open innovation

Open Innovation: Cracking the black Box

We are opening the Black Box of innovation. In fact, social media is forcing many black boxes to open based on a more free way of making large scale conversations. Open innovation is part of this movement. It is not only a matter of amplifying the search for ideas or the interaction with clients and suppliers. Open Innovation is part of a greater movement, of a Zeitgeist based on open creative fields. But what does this new concept tell us? If there is open innovation would there be a “closed innovation”?

Black Box Instalation by Tom Friedman

Last month we had a Conversation Jam sponsored by Dobra on this theme and our guests were Caspar Bart Van Rijnbach and Caio Vassão at JuntoSP coworkin.

 

“Closed Innovation”?

According to Caspar, this closed concept of innovation comes from Industrial Revolution, and the creation of the intellectual property is its cornerstone. This vision was dominant at least until the 1990s, when the greatest reference on innovation was 3M and its ultra secretive product development process.

A strong opposition to that idea only emerged after free software. Richard Matthew Stallman, or rms, founder of the movement preaches that all information wants to be free. But that started only in 1985, getting stronger during the 1990s and being crowned with the Cluetrain Manifesto (1999), that introduced the “open” philosophy in the business environment via marketing.

So the idea that a highly innovative production system can be based on the absence of intellectual property is very recent. It generates a radical inversion: those who do not open their innovation process are losing time. Sharing multiplies knowledge and thus makes new possibilities emerge.

 

Why Opening?

Caspar also stated the difference between open innovation and open ideation. The open ideation shares, and therefore opens, problem solving or idea generation processes of an organization, but the greatest impacts of open innovation do not come from this type of initiative.

In order to access the greatest benefits of open innovation, it is necessary to think about how the business strategy develops over time, understanding why and in what level it makes sense for the company to be open.

 

Lessons from free software

The development of free software is based on the voluntary engagement of talents to solve problems in the benefit of a community (of users and developers themselves). There is no money involved, but anyone can use it. “Do your best and be recognized”. Self motivation is the key and reputation is the necessary consequence.

But are organizations prepared for this type of self motivated free engagement, at least on innovation matters?

Are organizations able to foster the intelligence of their internal networks?

From a people management point of view this is a radical idea that shakes systems such as career and performance management, to say the least.

 

Innovation and Motivation

For Caio Vassão, the central theme is: what motivates innovation inside a company? How are innovative ideas validated?

But we can go even further: a key challenge to the open innovation process is to listen to innovation perspectives brought by partners from outside the company´s boundaries.  Does the organization let itself be modified by its network? Or is it going only as far as its own questions allow?

According to Paul Pangaro, variety is one of the most important conditions for innovation. Activating this variety in a collective creative process is a big qualitative leap for innovation networks. Caio Vassão argues in the same direction: innovation is a change in the ontology of the organization. It refers to the categories the company uses to organize its processes, its relationships and the routine discourses. The ontology determines choice mechanisms that can limit or amplify the variety the organization accesses to innovate.

Ontologies in a network are emergent. It is very complex for an organization to deal with them when its planning and management systems are based on pre existing taxonomies. Conversation usually goes around “growth pillars” and “strategic vectors” everyone should follow.

At the same time, there is enormous potential to that. There might be many innovation possibilities that are just not perceived by the mental model and the installed conversation patterns.

 

Innovating is dealing with paradoxes

So it seems that innovating in an open way means dealing with a fundamental paradox: being connected to what emerges and, at the same time, being able to make sense of it through strategy.

Since the ability to deal with paradoxes is one of the fundamental properties of complex adaptative systems, it seems we are getting somewhere. That is how it works in nature: clarity of purpose and deep connection to the environment at the same time.

 

A new mindset

An interesting view was presented by designer Ihon Yadoya at our Jam: “I don´t feel limited by the work environment. Innovation opens itself naturally when we solve our problems.” For those who think that way, the company is not a limit. Openness is inherent to innovation, something that is always available when we need it. This is an important mindset change. From the individual´s point of view, there is no closed innovation.

For those who work in connected environments, an idea generates a series of interactions and compositions. There are no boundaries to this. One more challenge for organizations facing the so called Y generation, one that lives in remix, and in eternal beta.

“Ideas belong to those that put them to action”- says Ihon. It´s as simple as that!

 

Who is ready?

The challenge is this collective authorship of ideas. And here some fundamental ideas on open innovation and strategy introduced by Caspar might help. He brought the example of companies that take part on the Battle of Concepts, promoted in Brazil by Terraforum. They are obviously worried about intellectual property.

But how do companies get ready for this new reality? Strategic thinking, says Caspar.

Kip Garland, brings his contribution and makes some important distinctions. For him, there are three levels of open innovation: sharing, building and decision making. Opening the decision process is the most complex level and sharing challenges is the less complex. Sharing refers to creating a collaborative network, building refers to bringing in each member´s strength and decision making… well, that´s where the greatest dilemmas are.

Caio agrees: making distinctions and choosing what to open is key. A reductionist view does not generate a process of collective construction. If the open innovation project is designed exclusively to profit from “Lei do Bem”, a innovation policy in Brazil, the benefits are reduced. The open mindset does not penetrate the culture.

Caspar presented the Phillips Innovation Camp case, which brings together many partners of the company to an environment where architecture contributes to make people meet and exchange ideas. There are no cars. An open culture emerges.

 

Shortening the thought-to-action cycles

Caio considers that open innovation is related to a short thought-to-action cycle. Somebody perceives a new reality arrangement, new ontologies emerge, unseen opportunities arise.

Kip brings the Visa Vale case to the table. The company was conceived by an ABN Amro Real bank executive who understood the consequences of a change in Brazilian regulation laws. In Five years, a 2 billion dollar business was created… outside the Banks boundaries. The institution could not evaluate the executive´s proposal of a new business when he was still an employee. It was a path that could not be analysed by the ontologies the company had at that point.

The challenge therefore is: how do we present business concepts that don´t yet exist? How are we able to listen to the proposals open innovation can bring? How do we distinguish what is relevant?

For the group that was present at our Jam, one of the most important answers is creating prototypes that materialize these possibilities. There is a certain simplicity to that: creating prototypes is storytelling to present ideas.

Caio suggests: then it is not a question of what we have to build, but of what we have to take away for motivated people to be able to present their ideas. It is about building open platforms and short cycles of prototyping inside and outside organizations, labs of new realities in which creation and action are closer and closer.

So much to do!

I Love Idea Jams!

 

5 Reflections on Open Innovation

What is the big buzz about open innovation? What’s the big change? The subject was discussed at the Connecta 2010 Congress in São Paulo and at Stefan Lindegaard´s workshop (during The Hub SP Winter School). It´s been approached in books and web communities and accounts for more than 12 million links at google search. Here are some thoughts about the theme from the last few weeks.

Social network mapping by Felix Heinen
1. All innovation is open. This conception was clear both in the speech of Matthew Heim, CEO of NineSigma, at Conecta 2010 as in Stefan Lindegaard´s.

Today open innovation has become a “buzz word” because new online tools have opened up possibilities that where not devised before, but in a few years all innovation will be open, or connected, as Jeff Bellairs, director of General Mills worldwide Innovation Netwwork, puts it in Lindegaard´s book. In addition, all innovation has always been somewhat “open”, since it requires a huge range expertise to be implemented. The mith of the Genious is far behind, we all know innovation is in most cases a collective achievement.

The difference nowadays is the availability of new mechanisms for building conversation networks around innovation. There are far more sophisticated ways of searching, connecting and managing such networks. Any company that has a well defined innovation question, a good “Elevator Speech” (making its innovation vision clear) and the right tools can have access to virtually any connected professional in the world. (That is not enough to keep an innovation network alive, but it might be a good start).If each person is a portal as Augusto de Franco put it during Conecta, the possibilities are endless.

So although basic characteristics of innovation, such as the need to coordinate a diversity of players and the inevitable stumbles inherent to the creative process, are the same, there is a significant increase in the complexity and connectivity of innovation networks and of organizations themselves. New questions emerge in this context, such as how to stimulate agents to connect and generate value in an innovation network and how to deal with and profit from these new possibilities. Open innovation potentiates the creative capacity of individuals and organizations, but it is a new way of discovering, relating and doing business.

Perhaps the big issue is creating a management paradigm to fit such a connected business environment. The verb manage has to be reinvented to deal with elements such as control and instability, creativity and organization. Innovation lies at the edge of chaos but it takes very wise management to deal with the paradoxes inherent to this state. Who is ready? How will partners in a network collaborate and deal with power relationships, for example? Which network patterns will emerge from open innovation?

2. It must start at home. One point that is placed as a success factor by several experts and case studies is to start articulating the organization’s internal network. It may seem trivial, but creating a network culture in which the relevant innovation questions can be shared with staff members and direct partners is a big issue.

The lives and conversations inside companies are still largely organized into “clusters” (work areas, processes) and it is difficult to visualize the larger map of innovation when time is short and accountability for results relentless. One must deliver the planned. How will organizations deal with emerging issues that change nonstop?

In this sense there are great challenges in terms of culture and organizational environment, such as to enable engagement in innovation projects (not only those projects that are already the responsibility of each one), to open space and to recognize that engagement. Most organizations are still far away from a “project” culture, where one can engage by his or her own desire to put to use the top of one´s knowledge. How will that be proposed to the external network if it is not the proposal internally?
3. Networking is bonding. There is a good discussion about how to promote the engagement of different actors in open innovation. There are two clear paths, and in Matthew Heim´s vision they are complementary. In the first case, actors enter the network to help answer a specific innovation question. In the second case, a permanent network is formed, and individual actors have a lasting bond.

There’s a difference between these two paths. In the first case, thinking of network management can make sense: you need to manage the innovation questions and the actors that can help solve them.

But in the second case, who manages the permanent network if each organization is (at principle) just another actor? And in the case the network is managed by a big company, how will creativity and self organization emerge? How will power affect the development of fair share relationships, as Umair Haque suggests in his behavior innovation approach?
Sustaining a permanent network implies network ethics. Today it is very common for large corporations, for example, not to respond to work proposals developed by their partners. Imagine how this behavior would be seen in a network, where spontaneous contributions among agents is what brings value to reputations.

Relate this to the theme of “being the preferred partner,” posted by Lindegaard in his book, and imagine how network relations represent a change for organizations. It must be a new way of living if you really want to have it in its full potential.
4. The network builds on diversity. Venessa Miemmis, who defines herself as a digital ethnographer, provides some inspiration to think of win-win relationships not as equality, but as something to be built from the different roles that actors play in networks in which they participate.

Venessa has posted a very interesting chart about the different roles that actors have in networks (which was deeply discussed, if you have the patience to read the comments).

When I looked at the chart I thought about the level of complexity of any sort of “management” or even setup of a network. Each actor takes on different roles in the networks it participates, and those roles change as time passes. To maintain a network with an ecology that allows both the diversity of actors and the diversity of roles played by them is pretty challenging. It is worth reflecting on how this affects  open innovation.
5. Creating conditions to be affected by a network is one of the biggest open innovation challenges. I’ve been reading It’s Alive by Christopher Meyer and Stan Davis where I found a wise statement I play freely: networks make us more sensitive but also more vulnerable to chance.

It is not just a question of demanding solutions from a network, though that can lead to good problem solving. The point is also to improve organization sensitivity and improve the quality of its problem finding capacity. Being connected increases the capacity to perceive transformations in business environment, but that depends on the network pattern you are living. This is about asking and being asked, to demand contributions and contribute as well. That is why understanding network patters will be so important to open innovation.

Finally, a question that maybe just time will respond: will open innovation undermine the organizational models as we know them? How?