Jeffrey Phillips, aka, OVOInnovation on Twitter, joined the show Wednesday. You can listen to our conversation here. You can read Part 1 of this interview here.
Jeffrey is VP of Marketing and a lead consultant with OVO Innovation. Jeffrey’s led innovation projects for Fortune 5000 firms, academic institutions and non-profits all based on OVO Innovation’s trademarked Innovate on Purpose method.
He was one of the 34 innovation experts who contributed a chapter for the excellent book A Guide to Open Innovation and Crowd-Sourcing: Advice from Leading Experts. Jeffrey’s chapter is Open Innovation Typology.
You talked about the two, the x and y axis for open innovation. That’s the who and why, then the what instructions. And you broke it down into 4 types of open innovation. What are those 4 possible types?
If you think about that first axis, we tend to to label that axis as “Who’s invited”. And so, we would say you could have a model that is participative, in other words anyone can participate or it’s invitational that I only invite certain people or certain organizations or certain groups.
On the other hand, you could have suggestive and then anyone can participate and suggest any idea regardless if it’s relevant to you or not. And on the other end of that spectrum you could have directed. That means the company says to its open innovation participants:
“We want to direct your thinking to this problem, this technology or this market.”
We talked about P & G’s Connect and Develop program as invitational, not everyone is invited, and it’s directional: these are the challenges that we want to address.
If I was to look at something that was 180 degrees different model then I would look at Dell’s IdeaStorm. Dell’s IdeaStorm is for the most part is publicly-facing and is suggested. Because Dell basically says:
“Any idea you have is welcome.”
And it’s a very participative model because they don’t say who can participate and who can’t. If you have web browser, you can go to Dell’s IdeaStorm site and you can suggest ideas to Dell about, basically, anything you want to suggest.
Now, they do ask you to help them categorize it. But they don’t dictate that it has to be just about Linux or just about laptops. It’s a very open model; it allows you to suggest any ideas that come to you.
As opposed to the Connect and Develop program that was invitational and directed, Dell’s model is very much suggested. Anyone can participate. And anyone who does participate can suggest any kind of idea. Dell doesn’t begin to try to tell you what kind of idea or what kind of technology or what kind of opportunity to frame your idea around.
Now. Thinking on the fly here and that’s always kinda dangerous in my non-sequitur type of thinking. Dell seemed to have a directed-invitational model when they allow their customers to design their own computers. They invited only prospects and customers and directed them in certain ways to tell them what kind of computer they wanted.
I want a laptop with a big screen and fast processor and x number of USB ports, etc, like that.
Would that be within the realm of reasonable?
Yeah, that’s heading in the direction. The one difference I had in that case is they are inviting certain people and they are giving them certain direction. But, what they’re doing is having them choose from a list.
But if they said “Choose from a list and also give us 3 new things that don’t exist” then I would say that would be excellent. So, if I could design my own computer and also add 2 features that Dell had never thought of then I would say that is the perfect example of directed and invitational.
Now, they jumped into this IdeaStorm which is basically open the doors and embrace the world. And I’m thinking a company like Dell had to be pushed into that IdeaStorm. Maybe, motivated is a more positive term.
What do you think motivated them to take a public, open, high-risk, open innovation crowd-sourcing project?
I honestly think that Dell got into it in a proactive way as opposed to being pushed into it. I think that proactively they recognized they needed better interactivity with their customers. Dell really did a great job of innovation around the business model and really radically changed the PC model.
But, I think they got a little stagnant and I think they saw this idea of open innovation as an idea to re-ignite innovation in a big way and to really become much closer to customers and integrate with customers. They were also an early pioneer with the use of social media. So, I suspect these kinds of things were hand-in-glove for them: both the social media aspects of it and the getting closer to customers to it.
Just in case you haven’t done any research on it, the feedback has been tremendous. I don’t have the specific numbers in front of me. But I think over a 4 or 5 year time horizon they have received something on the order of 15,000 ideas. And I think they have implemented 4-500 of them. They have been engaged. They’ve had a large customer body present ideas to them. And it’s really helped them engage customers in a very different way than other PC manufacturers.
I haven’t. I’m peripherally aware of Dell. I’m a MAC guy. So, I need to go and look closer at it. What you describe sounds fascinating.
Do you have any idea what metrics they have used to measure their success?
The interesting thing is I think Dell did this for two reasons. One is the sort of overt reason of:
“Can we gather more ideas from our customers and if so can we implement them more effectively?”
I think they’ve proven they are pretty adept at it.
The other reason is Dell’s Open to Listening Post for its customers. Based on this open innovation model, the IdeaStorm model, they are able to listen to customers, spot trends and identify lead users. So, they get a lot of innovation insight that is qualitative in nature, a little harder to measure. But it’s equally as valid as the more quantitative measures around:
how many people would participate and how many ideas would they receive and how many ideas would they implement.
Excellent.
Now maybe the other end of the spectrum from Dell’s IdeaStorm would be the Directed Invitational type of open innovation. The difference seems intuitively obvious in just their names: directed vs suggested, invitational vs participative.
Functionally, we talked about the differences particularly in how you profiled P&G’s Connect & Develop program.
But, both of these examples are from big companies. Dell and P & G. Do you have an example from a smaller company?
Well, we can talk about several different kinds of companies. Traditionally, not just companies but the federal government and not-for-profits as well. There are a number of not-for-profits that are running what we would consider to be a Directed-Participative model which is I direct people to solve a particular problem. But I’m not so defined as to the type of solution you create.
And when you and I talked before one of the ideas we threw around was this idea of an innovation contest. And this contest was a great example with I know the Rockefeller Foundation uses this kind of model. The recent oil spill, the BP oil spill, used this kind of thing. The federal government uses this kind of model. I think the website is Challenge.gov.
What it is is an innovation challenge. So it’s Directed. The non-profit or the government agency or the small business may say:
This is the problem we’re trying to solve.
But they don’t necessarily limit who can respond. The BP oil spill site is a great example of that. After the oil spill in the gulf last summer, the federal government and BP put up a website that allowed anyone to suggest ideas but around a specific topic: how do we get oil out of the sea water.
I know the Rockefeller Foundation has used systems around this. I’ve seen other not-for-profits use something like this. And some smaller companies, and the distinction here is that when you talk about smaller companies the infrastructural issues become more magnified. If I ask others for their ideas then it becomes even more important for me to manage those ideas effectively.
What you’ll find in an open innovation model, especially for smaller companies, is that they are very interested in becoming part of those networks like the P&G Developer Network; they’d like to be a trusted partner. There are some smaller companies using the traditional open model like the IdeaStorm. But I have to admit I don’t have any off the top of my head. But what I will do is do some research and include that with your transcripts.
You’re talking about smaller companies and the greater challenge in the infrastructural area. I think that smaller companies might assume that the Suggestive-Participative type of open innovation might be very enticing. With all these different resources that are often free, you can with very little upfront costs, you can begin a very open, participative model. The management costs would be very low.
You write that they would be very wrong with that assumption. What happens when companies assume that and don’t manage these conversations?
Well, what happens with open innovation whether it’s a large or small company is that you tremendously magnify the number of ideas that you have coming in. And behind every one of those ideas is an individual or team or business that is really fascinated by the idea and want to see it progress.
So, instead of you as an organization working with 5 or 10 ideas and everyone that sponsors that idea is within the organization and it is very easy for you to talk to them and you can put your arms around.
When you start opening up to ideas from other places, you have the responsibility to accept the idea, vet the idea to make sure it’s valuable for you and also to vet the idea for the intellectual property associated with it. That means you have to research does this idea have any provenance in any other places:
- Does it belong to anyone else?
- Does the intellectual property belong to someone else?
Not only that but you have the responsibility to give feedback back to the idea. And as we know from a social media market, if you’re not actively responding to the people who are trying to talk to you, if you become a one-way street, if you only accept information without sending information back out, then you create a level of cynicism very quickly within the people who are submitting ideas. Then that faucet will get turned off very quickly. What will happen is people will see their ideas going into a black box and never getting any feedback back on
- Hey, this idea is being promoted.
- This idea isn’t useful for these reasons.
So, while many organizations think it’s cheaper and easier to obtain the idea...on the surface they are probably correct. But what they are missing is the ongoing maintenance and care and feeding of that community. And that investment around vetting that idea, making sure there are no intellectual property issues around the idea. And then further, very few organizations have an excellent innovation process.
In other words, there might be very good at generating ideas internally or finding ideas externally, but that’s really just the first step in ultimately commercializing the idea. Because you have to manage the idea, you have to evaluate it, you have to make selections as to which idea to invest in. And then, I have to convert that idea into some sort of physical concept as a product or service or new business model.
So, if you don’t have a good innovation process underway for the ideas you spawn internally that problem will become magnified as you have more ideas from the external sources that have to get pushed through an already inadequate process. So, while on the surface open innovation may look a little less expensive on the idea generation point of view it actually will end up magnifying the issues within the organization from an innovation point of view from a commercialization and intellectual property and just the ability to manage the ideas effectively from the community at large.
The last thing you want to do is open up innovation to an external community and fail to interact with them effectively. You’ll run into that old issue of:
“If I please one person they may tell another. But if I anger another person they’ll tell 7.”
So, if you do open up innovation to the community ineffectively then that will spread like wildfire.
There’s a good example with Campbell Soup. Campbell Soup asked the people for new ideas for recipes. But on the website told people they wouldn’t respond to them for 60 to 90 days. And this has created quite a hubub within the community because many members feel they have been let down. They don’t know how their ideas are being implemented or if their ideas are being implemented at all.
I just laugh. What a mixed message.
Please share with us your ideas; we’re excited to hear them. But we’re not really that interested in communicating with you. We’ll get back to you in 60 to 90 days.
It’s weird. You and I have talked about this previously in this call. The further you go in open innovation, the further you’re penetrating traditional social media. And social media demands a two-way interaction and not a one-way interaction.
I’ve written less articulately than you just spoke that the communication you have with your customers is a reflection of the communication you have within your company. If it’s engaged, open, passionate and trusting then that will the communication you’ll have with the public.
Bringing in an open innovation model and trying to impose it on an very protected, hierarchical, infrastructure is just going to expose these problems and let everyone see what a difficult company this is to work with.
Yeah. You’re addressing a lot of issues we think are important from an infrastructural and cultural angle. I used to work with a company years ago. And our joke that the phrase “Not Invented Here” was invented there. Any idea from the outside was quickly rejected.
And that’s another thing you have to think about when you are doing open innovation is how will ideas from the outside be perceived. And how much engagement will there be for ideas from third parties.
Now, you’re talking about the economy and the global markets and I hate to paint the world in a black or white perspective. But it seems companies face two choices. They can innovate now; they can pay it for now as the ad says. Or, they can pay for it later.
If you think about it, we as consumers, or we as just individual, want to have relationship with brands or products that matter to us. And the more engagement I have the more involvement I think I have with the product or brand, the more likely I am to return and repurchase that brand or product or company. And the reverse, less so. If I have less involvement and they seem less willing to listen to my ideas, I may be less involved and less engaged.
Apple may be the one company that can keep me engaged because their products are so good and yet I don’t think they listen to ideas from the outside. They are the exception to the rule.
And I think what’s going to happen is that as companies, as certain companies, become better at open innovation they are creating not just communities but tribes of people that really affiliated with their brand and their product. They feel like they co-created that product, that they had stake in the development of that product or brand. And then companies that are laggards try to get into open innovation, I think that their relationships or the strength of that bond between the company that’s been practicing that open innovation is going to be harder to break.
So, companies that lag behind or drag their feet about open innovation may not just miss ideas but may also miss strengths of relationships between themselves and their customers. Its not just ideas they are missing. I think it’s also they are missing the opportunity to build a tighter relationship.
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Part three of this interview will be published on Saturday, August 13.
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