8 Reasons for Open Innovation Exploration By Gianluigi Cuccureddu April 26th, 2011 Discuss and feedback this article on the 90:10 Group blog Managing Partner of 90:10 Group Netherlands CMO Agora Media Innovation Connect through LinkedIn http://www.linkedin.com/in/gianluigicuccureddu Tel: +31 (0)6 41362612
8 Reasons for Open Innovation ExplorationStefan Lindegaard wrote an article on Blogging Innovation where he explained the hype onopen innovation and what the it brings. His elaborates that it brings attention to innovationin general and mindset changing to improve corporate innovation capabilities. Openinnovation also behaves along the lines of the Hype Cycle -which was applied on Social TVfor instance- that in return coincide with Stefan’s conclusion:“So yes, open innovation is hyped, but if this hype can help convince executives, employees,companies and even industries to change – and improve – how they innovate, perhaps this is not sucha bad thing.”The Hype Cycle ‘demands’ customer success stories to be able to prove itself, otherwise it’sclimbe out of the Trough of Disillusionment will be longer and more difficult. This is thestage where open innovation finds itself.The eight reasons described below all add value to the success stories, enabling furtherexploration or integration of open innovation processes in the organisation:You can’t solve problems with the same thinking that created themThe first reason is one from a meta open innovation point of view. Organisations can’t solvesolely their problems, being caught in their own thinking mechanisms, tunnelvisions, not -really- being able to think out of the box. With open innovation organisations have theopportunity to let multiple disciplines clash into each other, key is that many angles aretaken by many individuals, all with their own experience, framework and knowledge,which will build on hunches (as mentioned in the video) that mould ideas.Discovering unmet needs and introducing more innovative ideasDepending on whom you’re introducing into the open innovation funnel, customers aren’talways aware of their own needs. Taking them into the open innovation process allows theorganisation to discover these unmet needs. This will effectuate more innovative ideas thatare partially powered by external stakeholders, having created validated innovationsthrough them.Using outsiders can speed up processesBy having the right and external people in the open innovation process, the businessprocesses can speed up that favors competitive advantages and capabilities. What is beingenabled is rapid validated innovation.Driving growth by keep looking at unmet needs and transform them in viable businessWhen open innovation has become a process, a funnel with entries for external stakeholders,it will become a continuous process of finding, matching and validating the needs into newbusiness (NPD/NSD) or enhanced existing business. Not all are viable, and depending onthe business strategy, prioritization of transforming ideas/needs into business is moreeffective.
Enabling businesses to be faster, smarter, more agile than the competitionIndustry life cycles and produc life cycles become shorter and more violent, globaltransparency brings the challenge to innovate faster and smarter, being more agile thancompetitors. Porter’s Five Forces are more blurry then ever, expanding the volume of directcompetitors, taking into account more rivalry from unexpected angles. For global companiesand glocalisation counts that the very concept of a successful global brand now arisesbottom-up across several locations at once, with local relevance and an emphasis on localconditions.Reducing costsAll kinds of costs are being reduced. As mentioned in the third point, processes are speededup, decreasing cost by shortening for example the R&D phase. Think also about advertisingcosts, by opening up the process organisations guarantee a highly targeted buzz at pre-launch. Costs are also reduced because the time to market is shortened.Reducing time to marketThis relates to the targeted buzz at pre-launch, having already a group of influencers inplace. Through social networks the relevant niches can be spotted and reached quicker thanconventional go-to-market techniques, shortening the time to market and reducing costs byit.Increasing the output of innovationsBecause (yet-to-be) innovations are co-created (e.g. creative consumers), co-tested (e.g.critics) and co-validated (e.g. representatives of target groups), the output increases alongthe process. Another aspect that increases the output is the quantifiable ROI at the beginningof the process. By calculating the potential market through social media, by identifying keyinfluencers and their reach an extra layer is laid on the ROI calculation, giving organisationsmore validation for the development and introduction of it.