November 17, 2011

Open innovation returns home

Today was the second day of #MCPC2011, more formally the 6th biennial Conference on Mass Customization, Personalization and Co-Creation.

Normally held in Germany or at MIT, this year marked its first appearance on the West Coast. The conference is being held in Burlingame, next to the San Francisco airport, and is hosted by the Garwood Center for Corporate Innovation of UC Berkeley, just across San Francisco Bay.

The theme of MCPC 2011 is “Bridging Mass Customization and Open Innovation.” Not surprisingly, the director of the Garwood Center is Henry Chesbrough, father of open innovation, who is also co-chairing the conference with conference founder Frank Piller.

The day saw a combination of talks by consultants and industry practitioners about open innovation, co-creation, crowdsourcing and related topics. The end of the day brought a concluding talk by Chesbrough, reviewing both his earlier books and his most recent topic, open services innovation from the book of the same name.

He began with a review of the factors leading to the increased prevalence of open innovation
  • Labor mobility: instead of one employer, the average engineer has 9 employers
  • University research: government used to support most university research. However, “Even Berkeley professors can figure out that if now the money is coming from industry, I need to focus on research questions that industry is willing to fund.“ Stanford, “the second most respected university in California,” has John Hennessy as its president, a serial entrepreneur and current board director.
  • Increasing prevalence of venture capital. “Venture capitalists don’t pay for research; they only pay for development,” so the initial research (for such startup companies) must come from somewhere else.
As noted earlier, Chesbrough thinks services are an important area for open innovation, and not just because services are (by some measures) of greater economic impact that products. Certainly services are no longer an afterthought, as when (in Chesbrough’s days as a disk drive manager) customer support was just a cost center.

Instead, services can add value as part of an ongoing feedback process of service creation and refinement. (The slide he showed was similar to one he showed last year, as captured by Maha Shaikh):

The future is not just services, but a platform that integrates both products and services. As an example, Chesbrough cited semiconductor foundry TSMC, which recently announced its “open innovation platform.”

November 11, 2011

Open innovation: less fakes, more reality

Given the popularity of open innovation, it was inevitable that companies — and researchers — would seek to wrap themselves in the term to leverage its cachet to legitimate their otherwise unremarkable efforts.

One way that I’ve seen this is through a Google news watch on “open innovation” that lands in my inbox every night around midnight ET (9pm Pacific.) Every day there are 1-5 stories about companies (and increasingly the government) trumpeting their latest “open innovation” breakthrough. I am convinced that half the PR people (or execs sponsoring the underlying initiatives) couldn’t articulate a recognizable definition of open innovation.

In talking about this in conjunction with the creation of the Open Innovation Community, I found that Henry Chesbrough has a similar news watch. I’m concerned that faux open innovation will muddy the waters and confuse the market; also, from a research standpoint, a theory of everything is a theory of nothing. However, Henry is more inclined to give them the benefit of the doubt, perhaps because he is a more optimistic person.

The issue came up earlier this year in a press interview. Orange Silicon Valley (a branch of the French mobile phone company) hired a former WSJ technology writer to prepare a 48-page report on the future of Silicon Valley. This included interviews with 10 Silicon Valley experts, including California’s second most famous open innovation researcher. Here is an excerpt:
Do you think the phrase is being overused?

We don’t have a term for it, but there is an Open Innovation equivalent of “greenwashing.” Greenwashing is where people wrap themselves in claims of environmental-friendliness, but don’t change their actual practices to make their products more marketable.

When I use Google to see how corporations use “Open Innovation,” I’d say only about a third of it is really legitimate; the rest of it is just people want a buzzword to make themselves seem more innovative and more trendy.

In many cases, when they appoint a VP for Open Innovation, there is an attitude change and they really are being more collaborative. At other times, it’s just a new name for something they’ve always done, and they’re just calling it something else.
I was thinking of a particular example three years ago when one of Silicon Valley’s most respected companies renamed their university relations office to be their open innovation office.

However, I was a little more encouraged in looking through the news articles that Google emailed to me in November (thus far) — perhaps more encouraging than when I started the news watch four years ago.

Two sorts of articles have been there consistently throughout. One is for the crowdsourcing companies that are seeking to match firms with external suppliers of ideas — certainly a form of open innovation, but (as I’ve found in my research) tending to be narrowly focused on just the sourcing aspect.

The other common thread are stories that treat “open source” as synonymous with “open innovation.” The two terms are not synonymous: there’s an overlap in some cases but they are disjoint in other cases. This is the sort of misuse of the term I’m trying to discourage.

And yes, I saw a certain amount of greenwashing-type usages, using the buzzword for PR purposes. Alas, some of this is being done by the US government: small high-visibility innovation efforts don’t make a $3.5 trillion/year bureaucracy innovative — any more than banning iPad purchases make it efficient.

Still, what I found in this month’s data was more encouraging than I expected to find. One example was this news item from last week:
XYZ Corporation has announced a new Web portal to support its existing Open Innovation program. The new Web portal will increase the pace of innovation, in targeted areas, by improving XYZ Corporation's ability to leverage outside resources.
At the one level, this is the same as hiring Innocentive or Nine Sigma to find new technologies. On the other hand, the effort of setting up a portal demonstrates a greater level of commitment to OI — and perhaps to act upon these ideas — than a few experiments with outsourced crowdsourcing vendors.

Overall, I think the trend line is encouraging. There’s more real open innovation happening in practice, and perhaps even a higher proportion of it is real.