The Bleeding Edge of Innovation

7 Growth Factors Driving Innovation

I recently attended the 2014 Open Innovation Conference in Baltimore along with a deep bench of senior executives from Intel, Amazon, Under Armour, Pfizer, Clorox and others.  As an official social media voice for the event, I had an opportunity to track key themes across a content-packed 2-day program.

From this intense 48-hour window emerged core insights that offer benefit not only to Open Innovation (OI) mavens but those of us who navigate daily in the ‘Closed Innovation’ realm as well. In fact, I would estimate that 85% of the content of the conference applied equally to folks who walk the innovation walk inside their companies and never take on an OI role.

What remained astounding is that the OI executives I spoke with described themselves as operating at the bleeding edge of innovation. In their words, by participating in Open Innovation, they are daily risking career-ending failures.

They are enterprising innovators who are risking salaries and reputations to do what they do. In the words of Dr. Andrew Skulan, head of Partnership Practices at Clorox, “These undaunted executives “are planting a flag for open innovation, and we are going to drive it.”

Here are the top 7 insights I gleaned from this impressive gathering:

1.   Open innovation is increasingly viewed as an area of competitive distinction. Although we often shower accolades on organizations that grow their innovation advantage internally, firms that wrangle success in OI are viewed by peer organizations as leading players in their industries.  Rather than indicating that internal strategies are failing, OI success now means that companies are wising up and becoming more agile.  OI success offers firms new found abilities to pivot rapidly into diverse business models, distant geographies, as well as gain access to new target audience groups and technology platforms.

Increasingly, as voiced by Dr. Sophia Zhou, head of research and Clinical Decision Support Solutions for North America at Philips, “Open innovation is part of our way of working…We create a unique market position by combining external input with our own innovation skills.”

2.   Senior technical contributors are crucial to open innovation success. One question on the minds of every attendee was “How do I create a successful OI team?” Dr. Victoria Scarborough, Director for Open Innovation at Sherwin Williams, hit this issue head-on, and her message resonated across the entire two-day session. She noted that senior technical people must be present on the OI team – particularly in mature industries – as they have the respect of others in their field, they often hold strong business knowledge and not just technical knowledge, and they are often willing to personally accept responsibility for politically navigating the OI process. This latter point proved a crucial differentiator between success and failure for OI teams in every industry group.

Because open innovation means that team exchanges are happening at multiple levels in an organization, OI today is also increasingly a driver of change management. It goes deeper than ‘just doing projects successfully.’ OI now entails reweaving the fabric of the firm one project at a time, with senior technical contributors serving as major catalysts. More on this a bit later.

3.   OI champions need to stay with their initiatives from funding to proof-of-concept. Many false starts were experienced by OI teams that completed one too many baton hand-offs. Rather than collaborating and bringing competencies onto their internal team, several failure stories emerged from groups that delegated responsibilities too broadly rather than grooming areas of deep internal knowledge. This point was emphasized by Barbara Sosnowski, VP of Worldwide R&D at Pfizer.

As pharmaceutical companies move further away from the ‘blockbuster drug’ model to drive revenues, they have now been forced to generate new innovation competencies within their internal teams. Team leaders are thus often behaving differently when they reach out to external partners, actually staying with an initiative all the way from funding to proof-of-concept. This ensures that passion and key insights are not lost as the project progresses. Sosnowski indicates this new trajectory has enabled Pfizer to have a better view of which projects are at an early stage, mid-stage or in a final stage of product development with key partners. The term given to this new approach is “strategic externalization.”

4.   Open innovation + Closed innovation = Seamless innovation. Dr. Shimei Fan, R&D Director of Open Innovation at Unilever, brought home the reality that “Abundance is over.” She emphasized that with global R&D budgets declining in real dollars over the past 10 years, many R&D teams have been required to shift perspective on where they can influence the business when joining with external partners. At Unilever, open innovation has meant a shift toward a cradle-to-grave mindset which impacts not only revenues and profit, but the entire means of undertaking production in its partnered ecosystem. “We are working toward a marriage of open innovation with closed innovation to create seamless innovation. Our aim is to achieve seamless innovation by 2025.”

Open innovation projects at Unilever have newly directed how the entire organization buys, uses, and distributes products. Unilever is intensely mindful of its water usage, waste stream, and emission of greenhouse gases across the globe. In undertaking OI initiatives with Dow Chemical, for example, “External R&D” teams have remapped the environmental impact of palm oil groves and palm oil production.  A complete reexamination of how the organization uses clean energy for manufacturing and reduced land usage for actual palm fields has also led to a lower carbon footprint and more favorable environmental impact. As well, this new mindset has yielded the creation of new metrics, such as examining social implications rather than just raw ‘cost’ or ‘revenue.’

For example, in its partnership with TaTa on developing clean water for rural India, Unilever’s OI effectiveness has included focus on reduced rates of diarrhea, eye infections, and respiratory ailments. Dr. Fan commented, “Using open innovation, we are working to ensure that every child in India can reach the age of 5 and be healthy enough to go to school.” Even 5 years ago, those objectives would never have shown up as ‘ROI’ worthy of a VP’s signature.

5.   Ensure you are constructing a ‘sponsor spine.’ Among the many war stories shared at the conference, one in particular stood out. Luis Solis, President of Imaginatik North America, described failures of projects that did not consciously construct what he termed a ‘sponsor spine.’ A sponsor spine refers to the massive network that links scientists, executives, thinkers, champions, and passionate team members so crucial to the success of an individual innovation effort. Luis emphasized that this sponsor spine must touch all constituencies linked to an OI project team. In fact, counter to our often-insistent desires for efficiency, Luis urged “building redundancy into the system.”

Due to mobility of executives and things like budget shifts or team re-designs, holes are likely to develop in sections of the spine over time. The spine itself must always thus remain a focus for the OI project team.  “Some teams start in the middle, get their project underway, but never connect it to any other part of the organization. Those teams typically fail.” In urging executives to organize for innovation, Luis was actually emphasizing a precept that Thomas Edison continually reinforced. By organizing for complexity (like connected networks) rather than efficiency (like hierarchies that move in lockstep), the work of innovation can be accomplished more rapidly.

6.   “In order to drive change, you need to offer something.” I noted earlier that OI today is really a form of change management. Svetlana Dimovski, manager for Open Innovation with BASF USA, has learned that in order to attract the best people to her OI practice area, she must offer something in return. Dimovski emphasized that actual training around what opening innovation is and how it works has been a key magnetizing point to draw top internal talent. BASF has assembled an entire cadre of tools embracing licensing opportunities, scouting techniques, leads management, and more.  Their proactive efforts in driving increased access to what an OI ecosystem involves has yielded “greater engagement around innovation, more explosiveness of thinking, action, and momentum.”

This momentum has begun driving cultural change within the sphere of influence each project wields. Again, thinking about my own research on Edison’s world-changing practices, this concept offers parallels to how information traveled from Thomas Edison’s laboratories to his manufacturing partners. “Microcultures of innovation” begin to connect and form a new fabric for thinking within the entire organization.

7.   “Data allows development of infrastructure in minutes rather than weeks.” Getting back to the notion that OI is operating at the bleeding edge of innovation, in the words of Amazon Web Services guru Frank DiGiammarino, “You can scale innovation in a moment’s notice.”  Emphasizing that the prevalence of public data has transformed the ability of small internal teams to reach out and rapidly build something entirely new, DiGiammarino points to the OI ecosystems created by growth companies like Netflix, OpenTable, and Kiva (as well as – of course – Amazon).

These teams can act solo or link up with external partners to provide a ‘big infrastructure’ feel to their idea.  Citing Onemap.sg as an example (a website whose developers are based in Singapore), Onemap developed a toolkit allowing diverse partners to build collaborative platforms using their public data, and easily bring others into new projects. He noted, “We are encouraging all of our clients to bring public data into one frame.” Now that’s collaboration!

Although the OI landscape has dramatically matured over the past few years, one big gap remains. Not a single presenter offered a definition of what collaboration is, nor how they consistently exercise collaborative activity in their innovation efforts. I was disappointed to hear teamwork and collaboration equated as identical animals over and over again. Some real work is needed on that front.

But there is no gap in the heart, knowledge, and courage of the OI community today. Seasoned innovator HP Director of R&D Chris Kruger commented, “Don’t dilute the message. Stay with it to the very end.” Thomas Edison couldn’t have said it better.

image credit: ontheedgeartgallery.com

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A great grandniece of Thomas Edison and innovation process expert, Sarah Miller Caldicott is co-author of the first book ever written on Thomas Edison’s world-changing innovation practices, Innovate Like Edison: The Five-Step System For Breakthrough Business Success. Her new book, Midnight Lunch: The 4 Phases of Team Collaboration Success from Thomas Edison’s Lab, was just released by Wiley. You can access her work at powerpatterns.com and Twitter @SarahCaldicott