Open Innovation: The New Mantra

• Detailed case studies
• Business rationale
• Three different models
• Leading edge approaches
• Key success criteria
• Broad applicability

SUBJECT AREA Open innovation is an emerging trend that will eventually change how most companies go about improving existing products and defining new products. The same goes for services. The rationale is simple: if digital technology has the power to restructure entire industries that are affected by virtual content, then it can certainly restructure the innovation processes used in most companies which are, after all, based on managing the flow of just another type of virtual content: high-quality, creative thinking. Open innovation involves bringing such high-quality, creative thinking into the company from the outside. Professional managers can then commercialise the best of it using the company' s assets, while rewarding the originators. REPORT CONTENT This report begins by clearly explaining what open innovation is and why it is not unique to internet businesses. Next, the report uses a refreshingly different, but world-leading, case study to explain in detail how the efforts of outsiders can be leveraged to develop successful, new products. The main case study is then supplemented using a number of additional examples. The report then explains the business rationale behind open innovation. Next, using examples, the report explains three different approaches to open innovation, including one leading-edge approach that is ahead of that being used by Web 2.0 companies, who many might think are leading in this area. The report then explains seven Key Success Factors for open innovation projects and also describes the main criteria for selecting participants.

Executive Summary

Case Study: Mindstorms NTX

• 1998: Mindstorms Launch
• 1998- 2000: LEGO unofficially sanctions developer community
• 2000: New company strategy
• 2002: Mindstorms NXT becomes a liability
• 2002 -2004: Developer community takes over
• 2003 -2005: The problem years
• 2004: Strategic re-think
• 2004: External developers become essential
• 2004 -2005: A collaborative development project

• Woking Relationship
• Commercial Relationship

• Mindstorms NXT: Growth

• New Programs: Entrepreneurs
  • Selection Criteria
  • Example Project: Architectural Construction Kits

• Footnote

Additional Examples

• Backstage BBC
• Adobe

Analysis

• 1. Accept that valuable expertise is likely to exist outside the company
• 2. Be prepared to make the company' s valuable assets available to outsiders
• 3. Because the company cannot pursue every internally-generated idea, some great opportunities might be lost
• 4. Make sure the programme makes business sense
• 5. Be realistic about any cultural barriers, but be prepared to push ahead if you have a solid case

• 1. Early-stage Product Definition: Expert User Groups
• 2. Product Enhancements: Developer Programme
• 3. New Business Areas: Affiliated Entrepreneur Programme

• Clear, Focused Objective
• Clear, Timely Benefit to Participants
• Deep Experience Pool
• User-driven
• Relevant Skills
• Experimentation-friendly Product
• Selection Criteria: Lead User Groups