Small Groups Working Together is Where the Magic Happens

Interview with Peter Kragh
By Paul Arnold
Peter Kragh uses his expertise in open and user innovation to help organizations and companies develop breakthrough products and business concepts.

Previously, he held several positions e.g. at the medical device company Coloplast. Today, he shares his knowledge about cool innovation trends and his many open innovation projects in his travelling roadshow.

In this interview with IdeaConnection, Peter talks about his experience of working with companies embarking on open innovation projects.


Peter KraghWhen you speak to companies what are they asking you?

What I typically hear is that they get what open innovation is all about and why they should do it. The big question when I’m talking to them is how do we do it? And that’s a big difference from 10 years ago, because then you really had to put a lot of effort into why open innovation is a good idea. Now there seems to be a broader acceptance that it is a good idea.

And they have a good understanding of open innovation?

Very often we see one or two people in very large organizations who have a really good understanding of what it is all about. There are a lot of people in large organizations who know a lot about user experience and customer research and so they have a big understanding of figuring out user needs and turning them into customer requirements. What is really lacking is the idea that you can go out and find the right person to solve your problem or who has a solution. Or that you can reduce your costs by outsourcing some innovation tasks to someone who has a really high interest in getting the problem solved.

To do open innovation right you must have knowledge about the different methodologies and processes and the cultural or mind-set understanding. Companies are constantly struggling with getting the right mentality, because they have a desire to control what is happening and do not wish to reveal stuff at all. That’s a really poor starting point for doing open innovation.

I think it’s easier when you go out to non-profit organizations, because they don’t have these intellectual property issues. They have a better understanding of their motivation for doing open innovation. For them, it is more to what extent they can reach a target group to help them solve a particular type of problem.

How do you go about deciding which mode of open innovation is right for whichever set of challenges or problems a client faces?

I have a decision tree, so it’s basically analysis - What is the current situation? What do they want to get out of it? - to figure out which methods to use and which decisions to take. For instance, if you want to do some kind of crowdsourcing exercise, then you have to figure out, well, should it be a collaborative one or should it be a competitive one (where there is one winner taking all the money)? What type of solutions do you want and how easy is the access to the target group? Is the target group very broad or narrow? So there are tons of things to look into and questions you need to get answered in order to choose the right methodology and take the right decisions.

In many of my projects, it’s often turned out that it’s a combination of methodologies that I am using. You might start off by doing a Lead-User study (a 4-step process to find those who have made superior solutions to a problem), either in target markets or in analogue markets, and bring them together in one or more lead-user workshops.

What I often see is that in between workshops or after the workshops there is a need or desire among the participants to have more collaboration and to finalize the fantastic breakthrough concepts they have developed. Then you make a community (i.e. the crowdsourcing method) where you can continue the innovation work. Likewise, if you have found a lot of great solvers, then give them some materials, tools and training to develop their final products or working prototypes (i.e. the User-Toolkit method). That’s a really a cool way to combine the lead-user method with the user toolkit method.

Why do you think some organizations fail with open innovation?

Very often due to lack of knowledge. Organizations trying this for the first time get it wrong. They take wrong decisions or use the wrong methods for solving a specific problem. They say “we tried it out and it didn’t work”, but they really didn’t try it out in the right way. I see with some companies that very often they are not ready to do open innovation. If there’s a lot of “not invented here syndrome” then there is no use doing something unless you have some stakeholders within the organization or you can keep your open innovation project entirely outside the organization (e.g. by using the services of IdeaConnection).

There is a big constraint within some organizations, namely a fear among those involved in innovation that they might be fired or replaced by open innovation, which is not the case. It is about beating the competition. And if you want to beat competitors you have to do open innovation to find the right people to work with to come up with the great solutions or find those who already have the great solutions … before the competitors.

If there is too much “not invented here” and too much protection and too much control then I advise they don’t do it – at least not crowdsourcing activity. Then it could be a Lead-User study where they go out and search for people. Then they can better manage who they talk to and what they say to each person.

However, the more control and the more closed you are, the less you get out of it. It’s not black and white, you don’t have to disclose everything you know. There was a project manager recently who had a very good idea for a new product for solving a particular problem. I said, well instead of going out saying what your solution is in a community why not go out and state the problem and see what comes in. If you find someone coming up with solutions more or less similar to yours then team up with them so you reach a final solution together. This was in a target market and is where I very often see fantastic stuff happening.

In near future, I predict that there is a power shift where I think innovation will happen elsewhere: I see lots of innovation in user groups such as sport clubs and patient groups for example. I think we will see a huge increase in innovation activity there because consumers nowadays have the ability and desire to innovate when something is not right. This trend is documented by social scientists, e.g. in a huge scientific study by von Hippel, Berg Jensen and Hienerth (2014) and now there is even a model for this type parallel innovation process by product users, recently developed by Eric von Hippel and Christina Raasch.

Maybe seeing more of these sorts of activities will get larger companies more on board with open innovation?

That’s right. I remember a Lead User study at Coloplast where we found a user of Ostomy care products, i.e. a person with a stoma who had a big problem with feces leakage from the stoma pouch. Now he had exactly the same education background as top developers within the organization in engineering and tool development, but he was also a user of Ostomy products. And users have what social scientists call “sticky information” which is crucial information about what a product problem is. So he went into his kitchen to do innovative stuff and it was fantastic to see him lead a small team of people who all had the same problems but were from different backgrounds and countries. I see this kind of magic happening, where you have small groups of solvers online or physically working together to make great solutions.

In terms of companies who understand open innovation, have you come across any that feel underserved by the open innovation marketplace?

Often I see that the questions that they have are often answered by theoretical studies and best practices, and often it is about acknowledging that there is a learning curve when starting with open innovation. Very often there are questions about how to model something, how to approach a specific problem and so on.

Academia is farther ahead than business practitioners when it comes to knowledge to use in practice. However, Eric von Hippel, my long-term mentor and friend says that the more young people going to business schools are learning about user innovation and the theory behind it, the better their understanding will be when they get out into business practice. That’s an understanding of what’s going on, what to do and how to get it right.

Is it a generational thing? The old guard are resistant to change?

Probably. I also see is an even bigger driver of open innovation is that in our society in general there is a trend toward this “we culture” and sharing communities. I think these underlying trends will grow in the near future and change who is innovating and how to innovate. I am currently traveling around giving free lectures to organizations about these new trends in our society and how organizations can benefit from these trends with open innovation activities.

I still think we have some big issues to deal with which are related to the mental attitude of an organization. There are questions I always get when I’m out lecturing: What about IP? What if the competitors learn about what we’re looking into? If someone is submitting a solution in an open environment where the competitor can also see what will then happen?

Having said that, I think we are seeing new attitudes in organizations where they see that it is a no-brainer to involve users and solvers who have a solution to an innovation problem or who can/will solve the problem because they themselves will benefit from solving it.

I also think that organizations increasingly will have a mix of innovation activities, where some will be pure internal research (where they have their core competence and their core reason for existence) and some innovation activities where they support e.g. user groups to innovate themselves and a lot of innovation activities made in co-creation with suppliers, experts, solvers with special competences and especially co-creation with innovative users. I also expect an increase in a lot of new business models based on enabling products users to make their own final products as well as many new machines that enables you to easily make almost everything yourself at home.

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