Is Open Innovation really cheaper?

by Jeffrey Phillips

Innovation FallacyThe longer you hang around a subject, the more interesting the rumors and misperceptions. Innovation seems to spawn a number of fallacies, probably because it is very important, haphazardly performed and misunderstood by management. The combination of importance, carelessness and ignorance probably spawns a lot of fallacies. In fact, it sounds a lot like teen sex in a way.

One interesting new fallacy that seems to be making the rounds is that “open innovation” is easier and cheaper than innovation within the four walls of your organization. Open innovation can drive more ideas, and in many cases simply bypasses the bureaucracy and sloth of an organization to attract a number of people from outside the organization. In this manner open innovation can be faster, but it is not cheaper or less expensive, nor does it require fewer resources. Open innovation just shifts the costs from an innovation team, or R&D, to legal, IP and business development. If your legal, IP and business development teams have more bandwidth or lower cost than your innovation or R&D teams, perhaps this is a logical tradeoff. But don’t expect open innovation to dramatically reduce the cost of innovation.

Another fallacy we see quite often is the assumption that a firm can start, and stop, innovation programs as needed or at will. While other projects may start and stop easily enough, there’s enough barriers and roadblocks to make starting an innovation program difficult, and once halted almost impossible to start again. What’s the biggest concern about innovation programs from those who are assigned to do the work? That is is another management “flavor of the month” program and the executives aren’t serious. It is hard to start, and even harder to restart, an innovation project, and awfully easy to kill.

Innovation FallacyA third fallacy is that innovation can occur in a black box. While skunkworks can be successful, they compete for resources with other projects but can’t communicate the goals and aims of the project or effort. Thus, managers have to balance how to resource a project, and what benefits or results they’ll see from the innovation effort. Why would a manager provide resources to a black box project that potentially cannibalize his major product or service? We don’t cut our own throats in real life, and we certainly don’t do that at work. Skunkworks can work when fully resourced, all the way to product development, but innovation works best out in the open. The more visible an idea is, and the more scrutiny it receives within the comfortable confines of your organization, the more it will be shaped for the market.

The fourth fallacy is that really “good” people are important. Well, yes, people are important, but I’d rather have open-minded, collaborative volunteers than the smartest people who are assigned against their will. In fact, a good process and understanding of the tools and methods of innovation deployed by an “average” team will trump the best thinking of the best people who don’t leverage the methods and processes. Clearly, as an innovation team, we’ll take the best people we can get, but I’d prefer passion and the willingness to learn and use the innovation tools over people who think they already know the answer.

Innovation FallacyThe fifth fallacy is that executives can demonstrate commitment by talking about innovation. Frankly, unless he or she is Walter Cronkite (a famous newsman for you younger set), executives don’t communicate well, and often leave their direct reports and the people under them translating what was meant. If you want successful innovation, have your executives SHOW UP and participate in the work, and comment on the work and its outcomes, not simply state the importance of innovation. NO ONE IN YOUR ORGANIZATION KNOWS WHAT YOU MEAN BY INNOVATION ANYWAY! Demonstrate, then talk about it, rather than simply exhorting.

The last fallacy I’ll talk about today is related to my recent post about new wine and old wineskins. You can’t ask people to think differently and challenge the status quo, while working within the status quo and using all the existing tools and methods. New thinking requires new tools, and the ability and permission to use those new tools. Nothing is more frustrating for a team than to be told to innovate on the sly, on their own time, using old tools and methods to generate radically new ideas. Never the twain shall meet. If you want new ideas from your people, then give them the time and the tools to create the new ideas. No, demand that they take the time necessary to learn the tools and use them effectively. Otherwise, just buy ideas from consultants and save your team the headache.


Jeffrey PhillipsJeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of “Make us more Innovative”, and innovateonpurpose.blogspot.com.

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