Opening communication for open innovation: Should you share your strategy?

“Open Communication” is frequently cited as necessary for successfully working with partners. When I was reading Stefan Lindegaard‘s post on Open Innovation Lessons from P&G, I was struck by this statement in particular:

Understand that open innovation requires open communication.

I’d say that’s an understatement. In my experience, opening up to the depth of communication required for successful open innovation is often a scary proposition for companies.

Stages of opening communication

With their Connect + Develop program, Procter & Gamble (P&G) have become one of the icons of open innovation. With good cause. Their program portal touts more than 1000 completed agreements, in-bound and out-bound. When you hear P&G people talk, it seems like their program has not only transformed the company but might even be called an awakening.

Like many companies that have engaged in open innovation aggressively, P&G has chosen to be public about what they are looking for. They publish needs and wants on their website. They give talks and seminars. Merck does something very similar by publishing areas of interest and disseminating their interests at conferences like TechConnect.

Both of these companies have decided that working with external communities is an important part of getting where they want to be. And they’ve learned those same external communities can do a lot more to help them, and help them efficiently, if they communicate what they really want.

This is fundamental, but it surprises me how often it’s overlooked. Depending on the stage of maturity in open innovation, I’ve seen several approaches or phases that companies will go through:

Phase 1. Companies don’t open up so ask to see everything

At the earliest, technology scouting functions simply look broadly at what might be interesting. I jokingly call this the “catalog and shopping mall” phase, in which I’m asked, “Can you just send me a summary of everything you’re working on, and I’ll see if there’s anything of interest.” Frankly, I was naive enough to attempt to respond to these requests when I first started doing business development for PARC, but I’ve never seen it work for either party.

Phase 2. Companies share only the most pointed needs

The next phase is when the scouting function begins to describe specific point needs, such as those that can be sourced through matchmaking services as InnoCentive, NineSigma, yet2.com, and others. These are great for finding very specific solutions, such as an adhesive with specialized properties, or a technique for coating  surfaces. I’ve wondered, though, how often the really high impact business opportunities come from just finding that one missing element?

Phase 3. Company employees seek opportunities by engaging in open conversations

Which brings us to the most mature programs.  These are the ones in which companies go beyond “technology scouting” to see multiple ways to make money — by building on work done outside their boundaries.

They encourage employees throughout the company to look for opportunities to extend revenue, and provide mechanisms for employees to bring attention to those opportunities. They engage partners selectively in discussions about what they are trying to achieve, and can therefore rely on their partners to co-create technologies that address market requirements.

In short, they are willing to tell others where they are going, so others can help them get there.

How to share your strategy

Should you share your strategy?  Yes, with deliberate purpose.  If publishing needs on a website is just too big of a step, consider the smaller step of establishing a trusted network within which you can constructively share strategic directions.

Otherwise, your partners will have a very hard time figuring out how they can help you.

 


 Editor: Sonal Chokshi
 

10 thoughts on “Opening communication for open innovation: Should you share your strategy?

  1. Terri Griffith

    Jennifer,

    Great post (saw the link on Twitter). I had a related conversation with someone from EAA (Experimental Aircraft Association) yesterday as they think about how to support innovation. Looking forward to sending my Technology & Innovation Management students here.

  2. Jennifer Ernst Post author

    Just saw some tweets about the reward structures for opening up communication, and thought I’d share some thoughts. For programs like those at P&G and Merck, it’s largely about increasing efficiency. Having declared themselves open to external innovation (and in P&G’s case, very aggressively promoted it), they get an enormous number of submissions.

    This creates a dilemma.

    If a company courts external partners, but ignores most of them, they get a bad rap. If they respond to all of them, they create a very high burden on the scouting team. By declaring “we want to hear about this, and not this,” innovation sources can self-filter. And those that choose not to can be more politely ignored.

    For inventors submitting their ideas, of course, there are different reward structure issues. Prize-based mechanisms have gained popularity. The approaches provide two paths:

    (1) “Send us ideas without compensation” which is really meant to encourage dialogue with their customers. You know… the times we say “I just wish someone would make X.” Reward is, maybe, someone will actually make it and make my life easier.

    (2) For inventors who have patented inventions and are seeking a market outlet. This works more like a magnet. One person mentioned his metric for success is getting to see a good idea before the company does.

    PARC’s approach to this has been creating and incubating concepts with market-savvy entrepreneurs. (See our SolFocus case study example or how to work with us for such engagements.)

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  4. Stefan Lindegaard

    Hi Jennifer,

    Nice post and good follow-up comments. I agree on your points with regards to setting up filters.

    I have noticed that it is mostly consumer products companies setting up initiatives that you describe. Do you see similar initiatives among B2B companies in the PARC network?

    Stefan

  5. Jennifer Ernst Post author

    We have definitely seen this as a trend across industries. Consumer product organizations seem to be more public about their programs, and I suspect there are a couple reasons. First, their source of differentiation is in manufacturing, distribution, and brand power — essentially, scale and consumer reach. So I suspect it’s easier to conceive introducing new products that someone else has worked on, and much of what they do is take existing products and re-brand them (resonates with the Swiffer product story).

    For the type of companies PARC works with, they tend build more on the supplier/customer ecosystem because of the product complexities. The ability to have strong cross-company collaborations is crucial, because so much integration has to be done — implying a less public face to their initial programs.

    We’ve seen Open Innovation offices being set up in all sorts of companies, though, around the globe. Much is going to be happening in this space in the coming years. It’s really in its infancy.

  6. Bijjou

    I think an employee must recognize that he has to personally benefit if he share his Idea. The sharing of Ideas should be considered for rating his job performance. A.G. Lafley, the CEO of Procter & Gamble, lets his scientists and engineers present how they share their Ideas in the “Innovation Review”. People get the same recognition, and don’t care if they share their ideas or pick up Ideas. For the company, the value of a customer must be what he does with knowledge whenever, and not what he knows.

  7. Jaycee

    I totally agree with you that open communication is very important to create open innovation. I feel that ideas become more important when it combines with other thoughts. Nice post; I like it.

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