By Paul Sloane Friday, 25 February 2011

MT Expert's Ten Top Tips: Broaden your business' innovation boundaries

These days, companies don't just get ideas from their R&D departments - they come from external partners, and even customers, too. It's not difficult to pull off, says open innovation expert Paul Sloane.

After this month’s announcement that Microsoft would be teaming up with Nokia, it’s become clear that the idea of collaboration isn’t just for startups any more – these days, big businesses realize the value of working together, too.

In fact, while until recently most businesses developed new products in-house by taking their ideas from their marketing or R&D departments, companies are now increasingly turning to inspiration from outside partners (and even customers) to bring new products and services to market quickly and profitably.

Known as open innovation, companies like IBM, Procter & Gamble, Kraft Foods, Reckitt Benckiser and (of course) Nokia are all leading exponents of the process. There’s a world of ideas out there - we asked OI expert Paul Sloane for his tips on harnessing them.

1. Define what you want to achieve
Identify the areas where you need to be more innovative, then call in experts to cover the areas where you’re weakest.

2. Set Goals
Set measurable and timely goals for what you want to achieve. Procter & Gamble CEO Alan Lafley, for example, decided he wanted 50% of the company’s new ideas to come from outside the company – by 2006, they’d hit 35%.

3. Assess your level of openness
Most companies are remarkably difficult to approach with new ideas. They are internally focused and find it difficult to accept initiatives and suggestions from outside. Carry out an audit of how easy or difficult it is for outsiders to contact the right person and then work with your company. You might be surprised.

4. Be specific about your challenge
You can just ask for suggestions on any topic, but there’s a danger you’ll be flooded with low value ideas. It’s generally better to be very specific about what you are looking for – for example, 'we want new materials that will perform well in corrosive or extreme temperature conditions'.  The more specific you are, the easier it is for specialist outsiders to know if they have a fit.

5. Choose your method
There are several different ways to persuade people to give you there ideas. For example, you can throw a specific challenge at anyone who wants to submit an idea, or you can pre-select a community of potential partners who meet your criteria. For inspiration, read up what other companies do.

6. Design your portal
Most people approach your company first through your website, so you need a portal specifically for potential partners. Here, you can explain your approach, define the current challenges, explain how partners can submit, give a list of examples, benefits, contacts, and so on.

7. Think win/win
Some of your people may see suppliers as adversaries to be ground down, which is one of the biggest potential barriers to the process. Others might be hostile to the idea of sharing intellectual property.  It’s important to change the culture to one where people think in terms of a win/win outcome.  Suspicion has to be replaced with trust.

8. Put the right people on the case
Don’t put a junior R&D executive in charge of your open innovation initiatives – the person responsible should be someone reporting directly to the CEO, who has enough clout make big changes without thinking twice.

9. Get a good legal agreement
If you’re going to share IP, risks and rewards with an outside individual or company, you need an agreement which is fair to both parties. Your legal department is used to making your interests paramount, but here, you have to be fair and flexible.

10. Maintain high-level involvement
Don’t initiate OI with a great fanfare and then delegate and forget about it. It requires continual monitoring and support, with plenty of time and commitment from a dedicated team.

Paul Sloane is the author of A Guide to Open Innovation and Crowdsourcing, published by Kogan Page and available from all book bookstores and online.

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