3 dimensions of Open Innovation
Introduction
Since the term “Open Innovation” was coined in April 2003 by Henry Chesbrough in his book Open Innovation (Chesbrough, 2003), it has grown exponentially in use; and the practice has been researched, implemented and discussed vastly, both in academia and businesses. There’s skepticism and enthusiasm, investment and lack of, and all kinds of perspectives around it. At the core of all these perspectives we have one central question: Does Open Innovation drives real value to organizations?
I know it does. But I also know Open Innovation is not the one-fits-all solution for all kind of situations and organizations. Here I aim to discuss several aspects that affect the implementation of Open Innovation and value capturing derived from it.
Whenever I talk about Open Innovation, I’m referring to the new definition revised in 2014 in a new paper titled Explicating Open Innovation: Clarifying an Emerging Paradigm for Understanding Innovation [1] (Chesbrough and Bogers, 2014). It says:
“[…] open innovation is a distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with each organization’s business model. These flows of knowledge may involve knowledge inflows to the focal organization (leveraging external knowledge sources through internal processes), knowledge outflows from a focal organization (leveraging internal knowledge through external commercialization processes) or both (coupling external knowledge sources and commercialization activities). “
In other words, Open Innovation (OI) is a process for dispersed innovation (spread around and not concentrated in one point) that deliberately creates bridges between parts that were isolated before. It can be based on immediate money gain or not (like open source code, which is free) but always aligned to each organization model. It can be outside-in (you take the innovation from outside), inside-out (you give innovation to others) or both ways.
Open Innovation is my life and passion. I’ve been working officially in the Open Innovation universe for over 7 years now, especially during my tenure as Head of Open Innovation at BBVA, but in reality, my experience goes farther away. And I dare to say it, based on the afore mentioned definition, specifically with the part that says: “a distributed innovation process based on purposively managed knowledge flows across organizational boundaries”. All my professional life I’ve been working in creating links to bridge organizational boundaries and let innovation and knowledge flow.
For me it sums up in two words: “Better together”. Because I’ve lived Open Innovation as a process of innovation in collaboration within and without the organization.
I once stumbled upon a quote by Thomas Malone from MIT: “True innovations will come not from new technologies, but from new ways of collaboration”, and it hit me as a perfect way to phrase the mindset that underlies the Open Innovation paradigm.
Here I’ll discuss what in my experience challenges organizations in the process of implementing Open Innovation. I will also introduce a new framework that helps to analyze, understand and question the mechanisms behind the innovation implementation in an organization. I’m still working and developing that framework, in the hope that it becomes a strong and useful tool for Open Innovation practitioners and organization strategists to own and improve their practice by asking the right questions. So please, reach out to me with comments and thoughts. After all, I know its better in collaboration!
3 Dimensions of Open Innovation
In my experience, Open Innovation is a complex process because it implies collaboration. Collaboration is a human trait. And we humans are… complex.
As an OI Practitioner I’ve experimented with a variety of processes and approaches. I’ve committed all kinds of mistakes, and succeeded sometimes. What I’ve learnt along the way, what I propose here, is that in the same way an individual (a person) needs to have balance, the same way the organization and the elements involved in a collaboration need to have balance. The complexity we were referring before, implies that this balance needs to be analyzed in many dimensions.
I propose you a framework of 3 dimensions, each of which need to be aligned to ensure that the Open Innovation process works properly. The 3 dimensions are:
1. Strategy: Open Innovation is just one of the elements of an organization. And as such it needs to be intertwined, tuned and connected to the overall mission and strategy. This idea that might seem basic and obvious is not that immediate and obvious in the daily life of the organization. A good metaphor is our own body. Have you felt the tension between what you “HAVE” to do (what you know is good) and what you “WANT” to do (what you desire in your heart)? The tension between mind and heart is commonplace for us, and so not so strange to see it in an organization. What the results / stakeholders / strategy (the mind or brain) are asking, vs. what the innovation strategy asks for you: it might be a perfect novelty, the future, a better perspective… what the innovation initiatives lead the organization to do (the heart). Ask yourself the following questions: Is every member of the organization aware of and embracing the mission? Does everyone know the general strategy and what’s the aim for the organization overall work? Is the innovation strategy aligned and tuned with the organization objectives? How will the innovation outcomes feed or help the overall strategy? Can you do everything on your own? How collaboration (or Open Innovation) will add to that end?
2. POP K: This is an acronym for “Processes”, “Organization”, “Procedures” and “KPIs”. In this second dimension we should analyze if how the organization is structured helps to fulfil the mission and follow the strategy. In this case the analogy would be the different organs of the human body. They are all different but work together for a common goal. And each organ has its own role and responsibility. The questions to be asked here are: Are we organized in a way that allows the collaboration the strategy needs? Are the processes helping these objectives? Are there blockages or inefficiencies in the procedures to promote the collaboration that is needed? How we measure success promotes or hinders the kind of innovation we need?
3. Mindset: Finally, we get to the third dimension. I mentioned before that Open Innovation is innovation in collaboration. Collaboration is a relationship between different parties. We need to actively work in making sure that we understand and accept the perspective of each of the parties. The simile in this case might get a bit more sentimental, but if you’ve ever been in love and maybe considered marrying or embarking in a long-term commitment, you’ll understand me. At the end you need to validate the compatibility between the two of you. Because love is love, but the perspective spending a life together makes you, (in some cases!), think a bit more. The questions here are also at many levels: what do I want to get from this collaboration? And the other? Are these two perspectives compatible? How are going to share the revenues, Intellectual Property (IP), data, insights, visibility, branding and other take-outs? What kind of relationship do we want to have? Do we trust each other?
Of course, this isn’t an exhaustive list of questions, but intends to be an analysis tool to examine the alignment at the top, within the organization and with others. If we manage to actively identify divergences and act upon them, we will have a coherent and solid base to grow while we look into the future, and to make sure that true value comes from the innovation processes
For each of these dimensions I will propose you a framework and some tools, that will allow to go further and deeper into each topic. Till this day, I’ve worked those tools with +80 different corporations, and each experience is incorporated in the current version. I consider it to be a continuously evolving tool, because as humans learn and evolve, tools should do the same.
If you want to learn more about the framework, download materials and read the full methodology, you can access the Open Innovation menu in this web here https://www.marisolmenendez.com/3doi
[1] Chesbrough, Henry and Bogers, Marcel, Explicating Open Innovation: Clarifying an Emerging Paradigm for Understanding Innovation (April 15, 2014). Henry Chesbrough, Wim Vanhaverbeke, and Joel West, eds. New Frontiers in Open Innovation. Oxford: Oxford University Press, Forthcoming (pp. 3-28).