3rd. Dimension: Mindset Alignment

Collaboration and values

In the first dimension - Strategy -, we talked about aligning the brain and the heart. In POP K we wanted to make sure that each organ, each system in the body is working properly and contributing so the body can reach its goal. In this dimension, we can visualize our body, our Self, ready to connect with others. Inevitably a simile comes to my mind: the dynamics of love. What might seem to our heart as pure love, is on one hand the work of hormones and chemistry work of the brain and body, but it’s also the practicality of finding the right partner and the proper connection mechanisms with them. 

Following our simile, the same happens when you’re looking for a partner: it might be just dancing in a party or maybe a serious relationship. All is OK, but the important thing here is to be transparent about the intentions and make sure that all of the involved are on the same page. Once you’re ready to move forward, it’s time to make an active decision about the money arrangements and collaboration dynamics. And even further, when you’re ready to tie the knot, draft the right kind of contracts with the right kind of clauses. 

We’re talking about collaboration and innovation. Organizations create bridges across boundaries to let knowledge flow. But we must not forget that when we talk about organizations, there are people connecting, doing the activities, sharing the knowledge. And in this sense, innovation becomes a humanistic discipline.

In the collaboration dynamics, human traits are present: emotions, motivations, drivers, values… In my own experience, there needs to be a set of values in place for collaboration to work. Values of open innovation shared by those involved in the process. 

About values, in the Integrity & Ethics course of the United Nations Office on Drugs and Crime (UNODC) they explain: “Plato, who wrote many dialogues using the person of Socrates as his main character, argued that ethics and values should be understood through the idea of virtues, or the standard of excellence within particular activities as a guide for how to act. For example, being a good captain means ensuring that a ship does not crash, that its goods and people arrive safely in port, and that a ship remains seaworthy.” So, what makes a good Open Innovation practitioner? What values are underlying the collaboration process?

In my own experience, and following the 3 Dimensions I propose, we have the following:

• For Strategy, Congruence & Soundness: Merriam-Webster dictionary defines congruence as “Something that agrees with, is in harmony or in correspondence with another.” The strategy must be congruent with the organizational mission and goals. And the Open Innovation strategy should be congruent with the global strategy, making sure that each of the elements and variables involved is aligned (avoiding schizophrenic strategies). Soundness - “the quality of being based on a valid reason or good judgment”. - is also needed. It needs to make sense to all the involved. This creates peace of mind for the organization members knowing what they’re building together makes sense, and it’s working towards a goal.

• For POP K - Generosity and Care: Regarding Care, Inma Puig says in her book “The emotional revolution" (2) that if you take care of someone you’ll have a well-cared, nurtured person, and if not, then they deteriorate and will never perform well because they don’t feel good, and besides will make sure that everyone around them would feel the same way. There’s a lot of anguish when someone feels not cared for. In the process of collaboration we need to care about the others, be empathetic of what they need to archive and do. And with care, we will have an optimal organization, which will work in connection as a well-oiled machine. To do that, you need to do as Inma says: “Follow your biology: we have two ears and two eyes, but only one mouth. We need to listen and see the double of what we talk”. And this is the basis for Generosity. I’ve seen over and over the effect of generosity to open up collaboration paths: knowledge does not dwindle when sharing but grows. By beginning the collaboration chain by giving you can set the right mood to open up to other possibilities. It connects well with the exponential growth theories proposed by Peter Diamandis and Singularity University (3), that I advise you to look into. With generosity within the organization, silos begin to break naturally, by establishing optimal paths for knowledge to flow, and this inevitably leads to growth: for the individuals, for the organization, and for the business.

• For Mindset Alignment - Transparency & Integrity: Here we have values that affect our relationship with others during the collaboration process. The collaboration can be with different kinds of players, with one or many, for a specific project or long term. But always we will try to have this collaboration in a way that promotes and cultivates trust. And as I explain in the following chapter, to get trust we need to have transparency and integrity.

The mystery of Trust

Discussions about collaboration frequently end up focusing on trust. One can hear phrases like “the key of collaboration is trust”. But trust is a consequence and not a cause. 

Trust is the belief in the reliability of someone or something. And this belief is built upon experience. For some years I worked doing Process Engineering, and at that time I used to work a lot with ISO-9000 (4). There was a saying many consultants said trying to explain some principles involved: “Say what you do and do what you say”. I think this principle applies here. 

“Say what you do” is associated with transparency. Organizations need to be clear in what they are looking for, how far they want this collaboration to go. In the last 10 years, I’ve heard many startups complain about abusive corporations. “They just want to steal our ideas”. or “They invited us to a meeting and they just wanted a free diagnosis”. As time passed I understood that in a majority of cases these situations arose because there was a lack of transparency in the corporation side, or maybe too many illusions in the startup side. There needs to be a clear statement on what each side wants to get from the collaboration. Inspiration, advice, exploration, piloting an idea, experimentation, branding & image, acquisition, investment… All are valid collaboration schemes that, when shared by those involved, can generate great results. Of course, Non-Disclosure Agreements (NDAs), Intellectual Property (IP) policies, revenue share, and other agreements, are critical to make sure that all the involved share objectives and commit to them. 

“Do what you say” would be related to integrity, to be true to one’s word. Of course, there’s a reputational effect by not abiding one’s word and that’s bad enough. But more importantly, it will affect the commitment not only of potential partners but also of the members of the organization. Conversely, with integrity, knowledge and possibilities of value capturing tends to grow, the effect of failures evolves more easily into learning, and the collaboration bond strengthens, increasing the probabilities of success. Investors commonly say that they invest in teams and not in projects because teams can develop many successful projects. With integrity, the cohesiveness of the collaboration team reinforces, and also future project accomplishments.

Collaboration is a two-sided game. These principles apply to all participants in the collaboration effort. If any of the participants break the dynamic, then the balance is lost. This is related to Albert W. Truckers’ “Prisoner Dilemma”, the paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome.

With transparency and integrity, there will be trust. Strong reliability in the other will increase the possibilities of success. In the end, we’re solving “The mystery of trust” where we want to make sure that “what you expect” and “what I expect” can coexist during our collaboration, and ultimately in the long term.

Collaboration Players

This trust should be built no matter who we are collaborating with. And there are plenty of possible players in the ecosystem. Every company needs to proactively decide who they want to collaborate with, depending on the kind of collaboration and objective of that collaboration. In the overall perspective, each stakeholder has its own role in the innovation ecosystem:

Startups: According to Steve Blank, a startup is “a temporary organization formed to search for a repeatable and scalable business model.” (5)(6)  In this sense, startups act as the innovation lab of the world. They’re experimenting. And they specialize in specific elements of technology or knowledge, to which they dedicate full mind and team capacity. They’re fast, small, agile, and by definition, inexperienced in the business model they’re looking for (evidently this doesn’t mean that the team is necessarily inexperienced). Sometimes I imagine them as the little hands of children that can reach wherever big adult-sized corporation fingers can’t.

• Corporations / Companies: A company in Blank’s definition is “a permanent organization designed to execute a business model that is repeatable and scalable.” (7) They do have “big adult-sized fingers” because they’re robust organizations, with important qualities in the innovation game: a) they have strong infrastructure built across many years and lots of investment, b) they have a customer base and the relationship with the customer. They have distribution channels critical to the distribution and escalation of innovation. And c)They have a relationship with the regulator. In every industry normatives and regulations shape and limit the pace of innovation. A good connection with them is critical to write the future and advance of innovation.

• Investors: They inject the fuel to keep this dynamic rolling. With their investment, they allow innovations that are in the long term side of the benefits to originate and survive. It takes time for startups to be relevant to corporations or customers, and investors provide the resources to make this happen.

• Hubs (accelerators, events, networks…): They connect stakeholders to create collisions,  impacts or connections that wouldn’t happen without them. In a way, they’re the pollinators of the ecosystem, like bees in the forest.

• Academia: Builds the first bricks of knowledge. Working longer-term, they will give enough time to structure knowledge and explore other possibilities beyond it.

• Government and Institutions: create the infrastructures for society to grow and thrive. The same way that they build roads, schools and hospitals, they need to create the right mechanisms for innovation to happen, for collaboration to grow, and for all this to happen in an orderly manner that will bring prosperity to the community.

Among these players, collaboration possibilities are endless. And collaboration needs to be managed according to the players involved, considering each participant's interests, role and drivers.

Collaborating with Startups

In the specific case of startups, we’ve witnessed a change of paradigm. Some years ago they were  perceived as a menace, agents of disruption. I witnessed many discussions about “who will survive, startups or corporations”. Now, this discussion is part of the past. There’s a common understanding that the future is common. Startups and corporations need each other. In fact, startups are engines of corporate innovation by playing their role of “innovator labs of the world”.  Collaboration is key for mutual survival. As Carlos Torres, Chairman of BBVA, says: “We must innovate to survive” (8) and to innovate, we need startups. 

For corporations, collaborating with startups requires preparation in order to be able to collaborate with them without killing them. In words of Miguel Arias from Telefonica, it’s “teaching the elephant to dance with the gazelles”.

For a corporation to think about collaboration with startups, a good place to begin is to identify the kind of relationship they want to have. Wiblen and Chesbrough (9) talk about this in their article about “Engaging with Startups to Enhance Corporate Innovation”. They present the case in clear words: “When it comes to agility, startups have an edge over large corporations—whereas large corporations sit on resources which startups can only dream of. The combination of entrepreneurial activity with corporate ability seems like a perfect match, but can be elusive to achieve.” They analyse four models commonly used to engage with startups. These models are classified based on two dimensions: the direction of innovation flow (outside-in, inside-out) and whether or not there will be equity involvement. We will go more in depth in future articles. At the moment it’s enough to say that not all collaboration models are the same, and it’s critical to do a proper analysis on the corporate objectives to decide which model (or models) to apply.

The three horizons framework or “Startups are from venus and Corporations from Mars”

Back in 2009, McKinsey Quarterly published the framework Three Horizons of Growth (10). It provides a structure for companies to assess potential opportunities for growth without neglecting performance in the present. I’ve seen this framework applied in strategy and innovation planning. And later on, in a brilliant presentation by Johan Lorenzen. I met Johan while he was CEO for Holvi, and now he’s a Fintech entrepreneur, investor, executive, and board member. With this unique mix of perspectives, he explained the distance between the corporation focus and the startup / (Venture Capital) VC focus using the Three Horizons framework. It goes like this:

• Horizon 1 - Defend: The objective of the organization is to maintain and defend the profitable core. It receives incremental improvements and development, just enough to keep day-to-day operations, our customers, and markets engaged. In this horizon the mindset is risk averse, with a high volume of operations and actions, with low growth. - According to McKinsey, organizations can apply 70% of resources to this horizon.

• Horizon 2 - Extend: Here the organization looks to extend the existing business into new areas (either new markets or new products, never both) using partnerships and proven methods. The mindset is medium risk and medium growth. The organization applies 20% of resources to this horizon.

• Horizon 3 - Search / Explore: This is the farthest shore. The organization looks to create entirely new businesses. It’s unproven and unprofitable (at least at the moment). The mindset is about small bets, requires high skill, and looks for exponential growth. 10% of the resources are allocated to this horizon.

As it is in their nature, startups are exploring the future. They are born in the Horizon 3, and while madurating and validating the possibilities of the business model, they approach a Horizon 2, until they’re completely validated and they stop being startups to become a regular company completely embedded in Horizon 1. VC’s are not different. They move in the same direction, as they walk together with the startups. 

So we get to the crux of the matter: part of the art of collaboration is to realize that each player: corporation and startup, is moving in a different realm, with different priorities. A crucial part of the Open Innovation team is to build the bridge that allows to create an understanding and collaboration. To set the threads that will allow each player to be connected, and interact in the same terms: either because both assume they’re working in the same horizon, or because they’re willing to build a bridge to connect different horizons. Coming back to the love metaphor, it’s creating a communication bridge like the one John Gray proposed in his book “Men Are from Mars, Women Are from Venus”.

The “Collaboration Mapping” Canvas

Following the methodology I’ve presented in the previous dimensions, I introduce you to the final canvas (at least at the moment!). The “Collaboration Mapping” Canvas is an Open Innovation management tool that allows us to analyse, reflect, discuss and understand the organization's intentions while looking for collaboration partners, bringing forward relevant aspects such as equity involvement, the direction of innovation flow, time frame and needs.

I usually use this canvas in a guided discussion between the innovation team members, or the management team of an organization. In this session, the most important is to get to the right questions. In many cases answers will only come after the session, and while the teams explore within the organization and in the market what they want to do.

Here’s an explanation of the different elements of the canvas.

*Creative Commons Licence: OThe “Areas Involved in the OI Process” Canvas by Marisol Menendez is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Based on a work at marisolmenendez.com. Permissions beyond the scope of this license may be available at marisolmenendez.com.

Header: General information

At the top, there’s a space for the name of the company, name of the participant, job title and date. The company is important if the session is with more than one company, or department if you’re sharing with different departments. The date is important because you can repeat this exercise in the future and compare it. The organizational dynamics are not static, they change through time and are affected by the people who are involved. It’s interesting to compare evolution through time and verify the impact of changes and improvements.

Engagement Model

In this section, we have the corporate engagement models described before. Of course, this is not an exhaustive list of possibilities of collaboration, but it sparks the conversation. Adaptations can be done to include the relevant dimensions to analyse. 

Usually, corporations don’t have only one model of collaboration. Use this memento to discuss the value and approach of existing programs. Are they true to their nature? To what extent? Do they need adaptations or updates? Do you need to implement a new collaboration model? Why?

And there’s a moment to come back to the first and second dimensions and analyse if the engagement models are coherent with the strategy, and if the organization and KPIs are set to make this work. If they’re working properly to assimilate the innovation that comes in or out from these programs.

Innovation Projects in Collaboration - Three Horizons

This section is to map out the main collaboration programs and projects. Begin with the corporation perspective. When you have them mapped out, continue thinking from the startup perspective. And reflect: are there distances that haven’t been properly bridged? Are the horizons and expectations aligned? Is the organization coordinated with this vision as well? 

Again, come back to dimensions one and two. Reflect on the strategic variables about risk, time-frame,  depth of change, business models, etc., defined in the strategy. Are they aligned with the map you just painted? It is also relevant to reflect the current situation and compare it to a future scenario.

Finally, consider if in the existing programs and collaborations all teams involved have a clear notion on the objectives of collaboration. This validation should be done with the external collaborators, but also within the organization (coming back to POP K). Remember the values: Transparency and Integrity have their real test at this level of detail.

Scarcity and Excess

Finally, a basic exercise about the resources that are flowing in the Open Innovation process. In Open Innovation, knowledge flows from areas of abundance to areas of scarcity. The exercise here is to think what the organization has in abundance, that it is willing to share with others. Remember that this doesn’t imply that this sharing should be free!. Also, think what the organization needs and therefore, what it should seek from others. This is a basic exercise that should continue with more detailed exercises focusing on the most crucial needs.

Insight Questions

Here are some final reflections in order to set the grounds for discussion. 

• Current Partnerships: List the main partnerships that the organization currently has. Try to think also about those who might not be actively involved or in your area of influence, like institutional connections.

• Need to Explore: During the exercise, some ideas will come to mind about partnerships to explore. Write them down before you forget!

• Satisfaction with partners: Rate from 1 to 5 your satisfaction with current partnerships. Remember that you might be happy now, but know that there's a need for a change.

• Need for a change: Rate your perception of the need for a change in the current collaboration and partnership scheme of your organization.

Good fences make good neighbors

As discussed before it doesn’t matter who you are collaborating with. In all relationships, it is important to bring in the important discussions early on. Talk about money of course, but also, about Intellectual Property (IP), and the distribution of the assets that will be generated with the collaboration: revenue, data, customer base, knowledge…

New ways of collaboration require also new contracts and new regulations. Much is being researched and changed in these areas, although many might think that it’s not enough and not fast enough. Even so, it’s critical to have these discussions. In the end, "Good fences – or in this case, good bridges - make good neighbors.”

I know that I know nothing

There are plenty of other collaboration models. Some interesting cases are cooperatives. Mondragon Group in Basque Country (Spain) is an inspiring example of collaboration as a way of doing business.(12) NASA has a huge variety of collaboration models, including connection with existing expert ecosystems. All in all, the universe is immense, and worth exploring.

I want to end with a final thought. Socrates said, “I know that I know nothing”. Adapted to today’s organizations, we’re aware that we know we don’t know everything. We know we don’t have all the good talent. We know we can’t do it all on our own. And we know we exist in a bubble of knowledge, skills and technology, a bias that comes from our own business, sector and culture. And in order to succeed, collaboration is key. Because As they say, “Sharing is caring”!