The Key to Better, Faster and Cheaper Innovation
Interview with Owen Carryl, President, Open Innovation Services By Paul Arnold
Owen Carryl is the President of Open Innovation Services, LLC. As a deeply respected R&D leader and open innovation expert he is in huge demand from companies wanting to implement OI practices. Owen was also one of the first adopters of open innovation, at Procter & Gamble and then at PepsiCo.
In this interview he talks about the wider acceptance of open innovation and how innovation ecosystems - consisting of internal and external innovators – lead to better, faster and cheaper innovation.
I was an early adopter of Open Innovation and gained an appreciation for its business-building potential during the thirteen years working at Procter & Gamble. After leaving Procter & Gamble, I joined PepsiCo and found that my new company was at the very early stages of adopting Open Innovation (OI) as part of its business practice. After two years of leading Cheetos innovation within Frito-Lay, the snack division of PepsiCo, I was given the responsibility to lead open innovation. My formal responsibility was within Frito-Lay, but I seized the opportunity to advocate adoption of open innovation across the other business units of PepsiCo. Much of my efforts were focused on changing the innovation culture, making it more open to leverage external ideas and technologies and allowing unused internal ideas and technologies to be available for use by external innovators. Changing the culture meant selling the benefits of open innovation at all levels of the organization, including the CEO.
Is a culture change necessary for open innovation to work?
Absolutely. A change in the innovation culture, making it more open to the flow of ideas and technologies in and out of the company is the key to extracting the full value of open innovation. I recently participated on a panel of open innovation experts at the Open 2012 conference. One of the panelists made a statement I thought was both profound and true – “Culture eats strategy any day for lunch.” His statement emphasized and prioritized the importance of culture in an organization trying to implement open innovation.
How do you set about changing a culture? It’s not something where you can just wave a magic wand?
To be effective at changing an organization’s culture to one more conducive to open innovation, one needs to focus on three aspects of the organization. 1) Its current state of openness, 2) Barriers to openness and 3) Strategies to overcome those barriers. Open Innovation experts have now formalized a process to evaluate the state of an organization’s readiness for open innovation. Analysis of the data is then used to identify barriers to open innovation and strategies are developed to overcome those barriers.
One of the most common barriers found to open innovation is the “Not Invented Here”/’NIH’ syndrome, where innovators within a company seem predisposed to reject ideas from the outside.
In most cases, these employees believed they were being rewarded for delivering solutions and that accepting an outside solution would not be looked at favorably by their management. In almost all cases, this ‘NIH’ problem was solved when the incentives were changed and employees were rewarded and felt equally valued for solutions developed inside or outside of the organization.
There is growing evidence that senior executive support for open innovation has a significant impact on changing the organizational culture. A very common practice in organizations now trying to do open innovation is a bottom-up effort to change the culture with little or no support from senior executives. Though useful, this bottom-up approach hits a ceiling of effectiveness which is often shattered when open innovation is sponsored by a senior executive.
Another key strategy to change the culture is to create a connected innovation ecosystem, where internal and external innovators are effectively connected and ideas and technologies move freely in and out of the organization. When such an ecosystem is created effectively and with intentionality, internal innovators would have easy access to ideas, technologies and solutions created inside and outside of the company. This accelerates the pace and reduces the cost of innovation to ultimately grow the business. I call this state of connected innovation, ‘Nirvana’ and it will be the pursuit of innovation leaders for years to come
And that ‘Nirvana’ you mention will help companies stay with open innovation for the long-term?
Absolutely, that is exactly the case! I do believe open innovation is the gateway to connected innovation. In the future, companies that are leaders in innovation will have their own proprietary innovation ecosystem. It will consist of internal innovators and external innovators with unique capabilities that can advance the mission of the company, all connected with almost immediate access to each other. This connected innovation ecosystem is sustainable and will deliver better, faster and cheaper innovation.
Is there an increase in open innovation uptake?
There has definitely been an increase in open innovation uptake as more and more companies become aware of the benefits of open innovation – better, faster, cheaper innovation.
There are several drivers for this increase in uptake. Many companies are coming to the realization that organic growth is not enough, hence they are aggressively turning outside of the company for new sources of innovation.
Another reason for the increase in adoption of open innovation is that companies are learning about success stories of their competitors who are leveraging open innovation as a competitive advantage.
Finally, the increase in open innovation uptake can be attributed to companies finding out that open innovation is a more efficient way to spend innovation dollars and reduce development cost.
Should open innovation become part of a company’s DNA?
Absolutely! When open innovation becomes part of a company’s DNA, innovators would ask a different set of questions before initiating a development project. For example, “We can do this work, but is it more cost-effective to develop the solution outside?”
Before open innovation becomes a part of a company’s DNA, most innovators try to solve problems within the walls of their enterprise. The dominant question that precedes internal development projects is, “could we do this work?” My experience is that the pursuit of internal solutions, especially when developing new products, last longer than if the solutions were pursued externally. Hence, in companies where open innovation has become part of the company’s DNA, innovators ask before initiating a project, “should we develop the solution internally?” instead of: “could we develop the solution internally?”
Why did you decide to start Open Innovation Services, LLC?
I want to help companies effectively implement open innovation. There are so many companies that have made the decision to do open innovation, but just don’t know how. I want to help those companies set up the appropriate organizational structure, an effective innovation ecosystem with the right innovation partners and embed open innovation best practices in their organizations.
Unlike most open innovation service providers, I am on the ground working closely with my clients to set up the appropriate organizational structure and an effective innovation ecosystem that connects innovators internally and with the right external innovation partners. I help company management implement strategies to change organizational culture and embed open innovation best practices.
Are you optimistic about open innovation and its wider engagement?
Yes I am. I’m very optimistic. I am convinced that open innovation will continue to grow and gain wider acceptance for a number of reasons. First, R&D organizations will be leaner and will be expected to deliver more results. In such an environment, open innovation will be leveraged as a critical source of new innovation.
Another reason I am optimistic about open innovation and its wider engagement is that the pressure for companies to grow will not disappear. As a result, open innovation will be increasingly used to source external innovation and compliment organic growth.
Reader Comments
I am a new advocate of innovation ecosystems i think it is a newer approach to providing new ideas for the continual improvement of any company
Posted by feliciano calora on March 20, 2013
Maybe companies should also, in their pursuit of open innovation, examine their underlining philosophies of specialization and have a more comprehensive and holistic approach to problem solving. Specialization, especially in the health field, does more harm than good, since everything is connected to form a whole, a system that functions optimally when all parts are working together in harmony and gives due consideration of the impact of one on the other.
Posted by Sonia Carryl on March 20, 2013