Why a Networking Culture Is Important

by Stefan Lindegaard

The 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.

Related Article:

• Tapping the Network to Facilitate Innovation

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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.

Simple Justification for Open Innovation

by Stefan Lindegaard

I stumbled over an interesting paper, "Sourcing External Technology for Innovation", by the Alliance Management Group which has developed lots of great content including the Want--Find--Get--Manage framework below:

• Want - What external resource(s) does the firm want to access from the outside world to meet its strategic intent?


• Find - What mechanisms will the firm use to find these external resources?


• Get - What processes will the firm use to plan, structure and negotiate an agreement to access the resources?


• Manage - What tools, metrics and management techniques will the firm use to implement the relationship?

The article focuses on the Want element of this framework and what I in particular liked is the equation: A + B = C. I have inserted the below edited snippets from the article in order to introduce you to the equation.

We will define our terms:

• Variable A - "Represents the firm's existing 'assets' including its production equipment, core capabilities, intellectual assets, resources and perhaps even its market presence."


• Variable B - "Represents assets that are complementary to the firm's resource base and are only available externally."


• Variable C - "Represents the new product or market offering that goes beyond what the firm is able to deliver utilizing its existing 'assets' alone."

Variable C is a more valuable commercial result that comes from combining the firm's existing 'assets' (Variable A) with those sourced externally (Variable B). This simple equation makes a simple point. If the firm does not access external technology (i.e. there is no Variable B) then Variable C will be limited to what can be achieved using existing capabilities and assets. In other words, Variable C is determined by Variable A.

The goal of the A + B = C equation is to find new value that the firm cannot identify using traditional planning processes. Internal resources (A) retain their prominent role and integrate with external resources (B) to enable a visionary market offering (C) that was unthinkable just yesterday.

When the organization purposefully moves in this direction, senior executives require project managers to redefine C as a variable, enabled by A and B. This is an uncomfortable change for some managers because Variable C is ill-defined, Variable B is fuzzy and Variable A is the only known quantity.


I believe open innovation is about bridging internal and external resources and to identify and execute on the opportunities that arise on this interaction. I like how The Alliance Management Group turns this into an equation and I wanted to share this with you.

Don't forget to read the full article: "Sourcing External Technology for Innovation"


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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.

Open Innovation Side Effects

by Stefan Lindegaard

Open innovation will not only lead to new ways of making innovation happen. Innovation leaders and their executives will also experience side effects. I think most of these effects will be positive, but some will be mixed or perhaps even negative.

As innovation leaders and their executives implement open innovation practices, they can just as well start figuring out how to deal with side effects of open innovation such as described below:

• Open innovation is very much about managing change. If a company can handle the change process related to implementing open innovation, then they have learned valuable lessons that can be used in change management situations. In the current and future business climate, I think everyone should appreciate working in an organization that is agile and prepared for changes.


• Often, the biggest enemy of innovation is the company itself as the company begin to focus more on its needs than the needs of the market. When you begin to innovate with partners, you will see that these partners either focus on their own needs - and then innovation will definitely fail - or you will see that they come together and funnel their resources towards a market need. If the latter happens, then you have a great chance to succeed with innovation. Pressure from external partners can shift awareness from internal needs to market needs and this move can be helpful beyond the innovation process.


• Open innovation can bring along new organizational structures. As open innovation becomes the way to innovate, the functional/divisional or matrix organizational structures as we know today will change - or perhaps even break down. I am not sure what will be next...


• Open innovation will be one of the key drivers in bringing in new types of communication tools into the organization. Think LinkedIn, Twitter and Facebook. Once the initial resistance has been defeated, this can benefit many business functions.


• Customers are one of the first places to look for external input. Although, there are dangers involved in listening to customers when it comes to innovation, the increased focus on customers can lead to better relationships with them. This can change the role of sales and marketing units as they need to get even more involved in innovation.


• At a recent open innovation conference, Cisco said that they are trying to move from a culture of competition to a culture of shared goals. This was by large driven by a desire to make innovation happen with external partners. There is much talk on changing the not-invented-here culture, but perhaps open innovation will drive even more corporate culture change.


• As you work with external partners, you are exposed to other ways of getting things done. You bring diversed thinking into the organization. This can make you consider whether your current practices are good enough, whether you have to adjust these or perhaps even develop new next practices for your organization. An example: You get new perspectives on collaboration. Perhaps this can inspire to better interaction and collaboration between business units.


• Overall creativity as well as overall complexity increase with open innovation. The increased number of actors provides new ways for people to be creative. This can also increase the level of complexity, which is also driven by fact that the organization is no longer itself in control.

Let me know what you think of this and please share your own views.


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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.

Making Your Organization Understand Open Innovation

A Lesson from General Mills

by Stefan Lindegaard

Changing organizational culture is one of the most difficult tasks when it comes to open innovation. What can you do? Well, General Mills gave a great example at the recent CoDev conference. By sending more than 20 people to the conference, they sent a strong signal - internally as well as externally - that they are committed to open innovation.

I really liked this move and thus I did an interview with Mike Antinone, who is Sr. R&D Manager, Connected Innovation in General Mills Worldwide Innovation Network, in order to get a better understanding on this.


What made you decide to send this delegation to CoDev?

We had two main reasons for sending our GWIN team to CoDev this year. The first was really around team building. We have added several new team members as we expand our global innovation entrepreneur program and we wanted to have some time away from the daily demands of the office to foster an added sense of community.

The second area for us was to collectively learn and leverage the insights and best practices of other open innovation leaders represented at the conference and then create a plan of action to determine how we can best incorporate those insights and practices into our group.


What were the objectives?

We feel great about the progress that we have made with our Connected Innovation program, but we also wanted to put some serious thinking into "Next Practices" - those practices that we will need in the future to drive our program ahead and distance ourselves from competitors. We did not want to just go and listen, take notes, have a quick discussion then go back to our daily routine. Our goal was to create tangible action steps that we would incorporate into our development plans for our program.

We began our preparations about six to eight weeks before the conference. We divided the group into four teams with each team being responsible for a given topic. We chose to focus on three key objectives for our company. These were:

1. Driving profitable growth through Connected Innovation


2. Creating and leveraging more successful partnerships


3. Driving Connected Innovation throughout our company

Each team then created a list of questions they wanted answered about how we as innovation entrepreneurs could dramatically impact the three objectives outlined above. Our goal was to collect as many facts as possible.

The fourth team set up a series of networking opportunities, both before and after the conference to provide stimulus for answers to our questions. Some of those networking opportunities included:

• Smaller match-making events at the conference. We prearranged a series of discussions with conference participants. We met during breaks, at lunch, etc. to engage in a dialog about areas we wanted to advance and grow as an organization.


• Utilization of CoDev LinkedIn site. We posted several questions on the LinkedIn site to gain additional insights and make connections


• We also made sure we had prepared germane questions for each of the speakers to ensure we were tapping into their area of expertise.

Our team stayed in Scottsdale an extra day after the conference ended to have a working breakout session to summarize our key findings and to create an action plan going forward. During this session, we created list of "we-should" statements in our breakout sessions that were then reduced to three major areas of focus for each category as we continue to develop our program.


Which lessons have you learned so far?

It was very powerful to have our entire group at such a stimulating event. We had many opportunities to interact with each other, build on what we heard, and engage thought leaders with differing points of view. The conference provided us with a great opportunity to assess our program, consider new elements and chart a course as we continue our Connected Innovation journey.


Conclusion

I am impressed. Such an initiative can anchor open innovation in your company as it provides a great opportunity to build a common language based on what the team learned at the conference. This can really help develop the next practices of open innovation at General Mills.

Can you talk your executives into this kind of commitment?


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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.

Is China an Innovative Society?

by Stefan Lindegaard

I tapped into an interesting discussion on LinkedIn. Chris Gelken, who is host and co-producer of Today, a live news magazine, asked whether China is an innovative society.

Personally, I find the development of China to be both fascinating and a bit frightening seen from a Western perspective. Based on several visit, my take is that if China avoids too many financial bubbles, then the drive and ambition of the Chinese people to climb the value chain ladder will turn it into an innovation hotspot sooner than many think.

There are many great comments in the discussion and I have inserted snippets from a couple of them below. Check out the rest for yourself: Is China an Innovative Society? (requires group membership to China Networking Group)


Zhiyun Chen, Vice President at Pixelligent
I think as indivduals Chinese are very creative. It is result of strong natural selection by firece competetion in a closed society. The problem, though, is Chinese society still lacks mechnisms to channel the creativity of individuals into constructive innovations.

Edward Eng, Copywriter at Getchee
Rather than ask if China is innovate or not, people should focus on how China needs to improve its global marketing skills. The reason why many people think China isn't innovate is because no one knows what they are doing in China. People and businesses in China have great ideas and products but sometimes they just don't know how to effectively market them to the global consumer market. This is where China needs to strengthen its innovative juices.

John Walmsley, MD at Scot Lift Systems
They have the ideal situation for innovation as the Universities concentrate on designing and developing products which will meet a market need and not play around learning things which do not relate to Industry and Commerce. Where there is a gap is in Product design where they seem to lack the skills in making their products look modern and appealing. If they get that right then look out World.

Stephen DeKuyper, Managing Principal at CresaPartners
My experience tells me an overwhelming "no". Good at copying, good at driving costs down, but not innovative. I would be interested in seeing how many patents are applied for out of China. I guess it would be very low. I think with the size of the population, it will go up, but on a per capita basis, I think it will remain low. This does not equate to being smart or not. I just don't think there is an environment for innovation.

Bill Dodson, Principal at TrendsAsia
China excels at innovation, but not disruptive Innovation. "Small i" innovation is about patching and work-arounds. "Big I" Innovation is about changing the course of markets and even of societies. Chinese culture and history have always been supportive of "small i" innovation, due to the capricious nature of local government policies and decisions; and due to dramatic turns of events - revolts, revolutions, banditry, dynastic dissolution - that quickly destroy the fruits of labor. Hence, the tendency of so many constructions and creations in Chinese society to be just "good enough"; after all, who knows how long such works will be able to stand?


What do you think? Is China an innovative society?


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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.

Innovation Metrics of Leading Companies

by Stefan Lindegaard

I have often shunned the idea of metrics for innovation as it has been very difficult finding companies being good at this.

However, I believe it is important to work this out in order to raise the innovation productivity and in this post I share some input from a couple of large corporations based on a discussion on LinkedIn last year.

The discussion was started by Jimm Feldborg, who is R&D Manager at Grundfos in China. Jimm pointed out that a good start is to understand whether your indicator is a:

• Lag indicator. The results are lagged with weeks, months or years and cannot be changed. Some examples are rewards and the number of patents.


• Current indicator. The results happen right now giving you some possibilities to act and change and thus affect the future results. Some examples are the number of ideas generated and ongoing projects.


• Lead indicator. The results are predictive for the future. You can make radical change in your approach and thus affect the results. Examples are pretty hard to give here.

Jeff Murphy, an Executive Director at Johnson & Johnson, suggests that innovation metrics (and metrics for any deployment like this) need to be dynamic by design. He continues:

1. Initially, metrics should focus on engagement, training and participation of individuals.


2. Then, as you begin to build a critical mass of capable individuals, the focus of your metrics shifts to your innovation pipeline (active projects by stage, flow of projects through concept, development, launch or kill...) and early wins. This is in addition to item 1 metrics above.


3. Finally, as your organization's initiative begins to mature, your focus shifts to the end goals - return on investment, successful new products or services launched, revenue from new launches, etc. as well as optimizing your development and commercialization process. This is in addition to the item 2 metrics above.

If an organization gets ahead of itself in the metrics area, it can lead to unrealistic expectations during the early stages. On the other hand, if it gets behind on implementing the appropriate metrics and delays getting to #3, it leads to under-performance, and activity without business results.

Jeff emphazises that the key is to match your selected metrics with your deployment lifecycle. He also states that there are literally hundreds of metrics that you can choose from, but optimally, 8-15 metrics at any one time for an organization will be enough for senior management and/or the effective management of the innovation deployment. If any more granularity is needed, that should be done at the functional level.


Lessons from Intel

Personally, I keep getting back to a visit at Intel a few years back. It was interesting to get an inside view of this Silicon Valley giant, but it was also strange to sense how it was driven by control rather than creativity. I did miss a more creative sense, but I take my hats off for their ability to measure their innovation initiatives in which they track the following information.

• Number of innovation-related rewards and recognitions


• Numbers from various feedback mechanisms, showing employee acceptance and understanding of the initiative


• Results from the innovation self assessment capability maturity framework (survey measuring five levels of maturity related to innovation behavior)


• Percentage of our budget dedicated to innovation, research, and exploration of emerging technologies


• Shareholder value created from innovation activities. (Shareholder Value = IT Efficiencies + Business Value provided to the IT customers)


• Number of ideas generated in specific innovation harvesting campaigns


• Number of ideas harvested from the campaigns and turned into implementable projects


• Number of invention disclosure filings (IDFs)


• Number of Intel patent submissions


• Number of white papers published.

You can read further in this paper, Developing Systemic Innovation in an IT Organization, that provides an overview of how Intel works to foster and encourage innovation through its IT organization.

Paul Chaudury, VP of Innovation at Sara Lee, mentions that he has successfully followed the below KPI creation and reporting process at his prior job:

1. Net sales from new products. Reported monthly.
   % of net sales from new products at year 1 and the next three years


2. Projected value of the pipeline. Reported quarterly.
   Risk adjusted year 2 sales value of all ideas and projects in pipeline.
   Different probability rates for each phase in stage gate.


3. Average time to market from concept to launch date. Reported monthly.
   # of weeks from exit of concept phase to launch date


4. Aggregate portfolio net present value. Reported quarterly.
   Risk adjusted NPV of cash flow of all projects in pipeline from feasibility to launch phase in stage gate process.

Paul mentions that most of the calculations were automated and that reporting was done to senior management. KPIs were part of the key annual objectives and performance review for all involved with innovation. After a year from implementation, the process was continuously improved to fit the needs and it became a part of the company culture.

I also scratched the topic in a recent blog post, Increasing Innovation Productivity in which you can also find a few metrics used by P&G.

Francois Couture also started a new discussion related to this in my Leadership+Innovation group on LinkedIn.

Your input is highly appreciated.


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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.

Increasing Innovation Productivity

by Stefan Lindegaard

In a 2006 article, P&G's New Innovation Model, P&G stated that their open innovation program - along with improvements in other aspects of innovation related to product cost, design, and marketing - made their R&D productivity increase by nearly 60 percent since 2001.

When I listen to P&G talks on innovation today, the innovation productivity has nearly doubled and open innovation is a key reason for this.

Every company would like to increase their innovation productivity significantly so I am looking into how companies can do this. I am still researching and it would be great to have a discussion here on my blog. A few conversation starters:


What does innovation productivity mean?

In this video, P&G gives us some insight on innovation productivity including this quote from A.G Lafley: "...the other obvious way we measure innovation productivity is how much innovation do we generate per person and how much innovation do we generate per dollar invested in innovation." You can read a transcript at the link.

Which other metrics can we use to track innovation productivity?


Maximizing Innovation Productivity

In this article, PRTM focuses on four areas of opportunity that offer high potential for productivity and innovation leverage but are often overlooked or underutilized by development organizations: platforms and architectures, resource management, information automation, and cross-functional teams.

To which extent does your company apply this? Does it deliver results? What else do you do?

I look forward to hearing your thoughts and input 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.

10 Signs That Innovation Will Fail

by Stefan Lindegaard

What are the signs that innovation in a company is set up to fail? It would be great to have a checklist, but unfortunately innovation is too complicated and company-specific to employ a standard checklist for this.

However, we can share our insights on this and help each other become better at spotting the signs of failure.

Thus I have listed (in a non-prioritized order) the red flags I look for when I talk with executives and innovation leaders trying to get an understanding of their corporate innovation capabilities. What do you think and what can you add?

1. The lack of an innovation strategy. Executives and innovation leaders have failed to link innovation with the overall corporate strategy. As a result, the innovation efforts have no clear directions and there is not a proper mix of incremental, breakthrough and radical innovation. No strategy, no focused effort, no results.


2. No definition of innovation. Innovation means different things to different people. Every company should develop their own definition that fits their situation and use this definition to build a common language for their innovation initiatives.


3. Too much focus on internal capabilities. The future of innovation is open and global. Who will get this first? You - or your competitors?


4. Too much focus on open innovation. This is not the Holy Grail. You need to go open, but keep a strong focus on your internal resources. A key to innovation success is the ability to combine internal and external resources and act on the opportunities that arise from this.


5. Internal silos are not broken down. If you cannot make innovation happen across your own business units and functions you cannot expect to succeed with external partners.


6. Too much focus on ideas and too little focus on people. People and processes matter more than ideas. Yet, too few companies establish programs in which they can identify and develop the right people and match these people with the right ideas at the right time.


7. Executives do not understand that a strong innovation culture equals a strong networking culture. Although executives might acknowledge the value of relationships, they often leave this in the woods saying that people can figure this out by themselves. Not true. Executives need to establish networking strategies and employees need training that fits these strategies just as well as the time to build and nurture relationships.


8. Innovation efforts focus on technology or products. Most companies do not work with innovation models such as the Ten Types of Innovation which helps the employees and external partners view innovation in a more holistic way. Remember that innovation is also about services and processes.


9. The usual suspects play the game. Innovation champions and other elite units can work, but the setup of such units often also sends the signal that these guys will take care of it. Other employees might think they do not need to get involved. Everyone should not work with innovation at the same time, but programs or platforms that give everyone opportunities to work with innovation should be in place.


10. Executives and innovation leaders underestimate the speed of change. One example is open innovation. A key objective here is to become the preferred partner of choice. This will happen fast and yet many companies are not even getting ready to claim their position.

I look forward to hearing your thoughts and ideas 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.

Pay Attention When Sony and Japan Embrace Open Innovation

by Stefan Lindegaard

The "not invented here" culture is a problem at Sony. James Surowiecki addressed this in a 2005 article in which he stated that the Betamax video tape recorder failed in part because the company refused to cooperate with other companies.

Sony was also late in making flat-screen TVs and DVD recorders, because its engineers believed that, even though customers loved these devices, the available technologies were not up to Sony's standards.

And Sony's digital music players didn't play MP3s, which is a big reason that the iPod became the Walkman's true successor. Again and again, Sony's desire to control everything kept it from controlling anything according to Surowiecki.

Over the years, Sony CEO Howard Stringer has been working hard to crack this staunch "not invented here" culture. As the company bets big on a 3-D revival, it seems as if they starting to get it.

In a Wall Street Journal article, Stringer says that getting to market quickly takes priority over making everything in house. This led to Sony reaching a licensing deal with an outside supplier for an essential component of 3-D televisions. Things are definitely changing at Sony.

Things are also changing for Daiichi Sankyo, one of Japan's largest pharmaceutical groups. In a Financial Times interview, CEO Takashi Shoda talks about how a growing influence of western practices and the broader need for greater openness in order to innovate impacts his company.

"The era of trying to do everything in-house is gone," he says. "Innovation means open innovation: partnership, networking, relationship with academics. There used to be an NIH - not invented here - syndrome. If a drug project did not begin in-house, we were not interested. That is changing now. Management is constantly encouraging outsiders," Shoda says.

What is the message here? The future of innovation is open and global. Companies need to get this or they will lose out. And when even very tradition-driven, Japanese companies get it, everyone needs to pay attention.

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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.

Saving Curiosity from the Guillotine

by Stefan Lindegaard

This great topic was raised by Arthur Lok in a discussion in the Innovation Management group on LinkedIn. It made me wonder and reflect on my own level of curiosity, what this term means to me and how it effects innovation.

I think we lose our sense of curiosity as we begin to build a power base that we feel we need to protect. We have something to lose and then we begin to focus on how to protect this rather than expand and build further on what we have.

So are we just defensively minded? Such a mindset definitely make incumbents more vulnerable to new innovation brought to market by companies and entrepreneurs having nothing to loose.

I think this goes for products, services and thus corporate revenues as well as the knowledge base we build as individuals. If what we know today provides a good living perhaps we are not that open to challenge this and develop new points of view. Unfortunately, this does not work in times where just standing still is the same as getting behind - at a very fast pace.

It is fairly easy to point out what kills curiosity. I gave an example above and you can find others in the LinkedIn discussion. The more interesting question is what we can do to avoid killing our curiosity. I hope we can start a discussion on this here. Let me start off with one of my suggestions;

Try out new technologies. It took me years to get the value of cell phone texting and I am still not that good at it. In retrospect, I see this as a sign of me getting older and losing my curiosity. This lesson taught me to be open towards new technologies and not write them off as fast as I might have done.

Twitter is good example. I was initially annoyed but I stayed in there and today it gives me much value. TweetDeck is a great source of new insights - just use the search function.

What do you do to stay curious?

Editor's note: Check out our Continuous Innovation group for more interesting innovation discussions

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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.

Open Innovation Bullies

by Stefan Lindegaard

Large companies have always used their size and power to get things their way. This is no different with open innovation. So I am not surprised when I listen to people from smaller companies complain about the behaviours of large companies when they start working together.

Such behaviours were confirmed by several large companies at the recent Open Innovation Summit. They shared stories on how they had used their size and corporate power to get deals that favoured themselves and they even admitted that some deals could be so lop-sided that they could discourage other smaller companies from working with them.

This made me wonder whether it is just human nature to be a bully and use the power at hand. I reached the conclusion this is often the case and in terms of open innovation this is just what smaller companies should expect when they engage with large companies.

This is not to say that I approve of such behaviour. I prefer an ideal world in which all companies get along and share the pie in a fair and nice manner. But the problem is that we do not live in an ideal world. So what should smaller companies do about this?

I do not think they can do much to change the behaviours of the large companies. But they can prepare better. They should expect a bully-like behaviour and prepare for this rather than cross their fingers and hope for the opposite. They need to analyze the level of resources needed to work with the larger company and they need to weigh the pros and cons on potential deals. Some deals might not be worth the trouble.

At least some larger companies are aware of this situation. They understand how important it is to be perceived as the preferred partner within their industry. This was illustrated by the fact that some of the companies that admitted to loop-sided deals at the recent summit work to rectify those.

At the summit, a representative from a large company also shared that increasing the leadership position that comes with the perception of being the "preferred partner of choice" is an area of improvement to them.

On this, he mentioned that the company recently commissioned a third party to conduct a blind survey in which they asked a range of potential partner companies that had not yet worked with the given company whether they would like to do so. A large majority replied positively. Later in the same survey they asked companies that had already worked with the given company by revealing their name. Would they like to work with them again in the future? Although still in the high end, the reply here was lower than the first one.

This gives reasons to worry. Hopefully, it seems as if this company is up for the challenge as they show a willingness to confront and rectify this. This is most likely not the case at many other large companies, but let's hope for the best - and tell smaller companies to prepare well...

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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.

Scouting for Innovation

by Stefan Lindegaard

Nerac is a global research and advisory firm for companies developing innovative products and technologies. Two of their employees, Kristy Lutz Ulmer and Margaret Fiore, recently published a report on how companies scout for innovation.

I just got to read it and I find this to be great stuff that I want to share with you. You should also download the full report here - Innovation Scouting For 2009

The findings in the report fit well into a key thing being discussed in the open innovation community right now; the real effects of open innovation are due to behind-the-scenes activity rather than flashy portals and idea-generation campaigns.

The report has lots of great insights and the authors want to highlight these conclusions:

• Innovation scouts acknowledge a general lack of formal knowledge of the process of scouting, including how to find and evaluate ideas.


• The more integrated a company's products are into other companies' products, the higher the likelihood that scouting is considered important.


• There are many different approaches for implementing innovation scouting, with companies using internal innovation scouts, external partners, third party scouts, and consultants.


• Most companies operate with a small cadre of scouts, usually fewer than six resources.


• The scouting role is not always confined to internal R&D departments within an organization, but instead is often jointly sponsored across multiple business units.


• Innovation scouts use many methods for finding new ideas, with competitive intelligence the most prevalent source of ideas.

As we can see from the snippets below, the report is full of data and interesting conclusions:

Usage of Innovation Scouts:
Of the nearly 600 companies surveyed, approximately 30% of the respondents knew that their companies use innovation scouts. Another nearly 8% were aware of plans to begin using innovation scouts. Surprisingly, just over 42% were unsure whether or not their company employed scouts, so the usage rate could actually be higher.

Age of Scouting Program:
When asked how long scouts had been in place, 37% reported their companies have used innovation scouts for over five years, followed by another quarter that have used scouts between two and five years.

Size of Scouting Program:
Most companies operate with only a handful of innovation scouts. Our survey found that of the respondents who use innovation scouts, nearly one third have fewer than three employees in this role. Only 14% have more than 25 scouts.

Objectives of Scouting Programs:
The most important driver cited by 70% of respondents was "early identification of disruptive technologies." This is followed closely by building the product pipeline, leapfrogging the competition, and creating something novel.

Sponsorship of Scouting Program:
38% said that scouting was sponsored by their R&D organization. Another 24% reported that it was sponsored by Business Development followed by 21.8% respondents that indicated their scouting was jointly sponsored by several executives or groups.

Scouting Resources:
Our survey sought to identify norms regarding how scouting programs are staffed. We found that the most common staffing approach (at 63%) is to tap company employees on a part-time basis. However, over 25% have full time employees in this position. Over a third of the respondents characterize their scouts as technically oriented, and over one quarter as business/marketing oriented.

Scouting Methods:
We found the most common techniques for uncovering external ideas include conducting competitive intelligence (76%), attending relevant conferences and tradeshows (72%), leveraging academic connections (71%), and exploiting their network of innovators (55%). Other, less common methods include the use of third party networks (41%), innovation "bounty" challenges (18%), and crowd sourcing (8%).

Knowledge Gaps of Scouts:
Our survey asked an open-ended question regarding the biggest knowledge gaps or primary training needs for innovation scouting. The most common response, by a measure of over 3:1, was a lack of understanding the "process" of scouting, that is, how to actually go about doing the job.

Successes and Failures:
More than two-thirds of respondents rated their innovation scouting programs as just "moderately successful," with only 12% rating their efforts as "very successful." While a majority of companies surveyed feel their scouting programs are successful, this indicates there is certainly room for improvement.

Great job by Kristy and Margaret of Nerac! Check the full report here: Scouting For Innovation 2009

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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.

You Must Innovate Across Silos to Succeed

by Stefan Lindegaard

Vertical integration is becoming a buzz-word in the business world. Wall Street Journal recently had a good article, Companies More Prone To Go Vertical, in which they gave many examples on how companies as diverse as PepsiCo, Oracle, Boeing, Apple, General Motors and ArcelorMittal have chosen vertical approaches.

According to the Wall Street Journal, the moves toward vertical integration are a departure from the past half-century, when companies increasingly specialized, shifting functions like manufacturing and procuring raw materials to others. Today, many companies want more control over their value chain. This also creates many more internal silos.

How does this affect innovation leaders who also find themselves in the midst of a paradigm shift in which we move from closed to open innovation?

I believe that in order to be able to do open innovation well, companies need to make internal innovation work first. Many companies struggle on this. A main reason is that they have not developed an innovation strategy that sets the direction and height - as in their focus on incremental, breakthrough and radical innovation - of their innovation efforts.

It is my experience that the interesting opportunities arise in what I call the white space between such silos. This is a space in which you can work across not only different business functions, but also with different - but hopefully complementary - products and services while still operating within the same corporate foundation.

The challenges for innovation leaders working at companies with vertical strategies become more complex, but on the other hand than, they also get a new range of opportunities. A clear innovation strategy can help them develop the processes needed to exploit these opportunities and thus help reach the overall corporate goals envisioned by the executives when they chose vertical strategies.

More importantly, if innovation work across internal silos, the move towards open innovation becomes easier. It is to some extent the same issues and approaches in terms of working with 'external' partners that apply.

Once internal innovation works, open innovation can be a great tool to increase the innovation productivity by bridging internal and external resources. However, if companies cannot make innovation work internally - and across silos - they should not expect to succeed with open innovation.

On vertical integration, you should also check out this article by Rita McGrath: Why Vertical Integration Is Making A Comeback

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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.

What is your Innovation Intent?

by Stefan Lindegaard

I believe innovation can only work to its full potential if it is aligned with an overall corporate strategy. Many companies mess up here. They simply do not have an innovation strategy. Companies have marketing or sales strategies, but only very few have an innovation strategy.

What should an innovation strategy look like? It can come in many different forms as it needs to reflect the company itself. Due the obvious reason mentioned above, I have a hard time finding cases on this, but I definitely like the Innovation Intent created by Grundfos, one of the world's leading pump manufacturers.

Check out this description:

At Grundfos we have successfully achieved many of our targets and therefore we have recently reviewed our long-term business perspective by trying to look 15-20 years ahead.

This led to the statement of the Grundfos Innovation Intent. It represents a guiding star that will bring focus to our long-term innovation efforts and make sure the company is heading in the right direction. The Innovation Intent embraces three challenges, all of which every major concept, Grundfos launches over the next 20-30 years should meet:

CONCERN: Put sustainability first
CARE: Be there for a growing world
CREATE: Pioneer New Technologies

In other words, Grundfos will establish a substantial position in the growing markets by delivering superior sustainable solutions and offerings based on technology, the world has not yet seen. Perfectly aligned with our core values - being responsible, thinking ahead, and innovating - the Innovation Intent is a clear and bold statement of where and how Grundfos wants to develop its business. It is the ambition, that in 2025:

• Grundfos employs 75,000 people globally - today the number is 18,000


• 50% of our growth is coming from technology platforms that were not invented in 2007


• 1/3 of our turnover comes from other products than pumps


• We are still #1 in circulators and a specialist in sustainable solutions for housing


• We are specialists in selling directly to end-users within selected industrial segments and utilities


• We gravitate around local centres of excellence tapping into knowledge bases wherever they are


• We have become experts in translating user needs into new products and business concepts


• We are the first-choice workplace for the best and the brightest

Besides innovation work at the core, the company test new possibilities in Grundfos New Business which develops projects aimed at ensuring the limited resources of the earth will suffice for a rapidly growing population with increasing spending power, without destroying the environment.

I like this link between the overall corporate strategy and innovation and I definitely look forward to following Grundfos in the future. What do you think?

It would be great if you can share other cases on innovation strategies...

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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.

Defining Open Innovation and User-Driven Innovation

by Stefan Lindegaard

User-driven and open innovation mean different things to many people. So how should consultants guide their clients on this?

This became one of the key issues in a discussion that followed my Why User-Driven Innovation Should Not Be Confused With Open Innovation post.

I argued that these two types of innovation are related, but not the same. I also argued that open innovation and user-driven innovation already have too many different meanings and definitions making it useless for academics and consultants to drive ONE definition for these terms.

As a comment to this, Ellen Di Resta suggested that we should "view user-innovation and open innovation as approaches. Thinking of it that way, then it's the application of an approach that needs to be tailored to each specific context."

Ellen also mentioned that the terms can be ambiguous, and asked whether this might not be the point as it keeps us from being boxed too narrowly into a corner when we may need our tools to be flexible enough to handle a broad range of challenges.

I fully agree with Ellen when she argued "that consultants should take a more practical approach on this and help their clients define innovation towards their situation."

Rikard Waero agreed as well, but he brought in some perspective on this by stating that "the customer is right, we just need to help them understand where they are acting wrong. The theoretical work behind open innovation and user-driven innovation can help us lead them in the right directions, but the correction should not be communicated to them in a language they may misinterpret."

Jeff Murphy, a corporate guy from J&J had this statement: "I prefer to view open innovation as a broad enough term that also includes what you have referred to as 'user-driven innovation'." Different than above, but then he also mentioned that "...rather than getting tangled in semantics, and see it as more productive for an organization to select and use the right types of open innovation - those that are best aligned with their organization's specific needs, objectives, and business/technical complexity."

Looking at the bigger picture, I think we are pretty aligned on this. What do you think? And how do you see the role of consultants when it comes to making open innovation happen?

By the way, Graham Horton noted that open innovation is a two-way process which allows both inbound and outbound movement during all stages of the innovation process. He has mentioned this earlier to me and he is of course right.

However, I believe companies have plenty of challenges just making the inbound process work and they need to focus on this. As they get the proper mindset and processes in place, then they can start looking into the outbound processes in which they out-license or sell technologies, ideas or intellectual property not being used internally. But focus is important in order to get it right in the first place.

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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.

Open Innovation Starts With A Why

by Stefan Lindegaard

A journalist recently asked me how companies should get started with open innovation. I replied as below:

First ask this question: Why do we want open innovation? Many people believe open innovation is the Holy Grail and they just jump aboard without asking why open innovation is relevant to them.

An answer to the why question should show an understanding of how open innovation can be an important part of the general innovation strategy which in turn needs to be highly aligned with the overall corporate strategy. Many companies mess up here. They simply do not have an innovation strategy.

The benefit of having an innovation strategy is that it sets a direction for your efforts. This also allows you to better define open innovation in the terms of the company. Innovation - and even more so - open innovation can be defined in so many different ways. Companies need to find their own definitions like Procter & Gamble, General Mills and other companies have done it.

Once the why and the definition are in place, it becomes easier to work out a strategy and implement it. Next, you should not forget the people issue. A paradigm shift like this requires that people change their mindset and obtain new skills.

The key things here are the ability to view innovation in more holistic terms and to become better networkers. In the future, a strong innovation culture equals a strong networking culture. Thus leaders need to develop a networking strategy and train their people on this.

Let me know what you think.

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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.

General Mills' Open Innovation Initiative

by Stefan Lindegaard

At a first glance, the G-WIN initiative by General Mills looks just like the many other open innovation portals that are popping up right now.

So rather than just giving my two cents on this, I did an interview with Jeff Bellairs, who is director of General Mills Worldwide Innovation Network, to get a better understanding of the whys and hows of this initiative.

This turned into a great learning experience that I would like to share with others. I kicked off the interview by telling Jeff that I was kind of neutral on their project. Some things looked good and others not so good. I also mentioned that a press release they'd recently sent out on the project and the portal itself raised several questions.

I asked quite direct and candid questions and I did not really expect much from his answers. So the open and informative feedback given by Jeff Bellairs was quite a pleasant surprise. The interview went like this:


Can you explain the WHY behind this initiative?

We have learned an incredible amount in the more than four years that we have had a dedicated Connected Innovation program and our new Web site reflects much of those insights. One of the key things we discovered was that we needed a more efficient way to match our top business needs with the talent who had the potential to solve those problems and meet those needs.

We believe that through our alpha partnership with inno360, we are well on our way to developing a 'connection workbench' that will accelerate our efforts to clearly articulate our business needs and identify needed talent. The following are key Web site enhancements based upon our learning:

• Clearly articulated needs


• Non-confidential submission process


• Timely reviews


• Invitation to join G-WIN network so that we 'push' needs to individuals with the right skills and interest

How does General Mills define open innovation?

We actually prefer the term Connected Innovation. At its core, it's all about connecting more effectively to smart people who can help us meet our business needs. The connection could be with colleagues, suppliers, other food companies or perhaps companies in entirely different industries. Our program is focused on building the tools and processes needed to connect most effectively across this spectrum of possibilities.


What is the link from this initiative to your innovation strategy? And how does this help your overall corporate strategy?

Our innovation strategy is to build a rich pipeline of new products and product enhancements that deliver high levels of taste, health and convenience to consumers. Our Connected Innovation program seeks to enhance and accelerate those efforts by leveraging the global pool of scientists, engineers and other creative individuals who can solve technical problems and supply needed capabilities.


Which actions have you taken to become the preferred partner of choice within your industry? My early observation is that the G-WIN portal does not really seem to focus on others than General Mills.

The 'partner of choice' moniker is earned by consistent actions and by demonstrated leadership in the Open Innovation area. We believe that we have the needed elements in place to earn that title and are well on our way. We have:

• A dedicated External Partner Development group focused on building creative business models and partnering relationships so that both General Mills and our partners receive value. Our goal is to create mutually beneficial relationships and to reward our partners equitably for their contributions.


• A team of Innovation Entrepreneurs dedicated to each of our businesses who triage submission on a timely basis and seamlessly integrate external components into development projects.


• A dedicated centralized Connected Innovation Team that is developing new tools and methodologies and sharing much of that work through publications and speaking engagements.


• We have developed a portfolio of successful products, have a growing list of awards and external recognitions and most importantly, have a number of partners who are seeing tangible rewards from partnering with General Mills.

On this, I would like to know more about which actions you have taken to make the connection between external and internal resources as smooth as possible in the introduction as well as the integration phases?

Great question. About a year ago we took a retrospective look at many of our Connected Innovation projects, paying special attention to those where there had been a "speed bump" along the way. We learned that while we have a well-grooved process for commercializing internally developed products; we were missing a similar process for on-boarding externally sourced technologies and products.

Our answer has been to establish an External Speed Team, a cross-functional team that meets every other week to openly discuss projects, share insights and to make sure the appropriate communications are taking place.

In addition, we launched our Innovation Entrepreneur program so that we have dedicated Connected Innovation resources (or people) in each of our business divisions. Those individuals have a number of responsibilities, one of them assuring effective integration of externally sourced capabilities into the business pipeline of initiatives.


The press release mentions that "partners who help the company achieve its innovation goals can benefit from General Mills' resources, scale and credibility in the marketplace to advance their own business." Can you elaborate a bit on this?

With sales of almost $16 billion, General Mills is the sixth largest food company in the world and a company with tremendous scale. We have a portfolio of brands that are among the most trusted and respected in the food industry and a dedicated sales force who can assure that we get immediate distribution on new products. These are critical elements needed for success and elements that most entrepreneurs don't have access to.

When we approach a partnering opportunity, we work to build synergistic relationships where our unique capabilities supplement and enhance the capabilities of the partner. We believe that the barriers to entry are low in the food business but that the barriers to attaining scale are high. Our resources and capabilities can reduce those barriers.


Which steps have you take towards building eco-systems of partners working together to develop new products, solutions, ideas and technologies?

We often talk about the four levels of connected innovation. The first three being effective internal collaboration; collaboration with suppliers and other trusted partners and collaboration with new partners. We talk about the fourth level being one of building new collaboration models and in that area we have a number of efforts underway. Two examples are:

• Consortia - We are actively experimenting with consortia models that pool resources and insights, create scale and mitigate risks in a project in the sustainability area


• We are building an ecosystem of partners whose combined skills will enable us to meet a need in the health and wellness space. As we mapped the existing ecosystem we learned that no one partner could solve the problem alone, but that by bringing the companies together with the right focus and vision, we believe we are well on the way toward a breakthrough technology.

The G-WIN project seems to focus on R&D within General Mills. How do you involve other types of innovation and business functions as well?

Our Open Innovation program began within the R&D organization. As our program has grown it has spread across much of our organization. We firmly believe that we can be even more successful as we tap into the smart people outside of General Mills who can help us drive our businesses forward, whether they impact our R&D, Operations, Marketing or some other aspect of our business.


What were the biggest obstacles internally on this project?

The biggest challenge has been simplifying the very complex process of articulating needs and matching those needs to key players in the global talent pool. Our goal has been to create a 'connection workbench' that our developers can use to architect new connections. We are delighted with the thought leadership and talent at inno360 and believe that we are making great progress towards building that simple, intuitive workbench.

Upon receiving these answers from Jeff, I e-mailed back:

"This is great stuff! It gives a much better picture of your open innovation efforts and I really like several of your initiatives. Why did you not include some of this information on the Web site? I am especially thinking about your answers related to 'partner of choice' and how to connect internal and external resources. If I was on the other end, I would be pleased to know you have such initiatives."


To this, Jeff replied:

"The reason some of this information isn't on the Web site yet is that we're still evolving our Web site and have a redesign planned for early next calendar year. We wanted to get the word out on the new capabilities of the innovation portal now, rather than wait until the full redesign. So, we appreciate and welcome your thoughts and input on the type of information that would be most useful to outside partners."


I like the fact that General Mills acknowledges that they are still learning and that they are brave enough to start learning on the fly in the real world and get the feedback needed to improve their initiative. Kudos to General Mills on this as well as for their insights on how to approach open innovation.

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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.

Don't Confuse User-Driven Innovation With Open Innovation

by Stefan Lindegaard

Denmark has its share of world-leading companies on user-driven innovation. Lego, the toy company, is a great example of this through their Adult Fan Of Lego groups and many other initiatives.

Another example is Coloplast which develops products and services that make life easier for people with very personal and private medical conditions. Their business includes ostomy care, urology and continence care, and wound and skin care. They are considered by many as a global pioneer of user-driven innovation due to their work with doctors, nurses and users of their products.

Last week, I read an article on how Coloplast has set-up communities for their users to share experiences and ideas. You can use Google to translate the Danish article and you can check out one of their communities here: International Stoma Innovation Community. In the article, Coloplast claims that they have halved their development time over the last couple of years partly due to the external input and they also mention that they are now using many more external partners than previously.

It sounds good, but nevertheless, I think Coloplast is a nice example of company that is still stuck in the user-driven mindset. The main idea of user-driven innovation is to get input from the users - and perhaps even the eco-system - of your products or services.

Open innovation is about integrating external partners in the entire innovation process. This should happen not just in the idea or technology development phase but also in all other phases towards market acceptance. User-driven innovation is great as it directs your innovation efforts towards market needs. Open innovation takes you to the next step by providing more opportunities through external partners as you address those market needs.

Which red flags did I pick up on Coloplast? First, take at look at their corporate website. I cannot find any guidelines on how to approach Coloplast with ideas or other contributions. Compare this to Procter & Gamble where you can find a very visible link to their Connect+Develop initiative.

Another red flag is the stoma community itself. It really gives you the feeling that it is about how Coloplast can tap into users rather than how they can work together and build relationships with external partners. This is what user-driven innovation is about. It should just not be confused with open innovation.

Furthermore, if you search for "innovation" on Coloplast' corporate website nothing shows up besides a links to their international stoma community. This is actually a bit scary for a company that perceives itself as being quite innovative. It makes me - and perhaps many others - wonder how serious they really are about innovation...

The reason for writing this blog post is that I want to caution Coloplast - and other companies - not to be confused by the two types of innovation. This can be misleading and damage the possibilities for a company to become the preferred partner of choice which is a key objective on the open innovation game. However, I also think user-driven and open innovation can be a powerful combination and hopefully we will experience great cases on this in the near future.

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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.

Which Countries Are Losing Their Innovation Capabilities?

by Stefan Lindegaard

I recently discovered reasons to take my innovation perspective to a national rather than a corporate level. The questions that went through my mind were like this:

• What if the behaviours of the citizens in a country determine the corporate ability to innovate?


• What if such behaviours directly hurt the corporate ability to innovate?


• A capability that is so important for the future of companies as well as countries.


• Or what if the behaviours hinder the chances of taking innovation to the next level?

The country I have in mind is my own, Denmark. I have long argued that Denmark does very well on innovation. Danes believe in flat hierarchies and that authorities and common beliefs should be challenged.

This is a good outset for innovation and we have always been pretty good at taking existing technologies or ideas, give them a little twist and then come up with new ways of using this.

This has worked very well for many years, but things are changing so fast and innovation is becoming an open and global process. Being open to new input and being tolerant towards other cultures and perspectives are keys to future success.

Personally, I travel a lot and I try hard to stay open to other cultures and perspectives. However, I might not be as open-minded as I think I am and perhaps it is even worse with many of my countrymen. I was told this by a German friend who has lived in Denmark for many years. Danes are not open and tolerant. On the contrary, Danes are viewed as being quite self-sufficient.

My German friend made me think and I now begin to see some answers to questions that have puzzled me for a while.

• Why are Danish companies not on the forefront of open innovation?


• Why do Danish media not cover open innovation better than they do?

I have always believed that Denmark has all what it takes to benefit from the shift towards open and global innovation. Could I really be so wrong? I am sad to say, but I think this is the case.

Nevertheless, I want to thank my German friend for opening my eyes and getting a new perspective on open innovation. This also raises other important questions.

• Which other countries stand to lose just as Denmark might do?


• Which countries stand to win on this?

I view countries such as France, Italy and Japan to be quite inward-focused. Will they lose out on innovation? If my perspective on this holds true, the U.S. definitely will be a winner. China? Not sure. They have a little of everything in them, but I believe they will come out as a winner as well.


Enough for now. Your thoughts?

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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.

Building an Innovation Engine in China

by Stefan Lindegaard

I recently made another trip to China. My purpose was to meet with innovation leaders in order to build further on my understanding of the Chinese innovation community and thus on my global perspectives on innovation.

I had a couple of meetings and I did an improvised session at a company. Having met about 15 people and having spent 5 days in Beijing, I have to say that my expectations of what will happen in China grew even higher. The reason for this is the innovation people of China.

They are hungry, bright and very eager to learn. Yes, they still have a lot to learn. And many of them do not seem to have the creative mindset and the ability to think in a more holistic way which I believe is necessary in order to make innovation happen. These are tough things to learn and many Chinese people will never get this.

Despite such significant issues, I still believe that Chinese people will be major contributors to innovation in the coming years. You can get a long way by being hungry, bright and eager to learn. In order to tap into this resource, China-based companies - whether Chinese or multi-nationals - must continue to provide the framework for these people to grow. This actually brings us back to what it takes for any company to build an innovative culture including:

Have a strategy for innovation. I have said this many times before. You need to develop an innovation strategy that sets the direction and this strategy must be aligned with the overall corporate strategy.

Focus on people before processes and ideas. People drive innovation. Your first thing to do is to identify and develop the people who can make innovation happen. Upon this, you need processes that match these people with the right ideas and provide a way to turn the ideas into revenues.

Use a TBX(O) approach. Nothing happens without top management (T) just as well as nothing happens without the employees (B). Middle managers (X) are a great obstacle towards innovation so you need to work around this. Today, we also need to include outsiders (O) in our innovation process. More about TBX(O) here.

On top of this, China-based companies - as well as many Western-based companies - also need to deal with their authority driven system. I still remember a visit to Alibaba three years ago. Alibaba, founded by Jack Ma in 1999, is among other things the world's largest online B2B marketplace.

We met with a group of engineers and we asked how they dealt with innovation. No answer. We asked again and this time we got a short answer - "Jack knows." My point here is that innovation is a team-sport where everyone has an opportunity to contribute; not a game played by lone geniuses.

I will visit China again early 2010 hosting a Next Stop: Open Innovation session. I really look forward to work further with these interesting Chinese people on developing their innovation mindset and skills.

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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.

Developing an Innovation Culture (the TBX approach)

by Stefan Lindegaard

Having been involved in several efforts on developing the innovation culture within companies, I have learned that you need to work with three organizational approaches.

I call this the TBX approach:


T (Top Down)

• Get the executives onboard and make them personally committed to the innovation activities. Without executive support, no change occurs.

B (Bottom Up)

• Value creation begins with people, one by one, team by team. Nothing happens unless you get the employees engaged and involved. Take ideas, feedback and other input from employees seriously. If ideas just seem to run down a sinkhole and never to re-emerge or if leaders are not able to commit resources to any ideas, you will lose the trust of the employees.

X (Across)

• The biggest challenges will come from the middle managers placed across the organization. A key reason is that middle managers have a narrow focus on their own profit and loss responsibility. They do not see the full picture and thus will not give up resources that do not benefit them in the short run although it is the right thing for the company in the long run. Thus, if not dealt with appropriately and effectively, they can bring innovation to a grinding halt.

The T and B are quite obvious, but try to step back and think for a while on middle managers and the impact they have had on innovation projects you have worked on. They are much more influential than you might think of and you need to find ways of getting around these people.

You can get results through efficient stakeholder management but often you need also to change they way these people are incentivised. Such changes will only happen if you already have the T in place...

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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.

Why Open Innovation Matters

by Stefan Lindegaard

A few weeks back someone told me an interesting story about Procter & Gamble and their competitors. It is well-known that P&G is the open innovation champion and their long focus on open innovation has given them an important advantage.

They get to see interesting proposals within their business areas before their competitors. In the story I heard, one of P&G competitors complained they only saw ideas and proposals that P&G already had rejected. Ouch, talk about being a second-tier choice...

This leads to a very important point on open innovation for market leading companies and those aspiring to be. The key game is to become the preferred partner of choice.

A preferred partner of choice simply gets to see the best ideas first and such a position can help a company out-innovate their competitors and develop substantial long term overall business advantages.

As each industry only has one - or perhaps two - winners in this game, companies should begin to focus harder on their open innovation strategy and efforts. It becomes even more important as this positioning game already plays out in many industries. Let me give you a couple of examples.

Mobile phones: Apple and Nokia seem to have taken the lead here. I do not see much open innovation activity from Motorola, Samsung, HTC and the other players.

Software: IBM, SAP and Intuit are doing great things here. I acknowledge that software is a very broad business category that can be divided into smaller segments. Nevertheless, these are the companies I hear about on open innovation. What about the many other companies?

Technology: Cisco seems to build momentum over their direct competitors HP, Alcatel-Lucent and Juniper Networks.

Companies should have in mind that this game is very much about perception. A company starts an open innovation-like initiative and if they get some success they are encouraged to continue down this path. This is picked up by bloggers and others in the open innovation community and the word quickly spreads that a certain company is doing interesting things.

This spreads just as fast in the industry of the given company resulting in two things; internally the company gains even more momentum on their open innovation efforts and externally the company is perceived as an open innovation leader within the given industry.

Voila, the company is on its way to claim a preferred partner status and if they do not mess up they can soon reap the benefits of this.

I think this provides another example of why companies need to wake up with regards to open innovation. Your thoughts?

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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.