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Friday, April 30, 2010

Will Open Innovation benefit my competitors?

by Yann Cramer

Will Open Innovation benefit my competitors?Robert Shelton published an enlightening article about the three levels of open innovation maturity. But for most companies, open innovation raises instinctive fears that their ideas will leak out to their competitors and destroy any competitive advantage they would have hoped to get from their innovation.

Three levels of Open Innovation
  • Level 1: aware & adhoc - Companies are aware of the need to open up to external sources of ideas and to leverage external capabilities. They build adhoc partnerships with suppliers and customers along their tradtional value chain.

  • Level 2: pro-active & systematic - Companies set up an explicit goal that a significant portion of their new developments will come from outside and they organise themselves to attract outside input. P&G's programme Connect&Develop provides a case in point.

  • Level 3: confident & natural - Companies orchestrate a multilateral collaboration network (Shelton says "an eco-system") of companies and talent. They are not directly involved in all interactions that happen throughout the network. They let interactions happen in a natural way at the most appropriate level. They are confident that the value generated in any part of the network will directly or indirectly benefit the whole network and them in it.

A management-style analogy would be the evolution from directive to participative to delegative.

A question I often get is:

"How can I be sure that innovation that springs in such an open environment (Level 2 or 3) will benefit my company and not my competitors?"

The answer is time-to-market: more specifically, developing the capability and reputation for taking innovation to market faster than the competition. This comes from gradually pushing the company out of its comfort zone.
  • Level-1 companies operate within the comfort zone of developing new products with their traditional suppliers and customers. They have processes and tools designed to drastically reduce risk (risk of innovation failure, risk of IP leaking to their competitors). They need to relinquish some level of control on the risks where it enables the most significant gains on the time-to-market metric.

  • Level-2 companies, having efficient time-to-market processes, become the partner of choice of suppliers who want to get revenue (or recognition) as fast as possible, and of customers who want to enjoy the use of new products before their competitors. But they still operate within the comfort zone of controlling most information flows, in the sense that they are either at the receiving or at the transmitting end of information. To reach Level-3 they need to relinquish that sense of security and trust that having built that position of partner-of-choice innovation will come to them first rather than to the competition.

With innovation coming to them first and superior time-to-market processes, Level-3 companies can therefore build a significant lead to cash-in on innovation and grab market share before the pack of competitors joins in.

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Yann Cramer is an innovation learner, practitioner, sharer, teacher. He's lived in France, Belgium and the UK, he's travelled six continents to create development opportunities with customers or suppliers, and run workshops on R&D and Marketing. He writes on www.innovToday.com and on twitter @innovToday.

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Wednesday, April 28, 2010

Silos and Innovation - Break Down or Work Around?

by Stefan Lindegaard

Silos and Innovation - Break Down or Work Around?"How do you break down internal silos in order to improve at innovation? Open innovation - or any kind of innovation - suffers with silos. What are your insights and experiences on this issue?"

I posted these questions in the 15inno by Stefan Lindegaard group on LinkedIn about a month ago. We got 28 comments with lots of great advice. (Click on Discussions in the group if you want to read this). I have been looking through these comments a couple of times as I wanted to write a blog posts with an excerpt on this.

This has not yet happened and one reason is that I have begun thinking differently about silos and their impact on innovation.

Perhaps we do not have to break down silos to drive more innovation. Perhaps we should just accept the silos and work around the issues they can create on innovation. Perhaps open innovation will change things by itself.

Let me share some thoughts on this.

The smart people with drive and energy - and an interest in innovation - that I meet are most often attracted to great ideas and initiatives with a potential to really make a difference. Often, they do not care about the nitty-gritty kind of incremental innovation which proven and time-tested processes in silos also can take care of by itself.

We all know that corporate executives also crave for innovation that can really make a difference and as they begin to accept the loss of control and potential side-effects (check this blog post on open innovation side-effects) that are related to open innovation, it becomes easier for smart people from different parts of a company as well as for external partners to gather around the ideas that can really make a difference.

Why? A key reason is that we are getting more and more tools and solutions that allows us to innovate across corporate as well as industry boundaries. Just take a look at these initiatives: InnoCentive@Work, Intuit Brainstorm and Inno360. The latter is a software developer working with still un-identified open innovation leaders to develop the next generation open innovation platforms.

When corporate executives willingly accept more experimentation and a fair amount of failure on the innovation process itself, they will begin to understand that innovation delivers best when different business functions - and external partners - come together to develop products, services, solutions and processes that meet the needs of users and customers. This mindset change can be re-enforced by the above technology development.

We also have to remember that innovation can be radical in many different ways. It does not only apply to market approaches or technologies. Innovation can be just as radical with regards to the internal processes.

This is what this is really about and as with any kind of initiatives with a radical, disruptive or breakthrough potential, we need different approaches and setups that provides protection from the bureaucracy and corporate politics we have to deal with in any larger organization. So if companies really want to embrace open innovation, they will have to make organizational adjustments.

I believe this development will reduce silo-related obstacles on innovation although it will take several years before most companies reach this level of innovation maturity. Until then, it might still be relevant to check out the advice given in the LinkedIn discussion that inspired this post...

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Why Crowdsourcing Often Fails

And what you may not know about crowdsourcing

by Idris Mootee

Why Crowdsourcing Often FailsInnovation is hard. It is not about getting the idea at all, it is about managing ideas. So you've have a few great ideas, so what? There is a lot of art and science behind moving ideas along corporate decision chain as well as in managing the unknowns. I remember I used to teach an in-house program for my strategists on "managing the unknowns." These MBAs would struggle with not finding enough data points and get stuck in the innovation process. How often do these big world-changing ideas come from people with MBAs?

But then there are so many ideas such as Google, Twitter, Facebook, OnStar, Kindle, Blackberry and the X-37B space plane launched this week... that turned into innovations that change the way we work and play forever, stirred new competition, and created new wealth. The future is never about the future, it is about now.

What changed our life, work and business? I will say automation, digital technologies, social media, modern medicines, jet engines, fast food, mass manufacturing, the marginal productivity theory of wages, consumerism and modernism. Many of these ideas grew in a world with fundamental economic convictions, namely the mass-production and mass-consumption of goods.

But these assumptions are fast changing. Spend a few days around the world stopping over in Shenzen, Shanghai, Mumbai and Seoul and you know what's really happening out there. Companies are getting desperate and now reaching out to suppliers and customers for ideas. Some even go to the extreme of sourcing ideas from everyone - the crowd.

There's this naive belief that the crowd is smarter than individual. This is a dangerous theory. Engaging suppliers, advanced users and front-end employees are good practices, but not letting them do your job.

There is one recent book about crowdsourcing suggesting that companies should stir things up. Just look at the current state of US politics, and ask yourself, is that what you want to happen for your company?

Furthermore, let me tell you the secret of success for open innovation (this is a better word than crowdsourcing). It is not the ideas, the breadth of the ideas, the quality of ideas, etc. It is about building a team that believes in it and is empowered to make it happen. Crowdsourcing and futurecasting are all great tools to help you get inspired, but they are not innovation. The most important part of innovation is the managing, mobilizing and aligning the ideas to strategic intent. At idea couture, we have the toolkits and processes and have repeatedly applied them effectively in large organizational settings. Unfortunately that's not something we can share here.

Another way to explain what I am trying to say - Karim R. Lakhani, a pro at Harvard Business School, calls what most people refer to as crowdsourcing "broadcast search." A problem statement is broadcast along with associated incentives, and people with expertise apply their talent to solving the problem. I like the term virtuoso search better. But, whatever term we use, let's not call it crowdsourcing and pretend that 10,000 average joes invent better products than Steve Jobs.

The example of Cambrian House provides learnings for everyone. It was a very innovative idea. They were followed by the Kluster, CrowdSpirit, CrowdSpring, and FellowForce. Cambrian House was a pioneer in putting crowdsourcing to work. The company doesn't really exist today and the technology was sold to another company for a fraction of the original investment. This other company now offers their technology solution as a software service.

Cambrian House's CEO Michael Sikorsky reflected on Tech Crunch a few years back about lessons learned (excerpt):

Indeed, our model failed. In short: we became a destination people loved to bookmark more than they loved to actively visit (our traffic pattern was scarily VC-ish). The limiting reagent in the start-up equation is not ideas, but amazing founding teams.

A key assumption for us, which proved out NOT true: given a great idea with great community support and great market test data, we would be able to find (crowdsource) a team willing to execute it OR we could execute it ourselves. We needed amazing founding teams for each of the ideas - this is where our model fell short.

What we learned: it would have been better to back great teams with horrible ideas because most of the heavy lifting kept falling back on us, or a few select community members. A vicious cycle was created leading all of us to get more and more diffuse. Hence: the wisdom of crowds worked well in the model, but it was our participation of crowds aspect which broke down. Trying to find people willing or capable to take on the offspring (our outputs) of the CH model was hard and/or incredibly time consuming.

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Idris MooteeIdris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

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Wednesday, April 14, 2010

Guiding Principles of Open Innovation - Communication

by Stefan Lindegaard

Guiding Principles of Open Innovation - CommunicationI have just attended a great conference by 100% Open, a new agency specializing in open innovation. They have an interesting Jam & Discover approach to open innovation and they also run networks and do training and venturing.

At the conference, I picked up a new report: Open innovation - From marginal to mainstream. In this report they have some great guiding principles on communication and I've shared them below because I believe they are worth sharing.

100% Open Guiding Principle on Communication:
  • Many large organisations are trying to become open innovators by first trying to change their culture. Whilst this is rational, it rarely seems to work. Companies will often change their ways of doing things more happily and spontaneously if the see first-hand evidence of colleagues adopting a new approach and it working. Success sells.

  • Communicate with the outside world effectively. We've see many a large organisation get so wrapped up in its open innovation process and goals to the extent that it fails to communicate effectively, thereby rendering the endeavour less effective.

  • If Corporate Open Innovation requires different structures, it also requires a different way of thinking. The new mindset needs to be more cooperative and less command-and-control - and its new innovators need to be literally open-minded and communicative.

  • If a company is to place open innovation at its heart, management needs to communicate supportively and instigate mechanisms and behaviours that encourage it. Whose responsibility is it? How is open innovation rewarded? When and where does open it happen?

  • Setting an innovation culture is also about personal transformation, starting at the top. Do organisations have enough polymath leaders - multi-skilled individuals, who combine designer flair, engineering skill and marketing imagination? Training and recruitment will play a part.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Wednesday, April 07, 2010

Open Innovation Frustration

by Stefan Lindegaard

Open Innovation FrustrationLast week, I held a workshop in which a couple of the participants - all from the same company - had some struggles finding out why they should embrace open innovation.

This skepticism was not driven by satisfaction with their current innovation processes and culture. On the contrary, this seemed to be seriously flawed and creating lots of frustration within their organization.

So you should think they would be open to changes in their approach. They were not. I think their main reason for being skeptical came as they understood that open innovation requires a lot of hard work, while also bringing with it the uncertainty that usually follows change.

Even more importantly, they could see this will not happen in their organization if they do not have the full support of their executives to go open. They do not have this. The executives did talk about going open, but they had not yet managed to truly embrace this new paradigm shift.

No wonder innovation-driven employees in a company with a flawed innovation process and culture and no clear leadership on how to deal with this become frustrated.

So they rightfully asked the question - why should they embrace open innovation? I used the traditional arguments, that if done right open innovation provides access to larger pool of resources, faster speed to market and higher innovation productivity. It took a while but the participants eventually bought fully into the idea that you need to go open in order to win the innovation game.

It helped that the other companies at the workshop did not have this scepticism. On the contrary, they fully believed in the concept although they - as any other company - had their struggles getting this right.

This made me think that open innovation - with all the change and uncertainty it brings - can be extremely frustrating to innovation leaders and other employees. Especially if they are led by executives who are not fully capable of leading in tough times.

How can companies as well as individual deal with this frustration?

I will think further about this and would love to hear your input...

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Tuesday, April 06, 2010

The Paradox of Open Innovation: Internal or External?

by Robert F. Brands with Jeff Zbar

The Paradox of Open Innovation: Internal or External?What came first, the chicken or the egg? This paradox has perplexed philosophers for millennia.

In the progressive workplace, a similar dilemma confounds executives. In the pursuit of open innovation, what comes first: Innovation created internally, or innovation developed beyond the organization?

People talk about open innovation. It's the mantra of leadership experts and workplace counselors across the business landscape. But internal versus external innovation also presents a dichotomy. Often conflicting in nature, many proponents of open innovation get tripped up on why external innovation can fail to take root.

In my opinion, the paradox is easily answered: External innovation is destined to fail if the imperatives of internal innovation have not first been developed, deployed and adhered to. Workplace pundits extol the virtues of external innovation, but if innovation isn't alive and thriving internally, innovation itself will fall on the scrapheap of failed initiatives.

Effective innovation isn't about the Chief Innovation Officer or even the CEO mandating from on high what milestones R&D or Engineering must pursue or achieve. In fact, innovation that's required to come from R&D, Engineering or some other Department of Innovation is susceptible to the Not Invented Here syndrome. If it wasn't created by someone who's mandate it is to do just that, it's often likely to be squashed by exactly those who didn't come up with the idea. "Quit meddling in my sandbox," is the complaint.

Those barriers have to be removed. Effective innovation begins with breaking down silos that separate departments, divisions or teams - and encouraging, even welcoming participation from across the organization.

Sure, those directly charged with leading innovation might come up with good ideas. But will they speak to the heart of the organization and how it interfaces with its customers or constituency?

For example, since 1967, Hollywood Woodwork in Hollywood, Florida, has specialized in custom woodwork for use in premier hotels, spas, casinos, country clubs, public projects and corporate offices throughout the United States and Caribbean. Then the recession hit, and the company saw a drop off in its traditional business.

Then the company opened up and solicited ideas from all employees - not just those in Product Development. This led to a simple question: "Can we do church pews?" No deep analysis by skilled research teams or high-paid consultants. Just a simple query that made company executives wonder: Can we?

They could. And now, Hollywood Woodwork does, making many other products utilizing their assets. Building church benches helped diversify the company - and keep it afloat during the recession.

The request also made executives there realize something else: We must be receptive to potential innovation from all internal sources. Not-invented-here doesn't exist at Hollywood Woodwork. Innovative suggestions are welcomed from across its workforce of 150.

With the foundations of open innovation secure within an organization, only then should a company seek innovation from beyond its walls. If you don't have internal innovation down pat, and you haven't removed all the emotional barriers that inhibit the free exchange of ideas, you never will embrace what comes from the outside.

Successful open innovation, then, becomes the preamble to effective external innovation - if it's needed at all. Paradox solved, the entire team can focus on true innovation.

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Robert F BrandsRobert Brands is the founder of InnovationCoach.com, and the author of "Robert's Rules of Innovation: A 10-Step Program for Corporate Survival", with Martin Kleinman - to be published in March by Wiley (www.robertsrulesofinnovation.com).

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Wednesday, March 31, 2010

Earning Recognition and Respect

by Stefan Lindegaard

Earning Recognition and RespectIn Outliers, Malcolm Gladwell stated that it takes 10 years to become an expert in any given subject.

Many people actually reach this level. You might not be a professor or best-selling author, but you have probably worked long enough to become an expert in your given field - or you are on your way.

Yet, people having enough knowledge to qualify as a thought leader or expert do not get the recognition or credit they deserve - and often long for.

This is an interesting paradox. You work hard and at some point expect/hope to be perceived as an expert or thought leader, but it does not happen.

Why? The clutter of information and knowledge that surrounds us makes it so much more difficult to break through even if we have great, original ideas and an impressive knowledge base.

It is no longer enough just to qualify by knowledge to become an expert; you also need to know how to communicate and how to build a personal brand in order to become one.

I have spent more than 10 years on the topics of innovation and entrepreneurship. I am on the verge of breaking through and a recent incident prompted me to write this post and share my experiences and lessons as this might help others trying to figure out this paradox.

Obviously, this 'topic' is too broad to be covered in just one post so I will start out by sharing a few tips on what to consider if you want to be perceived as a thought leader or expert and then most likely follow-up with more posts.

Passion: You need to be passionate about what you are doing. I hope that this one is already in place for people who qualify as experts. If you decide to spend ten years on a given topic or business area then I really hope you have a passion for what you are doing.

Actually, I would argue that you could not deliver quality work over such a long period if you do not have a passion for what you do. Nevertheless, I too often meet people doing things they do not really like doing. I just do not get this...

Persistence: I remember when I started blogging several years ago. Sure, people will just come and read my thoughts. Nothing happened. Then, I got a couple of articles published in Strategy & Innovation, a respected newsletter from Innosight. Sure, companies will start looking into my services now. Nothing happened.

I started to engage with Twitter and became quite adept on social media in general. This helped drive some traffic to my blog. Sure, companies would now approach me. Things began to happen although slowly which I hope is also due to the current crisis :-). In May, I publish my first book, The Open Innovation Revolution by John Wiley & Sons, a respected, international publisher. I am curious what will happen afterwards, but the lesson here is very simple.

Nothing happens if you are not persistent.

Build a following: You do great work and you want to share this with the world. You might even want other people to help you spread the word on your work. Today, this starts by understanding how social media works. Personally, I use LinkedIn, Twitter and YouTube as I focus on business topics. Others might also benefit from building a strong presence on Facebook.

Co-create with others: I recently opened up 15inno.com for other contributions on open innovation. The reason for doing this is two-fold. I really believe that sharing what is happening in the open innovation community helps this movement to continue growing. The other reason is that helping others getting recognition most likely also benefits yourself in the long run.

Be honest and 'share' yourself: I share private thoughts and lessons here. I do not have to, but I have learned that what many people really like is honesty as this reveals integrity, which again helps build authenticity. Thus, I also really appreciated this endorsement by Steve Shapiro, a great thought leader on innovation and business for my upcoming book:

"If you want 'open,' look no further. Stefan's open and (sometimes brutally) honest account of open innovation is refreshing. There is no B.S., theory, or fluff. You only get practical advice for making open innovation a reality in your organization. Let the revolution begin."

- Stephen Shapiro, Author, 24/7 Innovation; Chief Innovation Evangelist, InnoCentive

I am pleased by this as it really reflects my values of being open to helping others, working with a passion and being honest. You should try this approach as well.

What drives people to be perceived as a thought leader or expert? Money is probably on the list, but personally, my goal is to be able to work with things I feel passionate about, where I can continue to develop myself - and to get some recognition for this.

Can you relate to this? If so, then it would be great to hear about your experiences and insights...

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Misconceptions about Transactional Open Innovation

by Debbie Goldgaber

Misconceptions about Transactional Open InnovationOn the Harvard Business Review blog, John Hagel III, John Seely Brown and Lang Davison, recently wrote a thought-provoking piece on the future of open innovation. They make many keen observations about the limitation companies currently face in making effective use of "Transactional Open Innovation" (TOI), defined below. However, they wrongly conclude that this is an inherent limitation of the TOI tools themselves, instead of a limit related to the way that enterprises presently organize R&D practices and processes.

Where Hagel et al., are most astute is with respect to identifying the drivers of open innovation, e.g rapid depreciation of "information stocks" and an Internet ecology rapidly evolving to facilitate the flow of information. These are the reasons that forward-looking companies like General Mills and P&G launched their often-cited open innovation experiments. Other companies, the authors of the HBR piece suggest, are following suite, at least in part, as a result of the pressure to appear au courant with the latest management trends.

These authors suggest, however, that it would be a disservice to executives considering OI programs to focus unduly on what they term transactional OI - i.e. defined, "short term transactions" that seek to source ideas and solutions from outside the corporate fence. Most typically, the TOI process would involve the following steps: "problem posted, solution offered, payment made, transaction completed, all parties move on." This model is great, they explain, as far as it goes; while the successes of this model have been well-documented and plentiful, there are several reasons why TOI is essentially limited in its impact. It is limited:
  • to a certain sub-set of problems
  • in its ability to transmit "tacit" knowledge
  • in its ability to enable effective execution
  • in its ability to solicit the long-term engagement of either party of the transaction

For all these reasons, we are urged by the authors of this study to move beyond TOI tools to a more integrative approach that, in focusing on long-term knowledge transfer relationships, is capable of overcoming these limitations. The problem is whether this imagined "overcoming" of TOI does not instead imply a return to a more traditional consulting model, even if it would possibly involve more players. But TOI tools seemed to be so attractive exactly because they held out the promise of eliminating the knowledge middleman, directly tapping diverse sources of knowledge without necessitating the long-term commitments.

In fact, the first 3 reasons offered are really aspects of a single challenge that faces TOI: how to broadcast an internal problem, one which might be difficult for those unfamiliar with the problem's context to "get," and how to evaluate a solution that may either not look like what you might have expected or might not include all the information that you need in order to understand and execute the solution. If this aspect of the transaction were not a problem than TOI's failure to solicit long-term engagement wouldn't be presented as a fault, since what you wanted from TOI in the first place is actionable information at the ready, and not long-term, costly commitments.

TOI is so limited as an OI model, according to these authors, because the issue of "tacit knowledge" in enterprise problem-solving looms so large. If tacit information is by definition what cannot be made explicit, recorded or presented, and therefore included in any problem formalization, then tacit knowledge would mark the limit of the effectiveness of transactional OI tools in particular. Where tacit knowledge or 'know-how' rules, TOI cannot get a grip for the simple reason that there's no effective way to transmit crucial information from one party to another. But this kind of internal limit to the fluidity or "transactibility" of knowledge is belied by the very forces that the authors admit are driving OI in the first place.

For one reason or another it seems that knowledge is becoming more of a transactional affair than ever before. However, just after affirming this, the author's seem to say that many of the most interesting and pressing problems a company faces are those that involve a decisive component of tacit-knowledge, and it is for this reason that the authors recommend that long-term relationships and engagements remain the focus of OI programs.

As I see it, the problem with the argument of Hagel et al, is just that they seem to consider the amount of tacit knowledge in a problem-solving situation as a constant - as if the ratio of tacit-to-explicit-knowledge were something that was not amenable to change. In fact, the importance of tacit-knowledge in a problem-solving situation varies according to concrete practices adopted within a problem-solving community. Looking to specific cases, most notably in software development, we see that this ratio is subject to significant modification. It is, in other words, the adoption of certain practices and norms (the wide use of wikis being one specific tool) that can increase the 'transactibility' of knowledge and therefore transform the way problems get solved and the way that work gets done.

To my knowledge, it is Michael Nielsen that first formulated this thought with his concept of "conscious modularity." According to Nielsen, open source software projects, like Linux, didn't manage to effectively divide work across a large number of people due to some "natural" modularity of the project, or to the natural modularity of software development in general. On the contrary, according to Nielsen, the people engaged in these projects consciously worked to keep tasks modular. And contrary to common perception, achieving and sustaining this modularity took an "enormous effort." This heavy-lifting is undertaken in the first place so that work "can be divided up, making it easier to scale the collaboration, and so get the benefits of diverse expertise and more aggregate effort."

If we take Nielsen's suggestion here, we can conclude that before we herald the limits of TOI, we should first ask how much effort companies have made to make their processes, problems, research and development modular. The sort of effort Nielsen describes will allow companies to make effective use of TOI tools, and thereby offer enterprises an economically efficient way to maximize their exposure to innovative ideas and expertise. Furthermore, we can expect that level of modularity would vary across industries and problem-type.

It is probably unrealistic to think that without doing this kind of internal work companies can effectively integrate TOI tools in their own workflows, creating the kind of culture where ideas "proudly found elsewhere" can be executed internally. Sure ideas that are selected from the outside need to be adapted with an eye towards internal specifications, but with the development of more modular processes, it seems likely that more and more problems will be amenable to TOI, the opposite conclusion to the one reached by Hagel et al.

If that's true, then far from needing to "overcome itself," TOI is still something aspirational (at least for most companies). This is something that hypios, an OI ecosystem that includes a TOI platform, has learned from innumerable conversations with clients and partners. It is for this reason that we strongly encourage companies we work with to make sure they do the prep work. The best prep work is of course to work hard to capture knowledge internally, through tools like intrapreneurship and other forms of intra-firm knowledge-capture. So perhaps what each executive embarking on an OI experiment should ask him/herself is "am I prepared to do the kind of long-term work that will ultimately make TOI an effective tool in my OI portfolio?"

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Debbie GoldgaberDebbie Goldgaber is Deputy VP of Concepts + Communciations @ hypios which provides enterprises with open innovation ecosystems. She is also a PhD candidate @ Northwestern University.

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Sunday, March 28, 2010

Three Models For Applying Customer Feedback to Innovation

by Hutch Carpenter

Listening to Customer Feedback for InnovationCustomers have always been core to companies' existence. An obvious statement for sure. Customers are the source of cash flow, and have historically been thought of in marketing and transactional contexts.

But in recent years, we've seen the rise of a new way to consider customers. As vital influencers of company activities and strategies. Two popular ways this is taking form are the social CRM movement, and the emergence of open innovation.

If you follow discussions in these developing strategies, you see that there are differing views as to the value of customer feedback. Understanding the different use cases of customer feedback helps organizations to set objectives and expectations appropriately, and to create effective frameworks for engaging customers.

Let's look at three models for applying customer feedback to innovation.

Customer Feedback and Innovation Objectives

The graph below highlights the three models for applying customer feedback to innovation:

Three Models for Applying Customer Feedback to Innovation
The three objectives on the graph are:
  1. Features - product or service requests
  2. Product's "job" - understand the deeper purpose your product fulfills
  3. Proposal - putting a new concept in front of customer's to understand its key value drivers

The X-axis measures the difficulty of getting feedback relevant to a particular objective. The Y-axis measures the impact on company results for the different objectives.

Some notes on the three models follow. For context, I'm including some ideas proposed by Starbucks customers on the My Starbucks Idea site.


Customers - hundreds, thousands, millions of them - are constantly using your products and services. This makes them well-positioned to suggest future product features and service enhancements. As a customer, you become intimately familiar with a product's utility, and what else you want to see.

You can see this on the My Starbucks Idea site. Some examples of customer product and service ideas:
  • Use dark chocolate in espresso drinks

  • More milk substitute options

  • Healthy food items

  • Mobile QR codes with payment info and drink order (scan-n-pay)

  • Separate lines for drip coffee buyers (during morning rush hour)

Often, I see this type of innovation pooh-poohed, as if it is not worth the effort. I fundamentally disagree with that position. This is the important, block-and-tackle work of serving a large market.

As the graph shows, these individual innovations won't dramatically change a company's fortunes. But in aggregate, they become a vital part of the product strategy for companies. Soliciting useful ideas for features is relatively easy.

It is important to remember that no company will blindly follow whatever ideas are suggested. Innovation here is customer-centered, but not majority centered.

Product's "Job"

The notion that customers hire your product to do a "job" is one I learned from Clayton Christensen. He stresses thinking of what customers need to accomplish, as opposed to thinking of product features or customer demographic segments. This frees your mind to address products differently than as a collection of features.

The challenge is to go deeper on what the customers are requesting. This is where customer feedback is not the final answer. Rather, it's an important clue as to what "job" your customers are hiring for. Take a look at these five ideas from the Starbucks ideas site:
  • I need a 24 hour Starbucks

  • Have late night locations near hospitals

  • Later Weekend Hours

  • More comfortable seating and extended hours

  • New/additional 24hr locations

  • Open late

Now as features go, the ideas above are pretty basic. Keep Starbucks open later. But rather than look at them that way, are they providing clues about the "job" customers hire Starbucks to do?

It's obvious customers are hiring Starbucks for more than a cup of coffee. Starbucks has consciously built out a more lifestyle-based experience. These requests for nighttime hours are indicators that Starbucks has an opportunity to address a new "job". Here's my interpretation of the "job" (yours may be different):

People want the solo intellectual pursuits of reading a book, creative writing, researching or getting projects done on a computer. They could do this at home with their own coffee brew or tea. But there's something social about being around others, even if you're not engaging with them. You're connected to the world, as you view it through the periphery of your mind's focus.

People want to pursue their individual interests, but do it in a way that let's them feel connected to larger society, be around kindred types and keep tabs on what is happening.

If you accept that as the "job" that customers hire Starbucks to do at nighttime, then the next activity in customer-centric innovation is to come up with other features of the experience that address the "job".

This is where Starbucks can suggest new features to customers, based on a better understanding of the "job". The new features can be put out to the customer community for their feedback.


Roberto Verganti describes a "proposal" in his book, "Design-Driven Innovation". A proposal is a product that is not a linear change in your offering, but represents a radical change in meaning. Many purchases - such as a Starbucks coffee - have meaning beyond the coffee. In fact, I'd argue Starbucks has successfully performed a radical change in meaning with its coffee varieties, 'baristas' and lifestyle experience. Much different than say, a Dunkin Donuts or McDonalds coffee.

Verganti also takes a fairly dogmatic position against customer-centric innovation. Rather, he argues for vision-centered innovation. The inspiration and sources for vision comes via learning from networks at the edge of societal change, within your industry and outside it. But it's not without a role for customers after all. As he wrote recently on the Harvard Business Review:

"They need to propose new unsolicited products and services that are both attractive, sustainable, and profitable. It is only within the framework of a vision-centered process that users can provide precious insights."

In this model, customers cannot tell you the new, unimagined things they want. Would anyone have suggested a need for Adobe Acrobat, Turbotax, Facebook or Twitter? But once a company has a new proposal for customers, they can become part of the development process. As Russell Ackoff and Herbert Addison wrote in the Little Book of f-Laws (pdf):

There is no point in asking consumers - who do not know what they want - to say what they want. Many new product and service introductions have been disastrous despite the extensive surveys conducted to show that there is consumer interest in, and intention to buy, such a product or service. These surveys have incorrectly assumed that most consumers know what they want.

Consumers can discover what they want in products and services by designing them. It is in design that people find what they want. Furthermore, consumer involvement in product/service design almost always gets creative results.

Engaging customers to get their ideas for something radically different holds great value here. This is not an exercise in determining market interest - although that might be a side outcome. Rather, it's a process of getting ideas to flesh out this proposal. Let customers help determine the radical innovation of meaning for a new concept.

Progress on the Open Innovation and Social CRM Fronts

The graph above is really more a spectrum, not a series of discrete models. For example, where feature requests leave off and become input about a product's "job" isn't a step function. More part of a continuum. But it's helpful for discussion purposes to describe three models, because there are differences at different points of the spectrum.

As both open innovation and social CRM progress, think about the implications of these approaches on integrating customer feedback into innovation.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Friday, March 26, 2010

Amazon - Make Kindle Open Source to Beat Apple iPad

by Yann Cramer

Amazon - Make Kindle Open Source to Beat Apple iPadIndependent research boutique ChangeWave surveyed 3,171 consumers and found that, amongst respondents planning to buy an e-book reader in the next 90 days, a towering 40% favor Apple's iPad, with Amazon's Kindle attracting only 28%. While the marked preference for the iPad may be temporarily over-inflated by the hype surrounding its launch, there is no doubt that Apple's entry in this market is a threat to Amazon. What should Amazon's next move be?

Acknowledge. The first step is to recognise a few hard truths:
  1. That the main threat is not the iPad selling better than the Kindle, but the iBook business model seriously denting Amazon's e-book retailing market share (currently estimated at 90%).

  2. That in spite of its heavy investment and outstanding achievement in developing and launching the Kindle, Amazon is not an electronic goods company, let alone a technology leader.

  3. And therefore that having the Kindle as one of the very few devices that can read e-books sold on Amazon will become a serious handicap to Amazon's mainstream business which is to sell books. There is no way back: the e-book market is rapidly growing and consumers will not settle for second best e-readers. If the Kindle becomes technically unable to compete with the iPad (or any other future new entrant), the barrier that Amazon has created by restricting the number of devices that can read e-books sold on its website will not hold for long.

Unlock the innovation potential of the Kindle. In a head-to-head confrontation on technological innovation, Amazon stands little chance to come on top of Apple. To unlock the innovation potential of the Kindle Amazon needs to take a path that Apple is reluctant to walk: open innovation, or, more radically, open source.

Open innovation would see Amazon orchestrate a network of lead-user enthusiasts, electronic good suppliers keen to win new business, and geeks with outside-the-box ideas. It would still require Amazon to retain a core capability to sieve, internalise, connect and integrate the input from this network, but it would tap into an enormous innovation work force that even Apple could not match.

Open source would be a more radical step. By letting other manufacturers adopt its e-book standard, Amazon would create immediately an intense competition for its Kindle but such competition would have two major advantages:
  1. Growing dramatically the offer of Amazon-compatible e-book readers would push the prices down, win over new customers to the e-book technology and overall grow the e-book 'cake'. Amazon's Kindle would enjoy only a share of that cake, but it would be a share of a much bigger cake.

  2. It is likely that Amazon would be able to tap into Kindle's competitors for technology improvements to be applied to the Kindle itself, therefore keep up with the pack instead of inexorably falling behind.

Even in the worst case scenario that would see this newly created e-book reader competition completely outclass the Kindle, Amazon's e-book retailing business would not be threaten but rather boosted.

The question is whether Jeff Bezos, who is reported to have invested a lot of passion and personal energy in the Kindle, can take the bold step of unleashing competition on it for the sake of reaping larger benefits in Amazon's mainstream

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Yann Cramer is an innovation learner, practitioner, sharer, teacher. He's lived in France, Belgium and the UK, he's travelled six continents to create development opportunities with customers or suppliers, and run workshops on R&D and Marketing. He writes on www.innovToday.com and on twitter @innovToday.

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Wednesday, March 24, 2010

Smaller Companies Should Embrace Open Innovation Too

by Stefan Lindegaard

Smaller Companies Should Embrace Open Innovation TooOpen innovation at small and medium-sized enterprises (SMEs) presents both great opportunities and great challenges. Forming open innovation relationships can give a growing enterprise access to resources that might normally are beyond their reach with the potential for greatly speeding up time to market. At the same time, working with larger - and in some case much larger companies - is not without its perils.

Let's consider a growing startup or a small company that is on its way to become a mid-sized enterprise. The early phases are very much about executing on single, great product, idea or technology. However, as the company grows focus tends to shift towards control rather than keeping the visionary thinking and bold approaches that build the company. This must be re-ignited. Open innovation can be the vehicle for accomplishing this objective.

Because of the high level of risk-taking involved with young ventures, leaders of entrepreneurial enterprises often have healthy or even outsized egos; it takes a certain amount of hubris to believe you can defeat the high odds against the success of a new venture. This can lead you to believe that you and your people have the best ideas. But in reality, there is a strong possibility that the best people and the best ideas are to be found outside your organization.

One key reason for Procter & Gamble to initiate open innovation programs was that they learned that for each of their 7,500 R&D people there were 200 people outside the company with equal skills and competences. An ignorant - and arrogant - company would ignore these 1.5 million people, arguing they do not matter as they do not work for us. P&G did not ignore this. They understood they should connect their own organization with the best and brightest from the outside world. Given the limited size of smaller companies, this mindset becomes even more important.

As I wrote earlier, SMEs often start with one great product or service idea and as they grow they might fail to recognize that innovation is about more than just bringing the core product or service to market. Innovation can occur at all stages of the business process, from the business model itself through to the customer experience. By broadening their thinking about what actually constitutes innovation, SMEs can more easily see the wisdom of open innovation, which can help them innovate in areas where they may not have internal expertise.

I will post more thoughts on open innovation for SME's in the future. Let me know if you have any comments on this or if you know of smaller companies that have adapted open innovation. It would be interesting to get to know more about their processes, failures and successes in order to get a better understanding of how this is different from large companies. Since small and large companies meet on open innovation, they need to start learning more about each other on this.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Saturday, March 20, 2010

LG Contest - Imagine the Future of Mobile Phones

Contest - Imagine the Future of Mobile Phones
LG Mobile Phones is partnering with crowdSPRING to announce a new competition to define the next generation of mobile communication. If you are a U.S. resident (citizen or green card holder) age 18 (or age of majority in state of residence) and older, you can have a chance to design your vision of the next revolutionary LG mobile phone and compete for more than $80,000 in awards. Exercise your creative imagination and let your ideas be heard. You don't have to work for LG to make an impact on the future of mobile communication!

Your assignment: Imagine the future of mobile communication

Deadline: April 26, 2010

What they're looking for:

Predict what's next. What do you think the next generation of mobile phones should work or look like for the U.S. market in the next 2 to 3 years? We are asking for your help. We're NOT looking for a long list of specs or phone ideas that already exist. We're looking for a cool new concept or 'big idea' supported by usage scenario and user experience illustrations.

Go to crowdSPRING for more information.

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Braden KelleyBraden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

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Wednesday, March 17, 2010

Creating a Networking Culture

by Stefan Lindegaard

Creating a Networking CultureIn my previous post, Why a Networking Culture Is Important, I argued that a strong innovation culture requires a strong networking culture. But what does a good networking culture looks like?

It is such a new concept that there are not lot of examples available to illustrate it, but here are some key components of a good networking culture:
  • Top executives and innovation leaders have outlined clear strategic reasons why employees need to develop and nurture internal and external relationships. This includes making clear how your company's networking culture links with and supports your innovation strategy (which, of course, is an outgrowth of your overall corporate strategy.)

  • Among the things to consider when developing your networking culture strategy is what types of networks you hope to build to support your innovation efforts. If your organization is moving toward open innovation, possibilities would include peer-to-peer networks for people working with open innovation in different companies, value - and supply - chain networks, feeder networks, and events and forums connecting problem solvers and innovators with your company.

  • Leaders show a genuine and highly visible commitment to networking. Leaders must walk the walk, not just talk the talk. By making themselves available at networking events and by being visible users of virtual networking tools, they model the desired behavior and motivate others to participate. After all, who doesn't want a chance to exchange ideas with the top brass?

  • Leaders should also share examples of their networking experiences whenever possible. Spread the word about your own and others' networking successes. Hearing leaders talk repeatedly about how networking is helping the organization in its innovation efforts will reinforce the message that this is important.

  • Networking initiatives mesh closely with your corporate culture. This is not one-size-fits-all; each company's networking efforts will differ. You can take bits and pieces, concepts and theories, knowledge and experience from others, but you still need to make it work for your own company.

  • People are given time and means to network. Frequent opportunities are provided to help individuals polish their personal networking skills. Not everyone is a natural networker. But almost everyone can become good at it with proper training and encouragement.

  • Both virtual and face-to-face networking are encouraged and supported. Web 2.0 tools and facilitated networking events maximize the opportunities people have to initiative and build strong relationships.

Let me know what you think and please feel free to add more components.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Thursday, March 11, 2010

The Call for Open Government

by Janelle Noble

The Call for Open GovernmentOpen Government is everywhere. Governments at all levels, municipal, city, and federal agencies are taking dramatic steps to open the traditionally closed processes and reform their IT structures to go open source and embrace cloud computing. What is the end goal? Well, there are several. At the highest level one could say it is to use the latest technology and social web tools to provide better services to constituents while opening up channels for communication between government, its employees, and citizens to gather feedback and new ideas on pressing issues such as the budget, safety, and transportation.

In September of 2009, Tim O'Reilly (who coined the term Web 2.0 in 2004) wrote an opinion piece outlining his vision for Government, or Gov. 2.0 and stated it was more about transforming government into a technological platform. In it he references sites like Whitehouse.gov and data.gov, highlighting the difference between governments providing a purely static informational web site or a site that is a kind of 'collaboration platform' and offers web-based services that provide more value to the user.

Open Government has been championed not only by President Obama in his Directive, but also on a city level, with Mayor Newsom's Open Gov Initiative for the City and County of San Francisco which focuses on open data, open participation and open source. With the recently launched ImproveSF.org, the city is furthering its commitment to recognize and tap the valuable ideas from city employees on the city's most pressing issues, starting with the budget. The campaign, open to all city employees, has only been running for a few weeks and since launching in late February, has gathered 300 ideas, 380 comments, and over 2,000 votes.

There are many other forms of open government popping up in lesser known town and city governments across the US. And the trend is not just limited to the United States. Your Country, Your Call is an online competition looking for ideas that will create jobs and prosperity for Ireland. The brainchild of President McAleese's husband, Dr. Martin McAleese, two winners will receive 100,000 Euros each and benefit from a development fund of up to 500,000 Euros per project. The site is definitely garnering local and international attention and is being promoted through traditional mediums such as television ads as well as through social media channels like Facebook and Twitter. Over 35,000 visitors from dozens of countries have checked out the Your Country Your Call site since its launch a few weeks ago, with thousands voting and commenting on the over 2,000 proposals already submitted.

Ireland's Your Country Your Call TV AD

As more and more towns, cities, and federal governments opt to embrace part or all of what Open Government stands for, the platforms that power these initiatives will become more central to their overall success. Brightidea has been offering open-innovation solutions through its WebStorm, Switchboard, and Pipeline offerings for years. These truly enterprise-level platforms incorporate the best of the social web and allow governments to link individual public or private initiatives, create rollup activity reporting across multiple campaigns on a centralized admin dashboard in order to track and monitor activity at all levels. These functions could truly help expand the rollout of Gov. 2.0 as a standard technological platform (as Tim O'Reilly pointed out, one that reaches well beyond IT) which truly transforms the way people interact with government, bettering the lives of citizens all over the world.

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Janelle NobleJanelle Noble is the Digital Marketing Manager at Brightidea and frequently contributes for Brightidea's corporate blog, Innovation at Work. Follow her on twitter @janelletnoble.

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Wednesday, March 10, 2010

Why a Networking Culture Is Important

by Stefan Lindegaard

Why a Networking Culture is ImportantThe reason for creating a networking culture is obvious once you look at the current and future direction of innovation. Let's start by disposing of the myth of the lone genius (the Thomas Edisons and the Alexander Graham Bells of yesteryear) arriving at a breakthrough innovation on his/her own.

This model wasn't true then, and even if it were, it simply does not hold true in today's complex business organizations. Technology and the challenges that must be solved have become so complex that many, perhaps even most, companies can no longer rely solely on their own internal innovation geniuses, no matter how brilliant those people may be.

Innovation is increasingly about having groups of people come together to leverage their diverse talents and expertise to solve multi-faceted challenges that cross multiple disciplines. To make this happen within your organization, and beyond as you move toward open innovation, requires a networking culture that is designed, supported, and modeled by your company's leaders.

Even organizations that are not ready to fully embrace open innovation are finding that employees' mindsets about networking must be stretched as more companies deploy internal R & D functions outside the corporate headquarters and around the world.

Employees start to wonder who should do innovation and where it should take place. Although this is positive, success in such situations depends heavily on the ability of the employees to initiate, solidify, and leverage external relationships.

Another key motivation for setting up networking initiatives is based on the simple fact that the knowledge of any company is inside the heads of the employees. Discovering and distributing this knowledge has always been a challenge, and now, more than ever, the ability to leverage a company's collective knowledge and experience through virtual and face-to-face networks and communities is critical to innovation.

Furthermore, establishing the ability to bring knowledge and potential new innovation insights in from external sources demands a strong networking culture supported and modeled from the top.

In one of my next posts, I will give some advice on how to create a networking culture.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Saturday, March 06, 2010

You Might Get Your Problem Solved for Free

A Problem to Love
hypios.com has launched its first annual "A Problem to Love" promotion. hypios will pay a total of $50,000 to solvers of two of the world's most compelling problems, as determined by visitors to the site.

Teleportation? A cure for cancer? Maybe, maybe not. Candidate problems must be submitted by an employee of some form of research organization - any discipline, public or private. hypios envisions that the two "Problems to Love" will be perennially frustrating research and development (R&D) puzzles. Current unsolved problems on hypios range from the mundane (how to make biodegradable, nonpolluting batteries) to the abstract (a model for frame-dragging that is consistent with Einstein's general theory of relativity - the details of which will not be explained here).

The two top problems will be judged on structure and promise of impact, then posted on hypios for a prize totaling $50,000, giving each problem a fair chance to find a solution. One, chosen by a jury, will be worth $30,000 to the Solver; the other, selected by the public, wins the Solver $20,000 - both paid for by hypios.

The persons that posted the problems receive all intellectual property rights to Solvers' solutions, once accepted.

Is there a problem you want solved?

Enter here

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Braden KelleyBraden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

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Thursday, March 04, 2010

Borderless Innovation and the Middle East

by Kamal Hassan

Borderless InnovationBorderless innovation, collaborative innovation, open innovation - all are terms that could resolve the lack of effective innovation and entrepreneurship models in the Middle East.

Think about it. What do we do here?
  • We import talent that works for a few years, but the high turnover rate makes it difficult to implement lasting change.

  • We hire consultants who do a few quick projects, and then leave with little knowledge transfer.

  • We invest millions in massive projects that take years and years to see a return.

  • We build educational institutions with the latest infrastructure and technologies, but only a few hundred students.

All of this contributes to a culture that relies on the innovation of others. What we need instead is a more simple and collaborative environment that learns from the rest of the world (without relying on them) to solve our own problems, improve our economies and advance our societies.

What we need is borderless innovation.

I'm not talking about looking beyond our geographical borders for solutions (although that can be a successful method for generating ideas if it's managed correctly). What I mean is looking beyond physical borders - the four walls that enclose your office, your department or your company. I'm also talking about social borders - the gap between public and private organizations, between big businesses and entrepreneurs.

Borderless innovation doesn't mean just outsourcing all your problems for someone else to solve. It means that the person (or organization) with the problem takes ownership of it; they take an active role in understanding the problem and developing innovative solutions. In addition to their internal problem-solving efforts, they also leverage the experience and expertise of people outside their borders to bring to light existing solutions or ideate new ones.

This is the logic behind borderless innovation - working collaboratively to find innovative solutions to complex business, economic, social and environmental problems, and create new value.

By way of example, one of my partners, NineSigma, has recently been contracted by the Piedmont region in Italy to develop an economic stimulus plan using borderless innovation. NineSigma is helping the region develop a list of strategic projects, and set up an open innovation network to solicit ideas and solutions from both local and global innovators to help stimulate innovation and growth in the region.

So, while the region is sponsoring the effort, the network brings together entrepreneurs, small, medium and large enterprises, universities and research labs as participants in finding the best solution for each project. All this is being done at a fraction of the cost of what it would take to build a fancy R&D lab. It's mainly done on the internet.

Would something like this work in the Middle East? I believe it could if given the chance. Our youth are very motivated and creative; they can do magic if they have the means and opportunity. They don't necessarily need an expensive R&D infrastructure to collaborate and innovate. Many are already taking the entrepreneurial path, using their own talents and innovative ideas.

Our governments and universities have innovation and economic stimulus as high priorities, although they are struggling to successfully execute in some cases. Using borderless innovation and collaboratively developing solutions might be the answer to move us beyond innovation apathy. One thing is for sure - we'll never know if we don't try.

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Kamal HassanKamal Hassan is President and CEO of Innovation 360 Institute, and is responsible for leading the company's global operations and customer acquisition.

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