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Author's profile photo David Cruickshank

Exploring Open Innovation Strategy (Part 2)

Being focused upon strategy and operations for the SAP Co-innovation Lab (COIL), I cannot always commit the time and energy needed to do the extensive research on topics that I think serve to help crystalize COIL strategy.  Nonetheless I’ve put considerable time into what is required to formulate a co-innovation enablement platform (CEP). I’ve been exploring its attributes and what makes it attractive to firms wishing to engage in co-innovation. What I’m learning is that there is real potential for CEPs to facilitate effectiveness of strategic alliances across a broad range of sectors.  In 2012, one goal will be to explore a comparative to different models (SaaS, PaaS, and co-creation platforms). I will also look to draw an analogy to existing alliance consortia models to understand the differences and similarities.

Parallel to the CEP work, I’ve spent a good deal of time looking at Open Innovation; recognizing that the SAP Co-Innovation Lab is well equipped to enable outside-in innovation projects. From where I sit, it has been easy to observe when project teams in COIL apply Open Innovation to their work. We’ve had a few key projects in 2011 where this has been the case and I’m hoping to share some insights in the form of one or two case studies early next year. The cases will showcase some of the ways in which projects get managed, how teams choose to collaborate and how we source subject matter expertise. This has also led to an interest in exploring the intersects of open innovation, co-innovation and social networking which also resulted in a paper penned earlier this year.  It has been all of these activities that eventually cascaded into my more current exploration of Open Innovation Strategy.

This is a complex topic to dive into. The good news is that Dr. Henry Chesbrough and several of his peers and contemporaries have published a wealth of knowledge on the subject so there is a good foundation to work from. Nonetheless, despite the fact that I have hours of graduate study and personal time invested in the subject and a job that keeps me centered into the jet stream of information being shared and communicated on nearly every dimension of this topic, I feel like I’m never caught up and that there is only more to learn.

I set about writing an OS strategy paper with some basic questions in mind with respect to a firm’s best approach for creating an OI strategy. The questions arose out of my own personal knowledge and observations stemming from projects pursued in COIL.  While I was able to offer citations noting the work of others meant to support my own, as well as to get some very solid feedback from many sources in an attempt to validate my OI approach recommendations; I did so knowing that there was probably other amazing work that I missed in my literature review that could only further support or compliment my effort. 

What I’ve suggested is that an OI strategy revolves around 3 pillars of Strategy, IP approach, and Organizational Practices (Implementation). At some point you stop writing and start looking for the submit button. You have to accept the scope that you assign to a paper otherwise you are never going to finish. You have to tell yourself that it’s only the paper that is done and not the work. I also don’t like to offer myself the out that I can always rewrite, as I generally do so at least 8 or 10 times before I am willing to say stop. Print.

There were many articles, blog posts and content from prior interviews with partners, that failed to make it in scope and yet remain in my mind as things that under the right conditions or a willingness to write 30 pages instead of 20, that I could have woven in to the work.  For example, I really like what Rob Veldt wrote in a blog post from 2009.  Rob notes that “it’s time to develop concrete strategies on how to implement organization’s Open Innovation ambitions in a sustainable way”. Much time has elapsed in which to establish the theories and to describe the potential to the firm to drive innovation. Rob submits that “stand-alone Open Innovation projects, without mandate, without clear corporate vision and without a well-defined (corporate) strategy” will likely succumb to failure. Rob’s post indicates the necessity to shift from focusing on the outputs of OI to the inputs like people, operations, policy and culture. This is where I think my paper is focused most; examining the operational framework needed to orchestrate all of these inputs in order to make the desired outputs possible.  

Mr. Veldt takes his OI implementation discussion further in a follow up post that I won’t elaborate on further here, but if you have not seen his OI chess paradigm, you should take a look. When Rob wrote this post, he was advocating that a firm place specific attention upon people, operations, policy and culture. What I describe, using SAP as an example, is that this is already the case as evident from all of the different ways in which SAP has organized itself to pursue open innovation. SAP offers several compelling ways in which to engage with its ecosystem of customers and partners through programs like Idea Place, Code Exchange, and Innocentive. Its Innojams and the Co-Innovation Lab as well as how SAP Research applies open innovation all yield noteworthy results that incites further growth and refinement of SAP OI-based programs.  

 There is of course room to advance from an OI strategy perspective. A firm already organized to engage in OI can expand beyond the singular goal setting and measurement of all its programs to determining the optimal means for sharing tacit knowledge capture at the program level as well as at an organizational level.  Value capture expands when considering both; whereas the firm loses value capture by not “knitting” together or linking complementary programs.  One thing I have already picked up on in some of the comments from my earlier post is that internal perceptions regarding OI differ depending on what people are trying to do.

Some view OI only through a crowd sourcing lens; the focus is all about harvesting external ideas.  For managers working on such efforts, they may or may not be familiar with the other dimensions of OI such as activities emphasizing co-creation of IP.  All they may be aware of relative to OI is what they are doing, like running a crowd sourcing project.  If you’ve not seen Stefan Lindegaard’s 15inno blog, there is a great post about the differences between crowd sourcing, user-driven innovation and open innovation.  This post dates back to 2009 but it’s still most insightful and the 21 comments which follow are especially interesting.  I point it out in that it illustrates how easy it is for people to get hung up on semantics or simply miss the bigger view when they are heads down as practioners trying to fulfill the goals and objectives of a single program.  

When we think about OI strategically, we need the strategy leadership that understands the inputs Veldt enumerates not only for the sake of developing and implementing the organizational structures needed to perform OI, but that the firm adequately describes the broader goals and scope of its open innovation both internally and externally.  To do so internally helps to get people on the same page and interested in developing programs that include ways to ensure they all get aligned and better connected. Externally, it becomes easier to communicate how we engage with those external to the firm and how the firm’s partners can optimize such engagements in ways that best contribute to the partner’s own business goals.

This presents real challenges because to establish meaningful communication channels and to orchestrate OI strategy across multiple programs, means to inject some degree of formal structure and process which for some, runs contrary to the “openness” derived from creating very informal networks and process. There is a desire to provide it as lightweight in nature to nurture an environment of divergence that is so essential to the generation and capture of ideas from the outside.   Can a firm create structure and process that does both; keep the leading edge facing externally open and loose while simultaneously directing this input back into programs that are sufficiently linked in ways to capture optimal value for the firm?

If you’ve had experience with either managing or using OI programs in the past; what was it like?  Did you obtain the outcome expected? What worked best? What didn’t work? If you could make improvements what would they be? 

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      Author's profile photo Sam Smith
      Sam Smith

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