Instilling the Culture • When companies try new systems and innovations, they must adapt to a new tech culture • Companies need to break down bias that inhibit them from seizing opportunities to open to innovation • For example, GE didn’t change ‘cultures’ until they realized how much money IBM was making from its licensing business.
Instilling the Culture • Many companies hesitate to use new innovation because they like creating their own way of doing things. • Robert Hirsch of DuPont says that was the case at his company, but it was more of ‘how much will it cost’ • Many companies resort to ‘changing the players’ (Outsourcing innovation employment to other countries with many tech workers, but at a much lower cost.)
Instilling the Culture • Alf Bingham: “ It requires a lot of trust that you can accomplish your goals by relying on free lance scientists to come up with solutions” • Companies who want to change the game with open innovation should be driving for a qualitative change in approach, not just incremental tinkering.
Instilling the Culture • Proctor and Gambill (P&G) realize that idea hunting on the outside will pay off in the long run, but internally the program is unpopular. • Larry Huston says that “once an internal idea gets into the development it still needs Research and Development (R&D), manufacturing, market research, marketing, and other functions to pull for it. • Creating incentives is equally part of the recipe. Many firms reward those who come up with profitable product patents. • Using underutilized assets in a company is a good idea, especially if the benefits are offered at the bottom line.
Harvesting External Ideas • The Ability to harvest external ideas stars with a keen sense of what you are LOOKING for. • For Example Proctor and Gamble spends over $2 billion on R & D in 150 science areas and over 300 brands that span over multiple categories. They achieve success by knowing what the customer wants. • The Mr. Clean Magic Eraser was an outside concept in Osaka, Japan. The concept has exceeded P&G profit expectations.
Harvesting External Ideas • Mr. Clean Magic Eraser • As you can see from the site, A simple Magic Eraser has allowed P&G to develop many more products from a simple invention. • HP, Intel, and Google have expanded their leverage of world wide networks to expand and develop new innovation.
Getting the Right Ratio • Reaching an optimal ratio to external innovation presents a unique challenge to companies as they strive to tap the power of ideagoras. • Not all companies need a large warchest of IP, but those that have none are damaging their future viability in the industry.
Getting the Right Ratio • For example, Dell is a company that invests little in R&D compared to HP and IBM. • But Michael Dell has tried to take on HP in the printer business, given HP invests over $1 Billion on printer R&D alone. • Dell’s Plan: Acquire Lexmark and transform it into a Dell Branded printer using its world class supply chain. • Dell’s lack of in-hose printer technology is offset by their ability to get a product out worldwide. • Dell offers Computer-Printer Bundles, for example.
Pushing the Envelope • Companies who master cutting-edge technology will be successful in their ideagoras. • By expanding the tools available to manage rights and communicate with other site users, thus igniting more self organizing behavior among seekers and solvers. • InnoCentive can spur some profound changes if it looked and behaved like more open communities like Linux and Apache.