Many practitioners charged with innovation have only a vague understanding of the specific tools available for Open Innovation, and how they might be applied. As the marketplace shifts dramatically to keep pace with changing consumer behaviors, remaining relevant increasingly means ramping up innovation processes. PDMA Essentials provides the tools NPD practitioners need to implement a leading innovation method, and drive continued growth.
THE JOURNEY INTO OPEN INNOVATION
The idea of cultivating firm innovation has long been associated with secrecy, fear of competition, and a general distrust of any entity outside the corporate walls. In this view (shown in Figure 1 ), product concepts are developed across various organizational functions, but it is a "hard-walled" process in which input from outside the firm is not sought or valued, and concepts are jealously guarded from leaks to the outside world.
Figure 1 : A Typical Closed Approach to Innovation
The term "Open Innovation" is generally credited to Henry Chesbrough from his 2005 book and prior writings 1 , though its origins and concepts certainly appear in earlier thinking. Chesbrough's definition highlights the breaking down of traditional walls and veils of secrecy surrounding the organizational innovation process. As he describes it formally, "[Open Innovation is] . . . the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for the external use of innovation, respectively." In somewhat simpler terms, this is "punching holes in the funnel" that historically depicts the innovation process, allowing good ideas, technologies, materials, and other knowledge to flow in, and viable ideas, concepts, and technologies that aren't going to be commercialized by the firm to be passed out through licenses, joint ventures, and other approaches. Figure 2 illustrates this general concept. More than ever, the benefits of Open Innovation (OI) are being explored and under its umbrella can be found increasingly popular techniques such as consumer co-creation, crowdsourcing, idea competitions, collaborative design, and other approaches.
Figure 2 : A General View of Open Innovation
Despite the recent focus on this approach, elements of OI have in fact been in existence for centuries. Consider the following:
In 1714, the British government, through an Act of Parliament, offered the Longitude Prize to anyone who could develop a practical method for the precise determination of a ship's longitude. The winner was John Harrison, who received Pds. 14,315 for his work on chronometers.
In 1795, Napoleon offered a 12,000-franc prize to drive innovation in food preservation, spurring a French brewer and confectioner named Nicholas Appert to develop an effective canning process to avoid spoilage.
In 1919, New York City hotel owner Raymond Orteig offered a $25,000 reward to the first allied aviator(s) to fly nonstop from New York City to Paris or vice versa. It was a relatively unknown individual, Charles Lindbergh, who won the prize in 1927 in his aircraft, Spirit of St. Louis , and made history.
In recent years, the X PRIZE Foundation sponsored a space competition and offered a $10,000,000 prize for the first nongovernment organization to launch a reusable manned spacecraft into space twice within two weeks.
Eli Lilly pioneered the modern idea of crowdsourcing in 2001 when they began to post research questions openly (online) to scientists and other outsiders to augment their own R&D efforts. From this effort, they developed and spun off a new company, InnoCentive, to offer crowdsourcing to other companies.
The use of "beta invitations" has been practiced for decades in the video game industry. In this model, which could be considered a form of OI crowdsourcing, a software developer releases a "beta" (or early, likely flawed) version to users for testing and commentary. This results in many expert hours of development being applied in a short time, thereby improving the product quickly and cost-effectively.
While these principles have been sporadically tried in the past, the recent move to focus thinking around the term "Open Innova