Posts Tagged ‘Innovation’

To compete effectively, companies will increasingly have to look beyond their internal walls for sources of advantage.

Open innovation—bringing ideas and solutions into your company from your partners, suppliers and customers, or tapping the “wisdom of crowds” through innovation markets – has gained favor as a way of creating value. Why? Because this new approach is delivering measurable results for its practitioners at a fraction of the cost of their old, proprietary methods. For example, a recent study conducted by Forrester Research with a $14B producer of consumer goods found that their use of the open innovation marketplace of InnoCentive produced an average of 74% return on investment with a payback period of three months. But despite the high-profile models heralded in the business press, very few companies understand what open innovation could—or should—look like for them.

The reality is that open innovation is hard. Even the best innovators may not be great open innovators, because it takes different skills and the ability to overcome different challenges. But the quest for open innovation does not have to feel daunting or to consist of random, one-off attempts to imitate the leaders in the field. What companies need is discipline: discipline to diagnose where in their businesses they can create the most economic value with open innovation; discipline to customize the variety of approaches to open innovation for their own use; discipline to design and execute the right types of experiments; and discipline to embed new capabilities, tools, and processes inside their organizations.

Those who get it right will reap the rewards.

Open innovation can help businesses more reliably discover new ideas and increase their speed to market. It can reduce risk in opportunity development and help shift from a fixed to a variable cost structure. And it can create tremendous benefits to reputation and brand by keeping companies on the cutting edge. It’s increasingly clear that open innovation is no longer an option. Businesses that don’t harness its power risk being left behind.


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