Open innovation; sharing succes stories

With the bad weather this weekend, I had some time to catch up with my reading. A backlog had built up during the recent beautiful beach weather and the children’s school holidays.

A piece in the newspaper Financieele Dagblad offered a recognizable take on Open Innovation. The headline was: "Treasure of untapped knowledge". It referred inter alia to the recently published benchmark research by Professor Ard-Pieter de Man, Professor of Innovation and Alliances at the VU. Atos Consulting, along with several others such as the TU Eindhoven, presented the results of a benchmark study on the state of open innovation in 90 companies, of which 70% were Dutch.

The data set used in the research shows that open innovation increases a firm’s sales, as well as  improving the success rate of new product/service launches. With our experience, this is one conclusion that Gendo can only endorse. The research also shows that most companies face four challenges in the implementation of open innovation:

• The mindset challenge: how does open innovation win the hearts and minds of the employees?
• The ‘intellectual property’ challenge: how can you earn money with intellectual property that is not directly commercially exploited within the company?
• The tools challenge: how do you make best use of tools (including ICT) to support open innovation?
• The ‘management’ challenge: how do you ensure that the appropriate management processes support company employees in their work around open innovation?

Although I recognize these challenges, I do not believe these are "showstoppers" with regard tot the introduction of open innovation to any organization. The article in FD also recognizes this and identifies a number of open innovation success stories, such as Procter & Gamble, Philip and DSM.

The whole point of these success stories comes from both the application of open innovation mechanisms to acquire knowledge from outside the organization (outside-in) as well as mechanisms for the commercialization of unused knowledge within the organization (inside-out).

As the success stories of others are often the best way finally to convince doubters to work towards Open Innovation, I quote below one of Gendo’s favourite examples, namely the ‘outside-in’ case of Rob McKewan of Gold Corp Inc. Adapted from Charles Leadbeater’s bestseller "We Think" (a must-read for anyone who wants to read more about ‘innovation through collaboration’), his story is as follows:

Rob McKewan is a legend among the proponents of open source business models. The former chairman and CEO of Goldcorp Inc, a Canadian mining company, was so frustrated by the inability of his geologists to locate significant gold reserves at its mine in Red Lake, Ontario, he decided to release on the internet all the company’s proprietary information – 50 years’ worth of investigations, geological maps and reports – to see if the global community of geologists could find gold.

The lure, beyond the intellectual challenge, was a prize of $ 500,000. McKewan released the recommendations of his own team on possible drilling locations for gold so he could evaluate them. He also wanted to see whether outsiders would come up with ideas that had eluded his researchers. The challenge attracted 1400 participants, many of whom were geologists, but also physicists, mathematicians, and complex systems specialists – people with skills not available to Goldcorp. Ultimately, 140 of them actually made a contribution and half of the 28 winners discovered drilling locations unknown to the Goldcorp insiders. Red Lake, formerly a laggard within the industry, turned out to be one of the richest gold mines in the world, with 6.6 million ounces of proven reserves.

This example is just one of many success stories out there about open innovation and open business models. It is vital these stories are shared as widely as possible so that the protagonists become better known and more experimental companies can enjoy the rewards that open innovation can bring to them.