Tuesday, June 13, 2006

Open Innovation Blueprint: Commandment 2

This continues my on-going blog on mapping out a blueprint for implementing Open Innovation. The first entry in this series talked about the framework I am using to analyze this question, the Ten Commandments of Change Management. Open Innovation is a big change, and therefore requires a change management program. In today's blog, I'll cover the second element of the framework:

2. Create a shared vision and common direction

Have executives in your organization share the news about the Open Innovation trend with their employees in speeches, water-cooler chats, and 1-on-1 meetings. Buy copies of Chesbrough’s book and pass them around the building. Help everyone understand the primary drivers of this trend and why it’s relevant to your business.

Open Innovation consists of two parts: in-bound and out-bound technology transfer. Personally I think two goods names for these processes are Technology Scouting and Technology Marketing, but the field hasn’t converged on official names yet. What do your people think of these names? Invite them to shape this economic revolution and talk about the benefits of each:
  • Technology Scouting provides faster time to market and can block a competitor from accessing a vital new invention available from another open innovator. P&G estimates they have effectively increased the size of their research pool to a million inventors by looking to the outside world (Buckley, 2005) and they currently source 35% of their ideas externally.
  • Technology Marketing allows you to create new streams of revenue through IP licensing. IBM received $1.9 billion from IP royalty payments in 2001. (Thinksmart Blog) That was a fifth of their revenue!

Paint a picture for your organization depicting a future where technology flows effortlessly in and out of your company leading to a global acceleration in innovation. It’s all about getting products that solve important problems to market more quickly by making use of the wheels already invented by others. This new paradigm will improve quality of life for all consumers. Make sure the image of out-sourced R&D doesn’t figure in your imagery though—the world doesn’t need fewer inventions, it needs more! Open Innovation just helps inventions get to the place where they’re needed most.

I'll mention again, in the spirit of being open, all of these ideas are open for discussion, so please share your thoughts!

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