Open Innovation – Is it really the next step?
August 22, 2008 by Raj Sheelvant
Innovation has always been a proprietary activity conducted largely inside the organization in a series of closely managed steps. Ideas, product design were closely held secrets because innovative and radical design has always provided competitive advantage to the company. The firms by patenting the design/ideas usually created a high barrier for competitors to emulate their strategy. Now, Executives in a number of companies are considering the next step in this trend toward more open innovation. This is according to the McKinsey article “The Next Step in Open Innovation”. The article also states that companies also hopeful in getting their customers into the act of co-creating and co-innovating. If a company could use technology to link these outsiders into its development projects (think social media, Web 2.0 technologies), they may come up with better ideas faster. Its one way to manage talent right?
This collaboration strategy towards innovation sounds good but in reality it has limitations. Do customers know what the next radical solution is going to be? Henry Ford once famously quipped “If I’d asked people what they wanted, they would have asked for a better horse”. Do you think open innovation using collaboration technology would have enabled Ford or any other car company to build and develop an automobile? If Steve Jobs asked the customers for a radical game changing phone, the customers would have still come up with phones with buttons (Who would have imagined that you could have a phone with no buttons to press). It’s very difficult for the customers to envision a solution. Remember they also need to know the constraints that exist around technology and environment to design and innovate a product.
I am not arguing that open innovation is a good idea. But it has its limitations. If the product needs to be improved, made more user friendly then customers have better insight on what they want. They will definitely help in design improvement of the product. That’s where co-creation and open innovation can be exploited. But if it’s a radical new product, customers will be of little help. Many researches, tests and surveys point to the fact that non-experts or ‘crowd’ in general fail to think radically different. To think ‘outside of the box’ we need experts. Bottom line is if the idea is evolutionary, then crowd sourcing is just fine. If the idea is revolutionary then expert sourcing is a must.
Read more on this in my previous blog What’s Better? Crowd Sourcing? Expert Sourcing?
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Comments (1)
Who suggests that ‘open innovation’ is about asking customer’s what they want? I have not seen this is any literature on the topic so maybe it is a false assumption you or McKinsey are making? I agree asking a Customer what they want is more than useless for anything more than incremental innovation but there are many tools to use with a customer to go beyond ‘asking’. See my recent post on J2BD as an example – http://brendandunphy.blogspot.com/2008/08/jobs-to-be-done-in-practice.html.