|Many firms are now opening up to creating innovation from the outside-in.|
Open Innovation relates to how companies collaborate with outside organisations to create new innovations. More than just outsourcing, Open Innovation relates to how two firms with compatible resources and strategies create an alliance to attack a market opportunity that previously could not be addressed by a single company. An example that Unilever presented at the conference was Starbucks ice-cream. Starbucks does not have the expertise to produce ice-cream. Unilever does have this expertise. The two firms were able to work together to create a product that might otherwise not exist or for which there would have been substantial hurdles to produce.
For me, by far the best presentation at the conference was given by Andrew Gilicinksi of Clorox. The presentation highlighted how Clorox relied on networks and communities of outside innovators. Through Clorox Connects, Clorox presented to the outside world some challenges that it was tackling and seeking solutions from the outside world for. There were two particularly noteworthy points about Clorox's approach. Though the company uses a third party firm to screen the proposals that they are sent, this third party firm is actually compensated based on the success of the proposals. This means that the "gatekeeper" actually has incentive to coach the people that produce proposals to make them more closely fit Clorox's requirements. A second notable point relates to confidentiality. This is an issue that many firms struggle with when it comes to inviting the external world to help solve problems the company is tackling. However, Clorox decided that there were many problems that, to the outside world, should be obvious that the company is looking into. For example, where new government regulation will change their approach to particular processes. As another example, "to some people it may even be surprising that we don't already have a dressing made of natural preservatives".
In other presentations, P&G highlighted their work with Ohio universities, creating a "master agreement" that allows P&G to work with any of the universities in Ohio under standard terms. Such an approach, if made nation-wide, would enable P&G to tap into a wealth of academic resources. Qualcomm presented an internal business plan competition they had used to stimulate innovation. Meanwhile, Cisco discussed the I-Prize competition that they had organized - a business plan competition that invited entrants from outside. I was impressed at the efforts Cisco makes to keep the company growing, billion dollars at a time.
The greatest take-away for me was that the difference between success and failure in Open Innovation efforts often comes down to the soft-skills of the people involved. As one seasoned expert remarked of one the more successful directors, "he might be all smiles, but I tell you - there is ferocious courage behind it".
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