For this week’s post I wanted to focus on a successful strategy that I learned about in my internship two summers ago. The strategy is called open innovation and it is becoming more prevalant today as more and more companies use it to generate new ideas, products and technologies. The objective of open innovation is to generate ideas and products using sources outside of a company’s R&D. In the old and more formal “closed innovation,” the focus was on internal control and the idea that a company must generate their own ideas and then develop, manufacture and market them. While this can be successful, the new form of “open innovation” takes the process one step further, by enbracing external ideas and knowledge in conjunction with internal R&D. The concept is based on the idea that the world is full of widely distributed knowledge and thus companies cannot afford to rely entirely on their own research, but should instead buy or license processess or inventions from other companies, startups, or vendors. In addition, internal inventions not being used for a company’s business should be taken outside the company throughh licensing, joint ventures or spinoffs.
To discover these external ideas or technologies a company can join an open innovation conference which meet throughout the year and share ideas or tehcnologies they may have discovered or developed that don’t meet their company’s needs. Additionally, the company may attend vendor shows where startup companies or individuals with new ideas and technologies could provide insight. For other companies their customer’s may be an external source with valuable information and the company can host competitions or solicite feedback for new product ideas.
One company that has found great success with this stratgey is Proctor and Gamble. One example of their success was when the company was trying to develop a way to keep cotton shirts wrinkle-free, however their internal R&D were struggling to come up with a solution. Since they could not come up with a method on their own, they approached a knowledge broker who posted a few details of the dilemma to its network of solvers. From the submissions that the company received, a solution was found in a place P&G would not have expected. The answer was sent from a laboratory professor studying polymers related to the semiconductor industry. His idea was then applied to garments and solved P&G’s wrinkle problem.
I believe this is strategy is a great way to share knowledge and continue to produce innovative technologies and products that can help the world. I think the recognition that not every company has all the ideas is humbling. Additionally, I believe it is important to understand that there are a variety of ideas and technologies in the world today that can be used for different purposes and keeping lines of communication open can better many companies.