The actual work is in taking those to market successfully. There is a whole range of activities involved right from packaging to marketing to launch. These can only be done by employees within an organisation and not by outsiders even though the ideas for these again could be from outside.

So, in summary, if you were under the impression that you can just throw the entire problem over the wall and you will get some magical solutions shortly, it is time for you to do a reality check. Engaging the crowd and getting solutions from the outside world works but there is a lot of effort before the benefits can be realised for the companies posting their problems.

Monday, December 7, 2009

How do I start innovating?

Most entrepreneurs or senior managers I have spoken to all agree that innovation is both required and worth the effort but a common question is – How do we start or more importantly how do we identify the areas to focus on?

They have had many experiences in the past where they have sponsored many “innovation” project but they have nothing to show for it. So they are confused and have decided to stay away from it.

Fair point. So thought I will discuss more about this. At the outset, let me confess that there is no magic formula for this. Innovation by definition means that we are going to encounter failure. However the areas to innovate on should be defined pretty clearly and there is no scope for failure on those.

The worst thing that you can do is to initiate a innovation project based on a few journal articles you read or based on generic analysts reports. These will need further refining and unless you define the path properly, you are never going to achieve success with your innovation agenda.

The next best thing is to do it based on what your team believes. They do have a good knowledge of the product space but the risk is that they could be biased based on the existing product offering.

The best way to do this is to listen to your customers and derive the innovation requirements from them. Only one word of caution here – Don’t expect solutions from your customers but listen carefully to the requirements and their current pain areas.

Once you have defined the areas where you want to focus your innovation efforts on, next make a plan on the status quo in that area and identify the main challenges – even at this stage – stay away from getting into complete solutioning mode – the aim is just to scratch the surface and identify areas to delve deeper into.

Finally identify different areas where you need to formulate task groups or teams to dig deeper and look for solutions.

During solutioning mode, please ensure that you get your best people to look at it. The more diverse the interests of the people who look at it, the better the chances of getting creative ideas, which has been proven to increase the success ratio. Ideally (unless you have confidentiality and proprietary reasons), try to get some outside solutions also either through partners, customers or even the outside world in general. Outside people bring in a freshness and unbiased thinking which is difficult to substitute internally. Obviously you need to define some incentives which makes this interesting and appealing to outside folks.

That is it!!! When done systematically, you should get responses unless you have not defined your problem statement clearly enough. Persevere based on feedback and you will get the responses that you expect.

Remember that it is equally important to have a good way of judging solutions when they start to come in. If you are exposing this to the outside world, you can get overwhelmed with solutions. So ensure that you define a process for rating the solutions and taking this forward appropriately.

Hope this helps companies get started with their innovation efforts. Remember the name of the game is perseverance and patience. Success will come but only to those who persevere (like most things in life!!!)

Enjoy the journey!!!
Alltop, all the cool kids (and me)

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