Innovation UK > News > Innovation UK Vol5-1 > NineSigma Europe

Traditionally, innovation has occurred within closed environments as companies sought to enhance their expertise and innovation in a particular field or industry. At the same time, companies strived to safeguard intellectual property and maintain control over proprietary processes and ideas. To remain competitive and solve today?s socioeconomic, technological and business challenges, many companies are gradually abandoning this traditional method and embracing a more open approach to innovation. These organisations understand that to be successful in a rapidly changing business climate, it will take the collaborative efforts of many who are willing to share both the risks and rewards of future innovation initiatives.

Open innovation (OI) broadens companies? reach and boundaries, helping them leverage external experts, knowledge and resources that complement their internal innovation processes. Using a combination of solution searches, consulting and intelligence services, NineSigma has worked with more than 100 global companies to implement open innovation programmes that facilitate engagement with the global innovation community and enable people and processes to discover innovative ideas, technologies and products that can quickly and cost-effectively solve business challenges.

NineSigma has identified three stages of open innovation adoption: launch, consolidate and embed. A recent benchmark survey conducted by NineSigma found that nearly 49% of senior executives practising open innovation felt their companies were in the launch stage, while 40% are currently optimizing, or consolidating, their programmes. With access to training and best practices, companies can move quickly through the stages and further integrate OI programmes throughout their organizations, increasing opportunities across new functional areas and applications.

THE THREE STAGES OF OPEN INNOVATION

LAUNCH

Most companies are in the launch stage of open innovation adoption. They understand the importance of leveraging external resources to further their innovation efforts and are researching and/or experimenting with different approaches to OI. Learning to be open, particularly within an environment that has traditionally kept innovation under lock and key, can be challenging. In NineSigma?s benchmark survey, executives were asked an open-ended question about the barriers to OI adoption. Their comments fell into the following four categories:

• Mindset or culture;
• Current work processes and priorities;
• Resources, particularly funding;
• Ability to find or execute external ideas.

Sustainable long-term change is difficult for many companies, and as a result, they frequently stall in the launch stage. To be successful and move on to the next stage, they must learn to connect with and engage the global innovation community. Companies progressing in the launch stage have established a champion to lead the OI programme, are in the process of defining cross-functional roles, needs and opportunities and are beginning to integrate OI into their innovation processes.

After conducting a pilot study, Cadbury, one of the world?s largest confectionery companies, formally launched an OI programme in 2008. Cadbury?s OI team utilised several key strategies in propelling the programme forward, including gaining senior leadership buy-in and involving all levels in the planning process for OI initiatives. Since its inception, Cadbury?s programme has evolved into a globally linked OI team that collaborates in identifying key technology gaps before launching projects. The company has developed its own external networks, in addition to working with innovation intermediaries like NineSigma (Innovation UK, 2008). This strategic, big-picture approach has enabled Cadbury to benefit immensely from its open innovation initiatives, and the company will surely see even greater success as it progresses into the consolidate stage.

CONSOLIDATE

Companies in the consolidate stage have made a significant commitment to open innovation. They have defined OI workflow processes, established an OI organisational structure and are adapting their culture to the new open methodology. These companies are able to evaluate opportunities faster and have established best practices that they can replicate successfully. Additionally, they are modifying rewards systems and developing metrics that will help them further align OI activities with overall corporate objectives.

Owens Corning, a leading home-building products company, has reached the consolidate stage by taking a methodical, strategic approach to open innovation. ?After assessing the value OI could bring to Owens Corning, we studied best practices and mapped out a plan that would allow us to launch a successful programme,? said Carla Miller, R&D Leader at Owens Corning. This ?best-fit? programme incorporated the processes that would be most effective at the company, as well as culture-change requirements.

Once the company?s processes were defined and cultural changes were underway, the team started executing projects that would allow them to validate and adjust their approach while gaining experience with open innovation. After these projects were complete, the team communicated the wins to the organization and made adjustments to their programme as they undertook the next phase of projects. Now that they have reached the consolidate stage, the team is preparing to move to higher levels of strategic initiatives that will continue allowing them to produce high-value breakthroughs that contribute to top-line growth and deliver the bottom-line results.

EMBED

Currently, the most recognised organisation in the embed stage of OI adoption is Procter & Gamble. The global consumer-products giant began experimenting with sourcing ideas from external networks a decade ago and enlisted NineSigma as a partner early on.

The company?s groundbreaking Connect + Develop strategy augments its internal R&D capabilities by identifying ideas from around the world and applying internal resources to them to create better and cheaper products at a faster rate. This reinvented innovation strategy has paid off. Since implementing Connect + Develop, the company?s R&D productivity has increased almost 60%, and R&D investment as a percentage of sales is down to 3.4% from 4.8% in 2000 (Harvard Business Review, 2006).

P&G reports that more than 50% of its innovations today are developed with outside partners, compared with 15% six years ago. Open innovation is not merely one of many innovation strategies that have been adopted by a few departments in the company. Rather, it is an embedded process that is fuelled by an overall corporate strategy and driven by a welldefined organization.

To reach the embed stage, open innovation must become part of a company?s culture; it must drive work process and priorities, have full access to the knowledge and resources needed to work well and show results by finding, developing and executing solutions that solve business challenges.

FUTURE OF OPEN INNOVATION

While open innovation is not a new philosophy, adoption of OI is still in its infancy. The future of open innovation is bright, as it continues to expand to touch new areas of business, from marketing to procurement, while enabling innovators to leverage resources and solutions from untapped areas of the world. Open innovation practices will have a major impact on sustainability issues as members of the global community come together to work on solutions for various social, economic and environmental challenges. As open innovation becomes more deeply integrated into organisations and they more aggressively leverage the global innovation community, there will be a call for better ways to measure success. These metrics are already in development by NineSigma and will further justify investments in open innovation.

There has never been a better time to incorporate open innovation into a corporate strategy. For companies that are not sure where they fit in the OI landscape, NineSigma can provide a clear picture of where they stand, as well as a plan to implement an open innovation programme. By engaging with NineSigma and leveraging the company?s experience and services, organisations will find that they can efficiently move through the three stages of adoption and fully realise the potential and value of open innovation.

During this economic crisis, more and more companies are utilizing open innovation as a cost-effective method to complement their internal R&D initiatives. For more information or to join NineSigma?s global network of solution providers, please contact:

NineSigma, Inc.
23611 Chagrin Blvd, Suite 320, Cleveland, OH 44122, USA
Tel: +1 216 295 4800 E -mail:

NineSigma Europe BVBA
Koning Leopold I straat 3, B-3000 Leuven, Belgium
Tel: +32 1624 4280 E -mail:

Website: www.ninesigma.com