Open Innovation Websites- The Supplier/Customer Perspective

There are many websites now touting open innovation which in essence is a way to match up an invention/technology, product or service with a potential investor/licensee, manufacturer or distributor. Some of these websites do a good job articulating the information required to make a match while others could use some improvement. This is a case where one of Stephen Covey's 7 habits, "Begin with the end in mind" is appropriate.

Open Innovation sites will be most useful when analyzed from the supply side of the relationship first. Who is the supplier? The supplier in this case is the problem solver, investor, licensee, manufacturer, distributor etc. that we are trying to capture interest from for our innovation. They may be supplying knowledge, solutions, $'s or expertise. Since these sites typically charge the entity posting the innovation or problem needing solving, it would make sense that the poster spend adequate time on articulating the idea, product or problem such that the potential supplier can understand and hopefully connect a solution with it.

One of the sites used by Proctor & Gamble (Connect + Develop) does a good job of mentioning technology needs while also describing what they have already tried or investigated which saves the searcher valuable time. For example, one entry seeking reduced calorie density in snack foods mentions 3 methods already tried which tells me that if I have method 4, then maybe I have something they're interested in but if my technology is one of the 3 listed then maybe not.

Here are some simple examples with me as the potential innovator asking questions:

1. If I want someone to invest in my technology, can I articulate potential uses (products, industries, applications) for that technology in addition to solely providing details describing what it is?
2. If I want someone to purchase and distribute my product, can I articulate how it may be packaged or purchased or shipped clearly? Can I provide lead times or availability if applicable?
3. If I need a manufacturer, does my entry let someone know basic manufacturing processes (i.e. injection molding, extrusion, powder coating) that I need to produce my product?
4. If I want a licensee for my service (or product), what is the proof or background that I can provide to meet potential investor needs (previous orders, testimony from initial users, quality of work and most certainly, the basic business case)?

You could make a much longer list. The point is that like everything else we do, open innovation needs to focus on the concept understanding to the potential supplier for my problem. The supplier/customer relationship in open innovation can become very blended and we could argue over who actually is the supplier and customer in this relationship but either way, looking at the innovation from the other side will provide clarity and hopefully better responses.

Innovation Quick Hits - If at first you don't succeed....

John Barry died this month. He was 84. Why do we remember Mr. Barry? He became president of Rocket Chemical Co. in 1969 and was involved in a great innovation. Rocket later became the WD-40 Corporation. Interestingly, WD-40 started out as an agent to protect the skin of the Atlas Missile from corrosion but was so popular it became available in local stores in the 50's as the lubricant we all know and love. WD stood for water displacement ( no water, no corrosion). The significance of the 40? Turns out the formula worked on the "40th" try.

Are you willing to try 39 times before your "Eureka" moment? As Edison was quoted as saying, "Innovation is 99% perspiration and 1% inspiration".

Innovation Quick Hits - Drivers License Innovation

Kudos to the State of Georgia on a simple, effective innovation that costs nothing, solves a problem and helps enforce the law. In a recent Atlanta newspaper article, the folks that produce the drivers license are revamping the look for the first time in like 13+ years. What got me wasn't the new holographic or anti-forging technology and the like, which we've come to expect, but something much simpler I didn't expect. For carding purposes, they are going to print the license vertically for licensees under 21 and horizontally for those over 21. This is a great example of a simple innovation that helps everyone from bar owners to the police to identify underage drivers. What a great idea! (unless you're the teenager).

Importance of History on Innovation Today

Preparing for an upcoming presentation, I decide to start with a quote from famed philosopher George Santayana:

"Those who cannot remember the past are condemned to repeat it"

The perception of what innovation is and how we view it in our organizations has a lot to do with what we've believed about how it was done in the past. Unfortunately, our view of the past is colored by the way history has been presented to us. The Myths of Innovation is a great read describing the facts behind the lone inventor/innovator myth (i.e. Thomas Edison with the light bulb and the Wright Brothers with the airplane). History is easier to remember when we compartmentalize inventions and innovations as being this Eureka moment attributed to a single person or group. The truth is harder to swallow when you consider the timeline of innovations before and after the one person who gets the credit in the history book. Advances in aviation and light bulbs continue to this day.

So why is studying the incremental innovation histories of these inventions so important going forward? If we believe the cliff notes version of these past inventions, we can become biased to thinking that we or our organization can ever be that creative or innovative when our reality may be totally based on a flawed historical view. Taking this forward to a current example, there are those that would credit Steve Jobs as the creator of the IPod and IPhone. Steve Jobs may be an awesome visionary and creative leader but he's backed by thousands of creative staff to turn vision into reality. As humans, we like a straight line problem and solution and a person to give credit to, but reality in the world of innovation is failure cycles with twists and turns in ideas that are difficult to predict. They involve groups of lots of individual sparks of innovation across individuals, companies and countries which are all dependent on the availability/affordability of the needed technology to pull it off.

Study of past companies and the path to get to where they are can be an encouraging process to show you that those who have innovated before you have gone through the same struggles and failures that you're experiencing. Study the "real" history and be encouraged that others have gone before you and succeeded.

Innovation Quick Hits - Challenge the Rules

I am no 60's radical although I grew up in the 60's and am more of a conformist but innovation demands challenging the accepted norms. The British Government in a recent AP news story released its "Guidelines to Teachers". A true innovation was the recommendation to stop teaching the time-honored "i" before "e" except after "c" rule. Citing words such as "their", "sufficient" and "veil", the government challenged the accuracy of the "golden rule". Just like innovation, the 2% that breaks the rules may be your sweet spot for an innovative approach.

Open Innovation- Pros and Cons

With the availability and increase of open innovation web sites (Idea Connection , InnoCentive , Innovation Marketplace , Bulbstorm , NineSigma , Ideas4all ), it will be interesting to observe the outcomes from this leveling of the playing field for new ideas, new products and new technologies. Admittedly, the sites have some different functions. Some are simply idea post and respond for no to low cost to gather input from the web community of creative folks who enjoy reviewing ideas. Other sites are well-funded with a broker model (and associated fees) to make the desired connections. There is really something for everyone from the small inventor wanting feedback to the Fortune 500 company where open innovation is a key business strategy for new product/service development (Proctor and Gamble's own Connect and Develop is a great example). Here are some pro's and cons that you may feel free to comment and agree/disagree with. My perspective for these are related to the small enterprise clients I serve and not necessarily the large corporation where these may not apply. I am admittedly a little biased with what I call the "post and hope" model where innovation responsibility is abdicated to the web response received.

Pro's:

• Provides a lower hurdle to gather ideas from outside the organization
• Becomes easier to do with the availability of Internet sites and search techniques
• Taps into the collective creativity of others providing stimulus from others outside our field of expertise or biases.

Con's:

• Too much reliance on the web or others to drive your creativity
• May ignore lack of an internal process for gathering "low fruit" innovative ideas within your organization (i.e. product extensions, new markets for existing products, better articulated marketing messages)
• Creates an expectancy of "post it and they will come" mentality of thinking that the Internet "post" is the innovation and not just a tool in the toolbox for your internal process.
  

What is your Innovation Process?

Innovation has become a buzzword and "cause". Yet it can be like a movie set that looks great from the front until you see it from the rear as a propped up fascade.

As Deming like to say 94% of the problems encountered are due to lack of good process, 6% involve the people. So much recently is centered around how to get our people energized to innovate. Encouragement, motivation, stimulus etc. All of these are incredibly important but let's take a closer look at process which you could argue is also heavily based on what the company culture is like. All talk and no process is indicative of the culture the leadership promotes.

So what is your innovation process? How physically are ideas generated, evaluated and put through the motions and prioritized for possible action that leads hopefully to revenue generation and profit. If you are small, start with a growth pipeline. Create an Excel sheet of ideas with a column for the probability of success and most importantly a column for the person who is responsible to investigate. Several other columns may involve scale ranking 1-10 for areas such as risk to development, investment required, time to develop, how strategic is it, profit potential etc.

The pipeline should be reviewed regularly. The simple rankings you come up with upon investigation may kill the idea from progressing to a formal product development cycle. Your pipeline realistically will have less than 5 ideas with activity if you are an organization under a few hundred people. The key is that there is activity on something and that you are meeting to discuss movement of ideas (kill it or develop some more).

The key is that when asked the question, "How do you innovate?", that you have an answer that goes back to some "process". Whatever that answer is, whether it's a simple Excel sheet or a more formalized approach is your process- good, bad or indifferent. If you can't answer the question, you know where to begin.

Innovation Quick Hits - Frozen in Fear

Are you the deer in the headlights? Frozen by fear, you stop and stare at the oncoming lights of change. The headlights keep coming and a collision is unavoidable.

If change is the headlights and we are the deer, what keeps us mesmerized on staring at the inevitiable? Get moving, get going, start looking at what your business does differently, more agressively. The headlights are moving in a direction. Where are they going? Can I move with them?

Too often we focus on the reasons not to innovate or look at our small companies from what we haven't done or can't do (the typical "we don't have the time/money"). Well guess what? No one else does either yet successes abound. To look change in the eye is a stare contest that you will lose. We need a call to action with our company cultures to lead or follow. Getting out of the way is no option either as that is avoiding the inevitable headlights on the next road we cross.

Roadkill has no capacity to make a decision and the landscape is littered with companies that have left their mark on the road of a once living and thriving organization. Graphic but true.

Any good examples out there of what has gotten you off dead center??

Innovation Quick Hits- Living on the past

Today's products/services are the result of yesterday's innovation and risk taking. Are we still living on the residuals of past success or pressing forward to create tomorrow opportunities ?

Raw Materials for Innovation

When we make product we start with raw materials. In the manufacturing world with Just-In-Time and supply chain integration, our raw material suppliers are vetted and their quality assessed, specifications analyzed, sample material inspected etc. This happens well in advance of approving the supplier for routine material purchase. How does this apply in the innovation realm? Our raw material is our people creating actionable ideas. These are not only the ones within our four walls but those we choose to engage with for innovation which includes suppliers, customers and outside sources.

If people are the raw material, how are they vetted for creating an innovation culture that leads to quantifiable results? The short answer is that in many cases you may be stuck with a raw material inventory of naysayers, "not invented here" types that if they were actual raw material vendors they might be replaced. In the company culture, we have to use what we've got and bloom where we are planted so to speak. Since we can't choose the company culture let's at least understand where people are coming from.

Here are some sample survey questions you may want to consider for an anonymous poll of your key decision makers and workers who make it happen every day. From my experience, the answers varied little from top management to the shop floor. A simple 1-10 scale defining what a 1 and 10 is for your organization (in 1-2 words each) is a easy way to gather and tally your results. Here's to the start of a great internal survey to help you understand the raw materials you're working with:

1. What do you think is your company's need to innovate it's offerings to be competitive?
2. How urgent do you think #1 needs to be done?
3. How successful in the past has your company been on innovative products/services?
4. What is your impression of the company's boldness towards taking on new ideas/innovations?
5. Is creativity/innovation rewarded at your company?
6. What is your level of optimism based on your company culture to taking action on new things?

There can be many others. What are your thoughts?

Putting the "No" in Innovation

I was reading Chic Thompson author and motivational speaker recently and a few of his thoughts brought back memories from grade school and beyond that are worth sharing. John Maynard Keynes once said "What's difficult is not so much developing new ideas but escaping from the old ones."

Innovation begins with openness to new ideas but if you think back to your upbringing, we had very few role models for innovative thinking from our educational system. When we had a question, we asked the teacher who gave us "the" right answer. In the innovative environment we ask diverse people diverse opinions for a kaleidoscope of ideas. In school we were encouraged to work alone, keep our eyes on our own paper and stay focused on the subject at hand. In the innovative environment we look on other people's paper by collaborating and sharing ideas, we form self-directed work teams and we welcome the brainstorming that our teachers used to criticize as daydreaming.

Innovation is an uphill climb for most of us because we are not used to being in environments that encourage new ideas and time to "daydream". If we are to some extent a product of our environment then we need to move towards pursuing one that encourages the "know" in innovation by putting ourselves in situations that encourage the opposite of the typical education system most of us were raised in.

The Customer Pyramid of Innovation

The customer anticipation pyramid is key to innovation success. As Wayne Gretsky said " I always skate to where the puck (customer) is going to be, not where it is now". At the bottom of the pyramid is the Henry Ford days. Ford produced the model T primarily in black because the paint dried faster and he could product more cars that way but interestingly when the Model T first came out there were other colors (regressive innovation?). In general though, producing what we want and placing it in inventory is an internal driven closed-loop process without customer input. You could also argue that this goes against current lean principles of customer pull.

Moving to the middle of the pyramid, is the more typical external driven organization whose product development and innovation strategies are based on what the customers "say" they want. While listening to the customer is always encouraged, the customer is frequently absorbed with his own needs and desires and not your profitability. Does the customer driven innovation lead to sustainable profits? Are these ideas/products that can be used by other customers? What's the wider market for a specific customer-driven innovation? Is it complementary with your business strategy? Unless there is a great customer partnership and historical success, the reactive approach doesn't address innovation from where it should originate.

The top of the pyramid is one of the best positions for innovation success and longevity. Innovation that is driven by proactive leadership through studying the customer in areas such as market, technology, and competitor sensing can create demand that doesn't currently exist. This data mining looks at questions such as:

1. What are we good at that our competitors are not that potential customers would see?
2. What problems and frustrations do our current customers face that we can address?
3. Who can we partner with for an innovative offering to expand the customer base into a new market (open innovation)?

If one stays at the base of the pyramid, tunnel vision sets in. As you move up the pyramid, the perspective and potential opportunities increase. Unfortunately, it's not always that easy to climb a pyramid.

Nonprofit Agencies and Innovation

Last week, I spoke at the National NISH Conference in Atlanta on Innovation processes leading from ideas to reality. NISH is the national nonprofit agency whose mission is to create employment opportunities for people with severe disabilities. NISH helps local and regional nonprofit agencies apply for federal contracts to support this mission by providing employment in a wide range of jobs. These include everything from light manufacturing assembly and call center support services to the more visible Goodwill store operations that I personally frequent for bargains. I found that through the comments, nonprofits share similar experiences with lack of innovation traction among company leadership that you hear from for profit companies which was a little surprising since an organization that relies so heavily on fund raising and donations, would assume to be more innovative. Some of the reluctance had to do with the nonprofit board of directors and their personal interests while other resistance came from the usual suspects of lack of internal resources, time or a process to innovate.

In the process of sharing some ideas for incremental innovation, it became apparent that there were several less risk adverse nonprofits that had actually been quite innovative in developing new services. Some of these were the direct result of engaging the customer in eliminating their process pain points as services that the nonprofit could provide. A few of these included: product labeling rework from Chinese manufactured purchased goods, document shredding, laundry and janitorial services. It was apparent from the discussions that the most innovative non-profits were those that established a good client relationship and understood where they could add value to the customer’s supply chain. We then discussed the idea of recycling as an up and coming value-add to help meet a customer’s internal objectives while helping the environment and potentially eliminating customer landfill costs by collecting scrap that could be sold by the non-profit. The ideas generated spurred quite a discussion and what started out as a theoretical topic turned into a great discussion with useful ideas for the attendees. Taking a step back in your organization to have similar discussions can be a great first step toward innovation and can release creativity that can ultimately lead to increased profits (or reinvested proceeds as the nonprofits like to call it).

3 Innovation Killers in Action

Tactical Innovation involves the 3 C's and I think if we get a handle on these 3 we'll be in good shape moving forward with innovating ourselves out of whatever hole we're in. I like to say innovation is turning ideas into $'s, very practical. Fortunately, we don't innovate in a vacuum which is a good thing because we need the group environment to nurture, refine, test and explore our innovation process. I highly recommend Group Genius for some insight on this topic. Unfortunately, we innovate best with others which can be messy, time-consuming, non-linear. Here are 3 issues with regard to an effective innovation process:

• Culture- The #1 biggie and the worst innovation killer this side of the moon. Management and a culture that criticizes new thinking methods and a fail fast/cheap without judgement approach is doomed from the start. It probably begins with the management's attitude and goes downhill from there as good behavior is caught rather than taught.
• Communication- Are your departments like 2 samari warriors with drawn swords facing back to back with competing goals, visions, leadership or is it more like a relay race where the baton gets passed or worse (dropped) in transition. The old throw the design over the wall and see if manufacturing can make it scenario. If you don't identify with either of these 2, you probably are on your way with having a fair shot at innovation with your current group of folks.
  
• Collaboration- Who works well together? Who doesn't? Is there any joint effort between groups and not just individuals where the sum of the parts is seen as more valuable than the parts themselves. I'll even give you extra points if you have groups that cross departmental boundaries to solve problems.

Innovation processes, software tools, training programs etc. are meaningless without attacking the problems a lot of organizations face with the above. To have practical innovation, focus on evaluating the temperature of these 3 and address where failures have occurred in the past before you add innovation as the next flavor of the month.

Patent first always??

I was just responding to a LinkedIn question on how to move forward with an MP3 innovation from a sincere inventor. Most of the answers were IP attorney type responses. Patent first, Non-disclosure everything, don't move or breath until done (or at least that was my takeaway). I would submit with open innovation forums like IdeaConnection BulbStorm PlanetEureka which are low cost/free? to more well established ones (higher cost/more technology driven) Innocentive and NineSigma , that there are other options. Now yes, anyone you talk to seriously you should have some sort of Non-disclosure Agreement (NDA) to cover your assets. And yes, a patent is the ultimate "pay to play" tool where investors like to see you've made that effort first before discussion, BUT, are there parallel processes using open innovation sites like the above to have "non-disclosure disclosure". Share enough but not too much. Get some buzz going about your idea. Let the listing drive some investors to you. Do you need to be careful? absolutely! Do you need to investigate an NDA with whoever you talk to? Most likely.

Here are some lower hurdles that can get you going. File a provisional patent, good for a year ($110) and less paperwork as you move towards a formal patent and gives you some protection. Use the sites above to explore what's already out there to get your brain engaged. Share your idea without explaining "how" it's done (maybe in parallel with a provisional patent). Let others comment on your idea, use the forums to help publicize what you are trying to do. Who knows? the next best step may be a helpful collaborator to improve the innovation rather than a corporate savior who swoops in to license your "perfect" solution.

Lastly, tactical innovation involves some risk. Sharing ideas for input with others is part of the collaborative community that makes innovation more robust and grow. The reward for any exposure risk you take is most likely enhancement to your idea. Can someone steal it and leave you penniless, I guess, but this "lawyerly" view is overblown. Lawyers want no risk, airtight agreements, secrecy. Strike the balance in innovation. Garner group/community/like-minded input while still protecting yourself through the NDA and provisional patents. Turn the protection tools into open windows not locked doors.

What has been your experience with using any of the open innovation tools that are out there??

The step or the leap

Just returned from a national conference for Industrial Extension services to small and growing manufacturers. Group is called MEP Manufacturing Extension Partnership and is a program within the National Institute for Stds. and Technology (NIST). Every state has a group that helps industry compete with best practices and services are typically subsidized which make them affordable to the small guy.

Question to ponder: Do you innovate incrementally or "go for the brass ring" with new to the market/world? I think the answer is both. Open (Radical) innovation vs. incremental innovation has been studied and debated. A brief comparison at Innovation Zen is a fair explanation. The diagram above shows it in a matrix.

Starting at the green block, you can incrementally go right or up (current capabilities/customers) or take the leap to the diversify box (radical change). It is crossed out to make a point that you may want to start small before making the leap to the top right. That said, incremental improvements may lead to radical game changers. Maybe you can take advantage of your competitors incremental improvements to visualize a radical product. Do you think the IPhone is radical or incremental? Maybe it's both. It certainly wasn't the first touch screen application but its ability to be a platform for 3rd party applications has spurred some radical innovations. (Iphone flute). Bottom line- Bloom where you're planted and grow from there.

The view from 30k feet

I was on a couple flights this week back and forth from the Northeast on business and it dawned on me looking out the window (when it wasn't cloudy) that being at 30,000 ft. reminded me of an expression I often use with clients. I say step back and look at this problem from 30,000 ft. I honestly don't know why it's not 20 or 40 but it always 30. Anyway, my point is usually about perspective. From 30,000 ft.

• I see the bigger picture
• My organization looks small compared to what's around it
• My immediate problems or customer problems don't seem to consume me as much

Practical Innovation is sometimes a step-back approach in order to go forward. A step back approach may be a SWOT analysis if you haven't done one in awhile. It may also be a current review of what projects are in the growth pipeline that may be clogging the pipe. The small enterprise has to step back and see if time and resources are focused on the right thing.

What do you think?

WYSIWYG

In the interest of full disclosure I'm declaring this a buzzword-free blog (as much as humanly possible). So to take my own advice, I've changed my "Who I am" info. to reflect my actual job title. It was "Change Catalyst Manager" which sounds like a manager of chemical reactions. I am what I am, a "Growth Services Manager". I manage a group that provides services for clients to grow their business. Lessons learned-

• Be real and honest, your customers will appreciate the fresh air.
• Don't conform to the latest fad regardless of who's doing it unless you've investigated how it will benefit you. Saying I'm on Twitter is less important than saying how you are using Twitter for business growth (I'm still investigating this one I'll admit).
  
• Keep the focus on the practical, less talk, less jargon, more tactical action and followup
  

Tactical Focus of Innovation

Top-line innovation (new sales, markets, customers) or Bottom-line (process improvements, cost savings)? Some would argue if I can't get my service or product out the door, I better figure out a way to get it done (better process method, better quality system). BUT, are you growing? What are your sales trends the last 2 years (up, down, flat)? How are your profit margins (stagnant?, growing?, nose-diving?)

Focusing on a bottom line cost saving project while ignoring negative top-line trends is sort of like rearranging the deck chairs on the Titanic. It looks OK until the base that the chairs are on starts to tilt. Our operations, whether we're providing a product or service (physical or web), are much the same. We tend to focus on what we see. We see the day-to-day operations that we touch and we focus on improvement or reducing our variation in whatever the process is.

Does the process have too many steps? we reduce them. Too many documents? we streamline them. The only problem is that while we're reducing the operational variation we are probably ignoring the top-line lack of variation in growth that we desperately need to maintain profitability.

Customer Sales, Products, and Markets need increased variation. Kind of an oxymoron isn't it? So much focus on tightening up our process on one side of the balance sheet with the need to expand it on the other. How do we define good variation then for the top side of the balance sheet?

Ask yourself some questions:

• How can I increase my client base so that 80% of my revenue does NOT come from less than 20% of my customers?
• What other market segments can my product or service be sold in?
• Are my current customers in trouble? Can I take an interest in solving their chronic issues with a partnership that benefits both of us? Am I aware of their pain points?
• Is my reach for developing a new product or service just out of arm's reach? In other words, am I looking to develop the next Iphone when my available time and development $'s tells me I should narrow my focus to the next Iphone cover (product extension)?

Let me know how you've answered these questions or others you think are good ones to ask?

As the blog implies, tactical innovation involves action. Sometimes the best action starts with great questions.

Welcome to the blog for the practically challenged! This is probably the 1287th blog on innovation, so why read this one? I want to share practical tips, tools, steps that you can take now to move from the innovation sidelines to playing offense. This blog targets the small enterprise. You're not a 3M or IBM, so why think you need to try and innovate like one? Practical Tactical Innovation will share some best practices used successfully that work and we'll have fun along the way. Here's to the start of a great blog.