While closed innovation has been the way most companies have operated and we think of Open Innovation as mostly a 21st Century phenomenon, there are many examples of open innovation throughout history.
In 1714, the British government offered the Longitude Prize to anyone who could develop a method for determining a ship’s longitude. Incentives valuing over £100,000 were offered in the form of encouragements and awards. The winner was John Harrison, who received £14,315 for his work on chronometers. Likewise, in 1919, a New York City hotel owner Raymond Orteig offered a $25,000 reward to the first aviator to fly non-stop between New York City and Paris. 9 years later the prize was won by little known aviator, Charles Lindbergh with his aircraft the Spirit of St. Louis.
In the corporate world one could argue that true crowd sourcing also began some 100 years ago when the suggestion box was first used. Truth is the suggestion box was a rather tedious mechanism for gathering feedback and by the 1990’s many companies had given up on it. Luckily with the diffusion of the internet the suggestion box was given a make-over, and in the past 10 years the “digital suggestion box” has garnered a lot of support and become a highly viable mechanism for problem solving and generating high quality ideas. No longer is the “digital suggestion box” a method for placating employees and customers into believing they have a voice, it is now a powerful tool for generating new ideas through Open Innovation.
One of the first genuine examples of corporate crowd sourcing was developed in 2001 by a drug company, Eli Lilly, they decided to open up their R&D to a broader community of contributors by posting research questions to scientists and others outside the company. These contributors collaborated to generate solutions, and the winning solution received a financial reward. Out of this venture grew a new company, InnoCentive, which now offers this crowd sourced approach to other companies. Many others have followed in the footsteps of Eli Lilly to collect ideas from the community, whether they are a community of amateur inventors, customers or even the broad public.
So why does Crowd Sourced Innovation or Open Innovation Work? Open innovation helps companies succeed because it opens them up to the power of the Long Tail. They gain access to a vast network of professionals and experts from a varied collection of disciplines, increasing the likelihood that someone will come up with a creative solution. Today, open innovation can be seen all over the world. Non-profit organizations, corporations and government agencies are using the Internet to reach a worldwide audience, and they are taking their in-house challenges and seeking the public’s help in solving them.
From an Innovation Seeker perspective (corporate or government entity) they can look beyond the R&D department and practice open innovation on several levels which are complementary.
Level 1 open innovation may be regarded as not being open at all as it concerns opening up the idea generation possibilities to employees, however for large multinationals this is a significant untapped resource . Since 2001, IBM has used jams to involve its more than 300,000 employees around the world in far-reaching exploration and problem-solving. ValuesJam in 2003 gave IBM’s workforce the opportunity to redefine the core IBM values for the first time in nearly 100 years. During IBM’s 2006 Innovation Jam, the largest IBM online brainstorming session ever held, IBM brought together more than 150,000 people from 104 countries and 67 companies. As a result, 10 new IBM businesses were launched with seed investment totaling $100 million.
Level 2 open innovation is truly open as it taps into the co-creation or ideas of customers of the company. Many of the consumer goods companies have already put initiatives in play to benefit from this idea source.
• Open Innovation Sara Lee – open innovation portal of Sara Lee
• P&G Open Innovation Challenge – external idea sourcing in Britain and Vocalpoint – P&G’s network for women
• Ideas4Unilever – corporate venturing
• Kraft – innovate with Kraft
• BMW Customer Innovation Lab
• LeadUsers.nl (in Dutch) & Live Simplicity – Philips’ crowdsourcing platforms
• Dell IdeaStorm – external idea sourcing
And in the retail space: My Starbucks Idea aims to shape the future of Starbucks.
Level 3 open innovation taps into a community of innovators, people who innovate professionally or simply amateurs who love solving problems with ideas. Here the company can use the same idea management web based systems to reach out to this professional or enthusiast group or can work with existing R&D communities such as InnoCentive. InnoCentive works with Seeker organizations to define and post their problems on a global community website. Seeker organizations pay Solvers for the winning solutions. Seekers pay InnoCentive a fee to post Challenges and, in some cases, they also pay InnoCentive a commission on the amount awarded.
• Innocentive – open innovation problem solving
• TekScout – crowdsourcing R&D solutions
• IdeaConnection – idea marketplace and problem solving space.
Level 4 is when the idea seeking entity seeks ideas from the broad population.
Some notable examples: The government of Ireland have been at the forefront of public sector crowdsourcing for ideas. In early 2009 they launched the Ideas Campaign and a year later have followed up with Your Country, Your Call is a citizen-based ideation and innovation campaign to spur Irish economic development. An award of €100,000 for each of the top two ideas will be given, along with a development fund for implementation of up to €500,000 each project.
• Also the Singapore government called out to all Singapore residents and visitors to share their views and visions for Singapore’s tourism industry. The initiative TourismCompass2020.com was launched in the second half of 2009 and asks citizens and visitors to contribute ideas to shape Singapore Tourism by the year 2020.
There is always a concern with customer and general public open innovation that the motivation for the exercise could be more a public relations effort rather than a genuine attempt to get better ideas, fast. Open Innovation should never be a “we are listening” exercise. It’s important for open innovation programmes to put feedback mechanisms in place so that strong ideas which are selected for implementation are showcased back to the “solver” community.