Open Innovation Fuels Growth (But Can You Measure it)

Mindstorms Big Robot on Campus, the NetFlix Prize, The Electrolux Design Challenge - these are all classic high-profile examples of open innovation challenges or forums that invite "outsiders" in to innovate with companies. This is different than promoting an open-source marketplace like Linux or iPhone application development. These historic examples are not about tapping into a scalable marketplace of innovation (see Nesta's P&G Corporate Open Innovation Challenge as an example), they are about making their internal teams more creative, more productively innovative, and about investing in a culture of innovation (and, therefore, sustainable growth and defensible marketplace advantage). Hard to justify with quarterly earnings releases. But that is why purposeful business culture is hard and requires leadership.

I remember attending the MIT Media Lab on behalf of a funding company I worked for at that time (Discovery). Corporations would fund professors and teams at MIT to explore hugely interesting yet often esoteric-seeming topics. The reality of this program is that it always felt at arms length. I am not sure how many people at Discovery actually knew their company was involved with MIT. The best examples are when everyone knows. Here's what I think you get:

• Fresh brains thinking about problems without any of the internal constraints
• New enthusiasm and passion for problem soloving
• Healthy competition for internal teams who become a little more motivated to show their stuff in light of these 'outsiders.'
• and, of course, the main "hard" business impact that most comapnies claim is the true outcome: talent recruitment.

While this last point is key, it pales in comparison to the first few benefits which are all about cultivating a culture that leads to more innovation.

This open innovation continues to quietly grow. Historically "closed" company cultures are experimenting more and more with open innovation models. Here are some examples:

Ford's "American Journey 2.0” (disc:client)  - a challenge with the University of Michigan students to develop applications comaptible the Ford/Microsoft Sync platform. “Already with SYNC, we have proven that we can access information in the ‘cloud.’ This research gives us the opportunity to harness the power of student innovation to explore beyond those capabilities and develop what’s next,” said Venkatesh Prasad, group and technical leader of Ford’s Infotronics team in Research & Advanced Engineering.

VTech's partnership with Savannah College of Art and Design (SCAD) (disc: Vtech is a client of our company) - their program, Cultural Context of Design, puts industrial design students into Vtech to experience the full monty of how coporate culture affects design. They experience teh discipline of the business problem. One might argue that this sounds more like an internship program than open innovation. I disagree. The integration of design students with a fresh POV into the enterprise does inject innovation into the organization. Just looking at the images of prototypes in this month's Metropolis Magazine (not yet on their Web site, hmmm) makes that much clear.

HP Labs’ Web Services and Systems Lab (WSSL)support of the Open Publishing Lab at the Rochester Institute of Technology - the Open Publishing Lab explores the future of "publishing" and while their mission is a little squishy to me (and interestingly they exist in RIT's School of Print Media), HP's support may fall in this category of open innovation if they socialize what the RIT team learns and comes up with at HP. If this is a token gesture with one HP person attending next May's ImagineRIT Festival, then they may not reap the true innovation injection possible.
 

Can the business impact be measured?

What's great about each of these examples is not the embrace of some simplistic consumer-driven innovation (nothing wrong with that but it serves another purpose). Companies are identifying people who are especially smart about the challenges they face but are well outside the usual talent base of the company usually because they are students or represent a discipline that may be under-represented in a company (like designers!). In the best cases, the experience is highly visible within the organization and there is lots of interaction between outsiders and insiders.

I plan on setting up our own challenge as I see a tremendous application with the world of social media marketing and communications and social business. Yet how can I make the had-number bsiness case to a publicly traded company? Does the commitment for such a program rest solely on some qualitative impact to culture and business that a CEO either embraces or not? Can you attribute improved business perfomance to a well-integrated innovation project?  

Comments

[Matt Bernius]

Hi John,

Thanks for noticing our little lab (and mentioning it in the same article with those other heavy hitters). The points you raised about why (and how) companies should take advantage of innovation labs like the Open Publishing Lab at RIT.

From the lab/academic side, collaborative projects allow us to ensure that our programs and curriculum stays in line with the needs of industry. And as you said, this helps talent training and recruitment (and placement of graduates).

How to quantify this is always the sticky wicket. Not only are the results of research always uncertain, but the path of integrating those results into a production/commercialization process (even if it's as a process improvement) can be really difficult. This is not unlike the application of other qualitative tools like ethnography, in the product design process.

One way to think about this is in terms of relative ROI on the quantity of new ideas that are generated and the quality of interactions. When compared to hiring a design/prototyping firm, sponsoring a lab project is a very cost effective way of having ideational work done. As you mention, working together, faculty and student researchers can open up a wide range of new perspectives. However, for a company to capitalize on the investment, it’s important to ensure that the sponsor dedicates the “mindshare” necessary to realize that ROI through fruitful dissemination and discussion.

For example, while there are advantages to going to the lab for project presentations/reviews (especially mid-project), when it comes time for final sharing, we have found that it's best to bring the lab to you. This enables the broadest amount of information sharing and can facilitate valuable discussions (and also cost effective). It also gives the researchers a chance to get to know the sponsor better (and often assists in creating a positive buzz inside the lab, building a company’s reputation among motivated and talented students who will be soon be looking for work). Unfortunately, these types of engaged interactions are often the toughest for companies to support (in terms of both personnel and financial funding). It's very easy for the results of a lab to be lost in the day-to-day operations of a company, especially in tough economic times.

So if I have any advice, beyond stressing the relative ROI of working with a lab, it’s make sure that the plans and funds for supporting the dissemination of the work are clearly built into the proposal and supported by the company right from the get-go.

If you have any questions, feel free to get in touch.

- Matt