Connecting to a world of knowledge has never been easier. The ability of the Internet to harness expertise from all parts of the planet in a wide range of fields is allowing companies to augment their talent base with the knowledge, skills, experiences and points of views of others.
In 2003, Henry Chesbrough (Executive Director of the Program in Open Innovation, Haas School of Business at the University of California, Berkeley) coined the term “Open Innovation” to describe how companies are shifting from so-called closed innovation processes to using both external and internal ideas to support their innovation goals – a practice made easier by today’s modern communications technologies. However, this approach is only as good as the instruments and modes of open innovation and how they’re deployed by those who are using them.
The high costs associated with R&D functions, the equally high risk of failure and uncertain economic conditions has led to an increase in the adoption of open innovation methods. They include technology scouting, partnerships, knowledge brokering, idea contests and crowdsourcing. One approach that’s been gaining a lot of traction recently is the open innovation portal. This is an online platform where suppliers, partners and even the general public can submit technologies that may be of interest to a company. Procter and Gamble is the poster child for open innovation portal success with Connect + Develop. By leveraging the expertise of external partners, the global corporation successfully reversed a decline in its growth within four years. Today, the initiative continues to deliver innovations to all areas of its business. “Connect + Develop has helped deliver some of P&G’s leading innovations, and is critical in helping us deliver on our renewed growth strategy moving forward,” says Bruce Brown, Procter and Gamble’s Chief Technology Officer.
In the wake of P&G’s outstanding success, many companies followed suit with their own open innovation portals. However, there is a great deal of variability in their outcomes and many get it spectacularly wrong. The failure rate is high, with many companies reporting a poor “signal to noise ratio” with mostly out-of-scope, shallow or unworkable submissions.
In my position as President of IdeaConnection I have had input from thousands of people who are the end users of open innovation portals – users such as university tech transfer offices, researchers and startup companies. I have also attended countless executive presentations dealing with the implementation, successes, failures and findings of these open innovation endeavors.
What I have discovered is that companies set up their portals hoping that external contributors will deliver product innovation gold. But what they end up with are often low quality ideas with little or no commercial value. Often they receive far too many submissions and the exercise becomes a waste of time and money as a lot of internal resources are monopolized to read, track and evaluate them.
Open innovation departments within companies often talk a good talk and boast of achieving great things with their portals. They have the luxury of defining their own metrics by which success will be measured. Many are kidding themselves. They tell you about the numerous viable ideas they have received that fit some of their direct needs. But when pressed on how many of those ideas made it to market, the answer very often is “none”. This is not a definition of success that I would subscribe to.
So what is going wrong? And more importantly how can the situation be improved?
Innovation means you are treading new ground and you’re doing things that other people have never done before. Therefore, you can expect to make a lot of mistakes. If you’re not making mistakes you’re probably not innovating. For the most part, open innovation portals are very new and they’re very innovative – so by definition people are making a lot of mistakes when they launch them. This affords us the opportunity to learn from their mistakes.
In this two part article series I will examine why many of these portals fail and present a number of best practices that can be adopted to help vastly improve their success rates.
The second article will concentrate on the internal factors that are barriers to success. This first article focuses on the external issues that companies need to think about, namely how they market and present their open innovation portal.
Adopt audience specific marketing messages – on many portals, the information given and language used is often inappropriate for the intended audience. For example, a consumer products company is naturally very good at marketing to end users, however they’re not used to marketing to the researchers that come up with the technologies for their products. Yet they launch a portal that speaks to the average person on the street not the people they really want to attract.
Loudly boasting that you’re the best at what you do, and that you have billions of dollars of revenue and that people should submit their ideas to you is often counterproductive. If, for example, the majority of a company’s technologies come from university researchers, then this kind of language is exactly the opposite of what they want to hear.
Instead of a litany of claims and assertions, companies need to communicate that they are a good enterprise with which to co-innovate, and that they want to reach out to brilliant expertise outside their four walls. This doesn’t mean suppressing their self-belief or winner instinct, but it does mean getting the messaging right, aligning your marketing with your target audience and being explicit about embracing the spirit of collaboration.
Get the legal language right – one of the failures I often see is that portals intimidate people with lengthy and nebulous legal terms of service that only lawyers can understand.
Typically, these will state that the company doesn’t accept confidential ideas or confidential information, and that all submitted information is considered to be non-confidential. Many people don’t understand what this actually means, often interpreting this language as a statement that anything they submit to a portal will be made public.
Companies need to address this clearly on their website. I rarely see firms explicitly spell out in plain language what confidentiality (or non-confidentiality) means. But they must, because the current lack of clarity is stopping people from submitting their ideas. Tiny misunderstandings like this can make a huge difference to the outcome of this particular type of open innovation venture.
Manage expectations, but make a commitment – companies need to understand the concerns of their target audience. Many people don’t submit ideas because they believe the projects they have worked so hard on will disappear inside a black hole and they’ll never hear anything back. A lot of firms set up open innovation portals so that proposals will make it to the right person, but they do a bad job of convincing innovators that their technologies will actually be looked at.
Clear communication is vital. Not only do people need to be assured they’ll hear back from a company, but they must be given a specific time frame for when they will receive a response. And keeping that promise is absolutely essential. The portal should also spell out what will happen if a proposal is something the company needs. For example, whether the person will receive funding opportunities for their research and if the company is also interested in licensing or acquiring the technology.
More than eighty percent of university tech transfer offices that we have spoken to report negative experiences with portals. They never hear back from them and so they just figure it’s a waste of time and leave them well alone. This is a tough perception to overcome, so make your commitment clear.
Have a clear value proposition – an open innovation portal needs to be unequivocal about the value proposition, explaining why innovators should submit their ideas. It should work hard to convince them of the benefits and value they will derive. I rarely see this as there is an assumption that people want to chase these companies.
Keep in mind that it can take a significant amount of time for someone to put the information together about their submission and get it into your web form. Make sure that they understand why it’s worth the effort. Remember that the people with the hottest technologies are often the busiest, and most in-demand. Portal communications need to convince them that it’s worth their effort.
Get personal – people want to do business with other people is a maxim that’s as old as the hills. Another objection to portals that I hear is based on a misconception. Companies, universities and institutions that develop technologies assume the portal is there to replace personal relationships. The more likely it seems they are dealing with a faceless entity the less motivated they are to submit their technologies. Again, the onus is on technology seekers to deal with the mistaken beliefs.
They need to explain the portal is there to provide a front end to make sure all these technologies are stored and go through their process management system properly rather than just sitting on a desk for months on end. And that the personal relationships will remain; the portal is not there to replace them. This is part of the value proposition as above.
If possible, open innovation portals should publish the names and pictures of the people that deal with technologies that are being submitted.
Ensure your portal is easy to find – I’ve lost count of the number of times I’ve visited a company’s corporate website and struggled to find their open innovation portal. It takes no effort at all to include a link or button to the portal that is clearly visible on the homepage.
Make the Changes
Today, any company that launches an open innovation portal is battling a miasma of bad sentiment that’s built up in recent years. In my experience businesses just don’t realize that people have developed a raft of misconceptions about portals that stops them from submitting their ideas. Who knows how many billions of dollars’ worth of lost opportunities this adds up to?
Organizations will improve the chances of their portals delivering commercially viable products if they make their value proposition clear and make promises they can keep such as: “we’re different, we’ll get back to you and we’ll actually follow through with your ideas.”
These are not seismic changes, but the impact of their implementation could be game-changing.
Paul is the President of IdeaConnection, one of the world’s leading Open Innovation service companies, helping make OI portals successful and solving difficult problems for some of the largest companies in the world.
You can find out more about IdeaConnection’s Portal Support services here.
Paul can be reached at 1-877-525-6671 x105 or at www.IdeaConnection.com