There are about 50% of companies across the value chain that still are not participating in open innovation, according to a PTIS benchmarking study we conducted last year. Many of the companies that do practice it are still struggling for a number of reasons. The first reason is that companies have not developed simple and equitable ways to deal with and reward technology providers or inventors. The second issue is that many internal leaders feel threatened by outside ideas. You might know this as NIH (not invented here) syndrome. The third issue is that many organizations have not developed simple open innovation processes. Some have overcomplicated processes which inventors can’t get through, and others have no process to funnel ideas.
The good news is: all of these issues can be overcome. First, you need to recognize there is value in the concept of open innovation. Then you need to have a way to sell in ideas to the organization (a simple process). Third, you need to address the NIH issue and help people inside the company recognize that outside help is valuable and can provide a competitive edge; there is more knowledge outside the four walls than inside.
Take Procter & Gamble, for example. P&G has a program called Connect and Develop. The Cincinnati, Ohio-based company is looking to generate more than 50% of its innovation from outside the organization — and they spend billions of dollars on innovation.
This year is an excellent time to get moving on open innovation for small to large dairy foods companies and their suppliers, too. We work with many Fortune 500 and private companies and believe that if you want to be a leader and be successful, then having an open innovation program is a business imperative. Although this column is focused on packaging, having a broad, yet defined, open innovation program is important.
Here are 10 points about getting started or enhancing an already existing program in your organization:
1. Think open innovation and recognize the value. New solutions and opportunities abound outside the organization. Start getting prepared for the opportunity.
2. Integrate open innovation into the management structure. Build in innovation processes and goals. Getting started is the imperative and having a senior champion is key.
3. Sharpen your focus on the future. Start by getting insight and foresight projections and look to use scenario tools as a powerful way to get in touch with the future.
4. Get the right leader to head the effort. Look to identify a great networker and someone who can help break down NIH issues.
5. Develop trusting business relationships. If you don’t have trust, it won’t work. You have to see technology providers and inventors as partners, and build a relationship. One way to do that is to start with a simple memorandum of understanding (MOU) and move forward together.
6. Create a strong value proposition for innovation, Think about the level of innovation you want to go after. This can be as grand as world products and services. Yes, services are open innovation products as well.
7. Recognize various contributions. Some of the best thinking comes from people that don’t fit inside organizations, and maybe you have others who are not as vocal. Value their insights and opinions.
8. Create sensible and fair agreements. Many large companies still have one-way agreements. No inventor wants to give away an idea. It comes back to trust.
9. Keep out of “crisis mode.” There will always be a need to pull innovation resources to do other work. Create a process that supports open innovation people and dollar resources.
10. Start small and build. Do not expect to deliver new “Big” successes overnight. Create a simple portfolio of effort that ranges from small to big. Manage and lead appropriately.
We see 2012 as a strong year for open innovation across categories. It is time for dairy foods organizations and their suppliers to get started and build their successful packaging programs. Packaging open innovation will be a key enabler to new product success in the future!