Open Innovation Works

Do you Need Open Innovation?

Innovation-led growth is becoming a strategic imperative for many businesses around the world. But depending on context, different companies need to make different decisions about how to achieve innovation-led growth.  Some companies might focus entirely on internal (closed) innovation.  Others might throw in the towel on internal innovation and do open innovation only, sourcing entirely from outside the organization.  Still others might use a hybrid approach.  None of these decisions are necessarily wrong or right.  

The decision to add open innovation to your company’s innovation activities has to be rooted in need. 

Does your company actually need open innovation? Simply committing to open innovation because you read somewhere about its advantages, or how cool it is or the fact that your direct competitor is doing it, is not enough. 

From strategy to resource allocation and from talent to the expiration date of your company core business model, different factors need to be weighed before pulling the trigger on an open innovation play. 

Take the assessment below and find out if your company needs open innovation (and if it’s ready!)

Rate yourself on a scale from 1-5 on each of these seven core questions.  Then scroll to the bottom to find your score and our recommendation about whether you should read our book or not. Keep in  mind:  You’re the only one reading this.  Answer honestly if you want meaningful feedback.

Question 1:  How much time remains in your most profitable business?

A:  10+ years remain  Tempted to choose this one?  Are you sure? It’s very hard to generate evidence for more than a decade of profitability at this time of great change. We suggest you recheck your evidence.

B:  7-9 years

C:  4-6 years

D:  2-3 years

E:  0-1 year — our most profitable business has already turned down, or will do so in the next year

Question 2:  What’s currently happening with open innovation in your company? 

A: We are only doing closed (internal) innovation, and it isn’t enough to keep us thriving. We may have tried open innovation before, but it has always failed.

B: We are beginning to toy around with the idea of open innovation as we come to realize that we can’t do everything by ourselves (internally)

C: We have a mix of closed and open innovation initiatives, but this mix is skewed toward internal innovation — we don’t have enough external exploration (yet)

D: We have a solid mix of closed and open innovation initiatives in order to bring new business ideas to life, but we are still failing to see a constant stream of results.

E: We constantly bring new ideas to market through a solid mix of internal (closed) and open innovation initiatives. And we have a track record to prove it.

Question 3:  Does the outside world have ideas, skills and talent we need?  

A:  No.  Our staff is the best of the best and very loyal, our core business is essential to the world and can’t be displaced.  Our IP is solidly protected and is the only way to solve the important and evergreen problem we solve.  We don’t need to pay too much attention to anyone else.

B:  Perhaps a little.  There are folks working on the edges of our field and in adjacent fields who might come up with something before we do, or see a trend before we do. We need to keep a general eye out for this.

C:  Somewhat. There’s a fair amount of activity outside our walls that’s relevant to our business, so we need to pay some attention.  But we wouldn’t divert energy from our strong core for this.  

D:  Substantially.  We’re in a dynamic field where new advances in materials, platforms or business models could change things, eventually.  We need a presence in the ecosystem and some good active partnerships.

E:  Very much so.  Our setting is rapidly changing with a great deal of uncertainty present or on the near horizon.  We need to engage deeply in the external ecosystem of ideas — exchanging resources and efforts with other entities on a consistent basis so we don’t get left behind.

Question 4: How might issues outside of your control impact your business?

A:  We try hard not to think about what might happen.  One foot in front of the other.

B:  We know external circumstances could have extreme effects on our business, but we don’t have any particular plans to address.  We’ll cross that bridge when we come to it.

C:  We have preparations in place for external events that have already happened, so we’re ready if they happen again. But if a new crisis occurs, suddenly or unfolding over time, we don’t have a plan.

D:  We have good plans in place, but it’s not clear we would be able to execute them if something happened.   

E:  We consistently consider what low-probability, high-impact events might occur.  We have specific plans to address the ones we’re aware of, we scan the horizon for new issues, and we have a general strategy to prepare for surprises.  We check these plans regularly and practice for the high-speed possibilities. 

Question 5: Does your company have the maturity to engage in open innovation?

A: Our company immediately rejects any new idea, due to structure, process, culture, or leadership.

B: We understand that open innovation requires mature processes, culture and leadership, but we have not yet started to build these capabilities.

C: We have begun to build the leadership, process and culture capabilities needed for open innovation

D: Our maturity is solid, and we are working to address some shortcomings in our capabilities that might currently be getting in the way of consistent open innovation results.

E: Our company is absolutely ready to take advantage of new ideas from outside — we can tell because we are already doing this and seeing impactful results

Question 6: Does your company have the resources to engage in open innovation?

A: Our company spends every single resource on highly efficient operations. No margins, no rainy day fund. No spare capacity.

B: If we cannibalized the core business, at least a little, we could put resources into open innovation. Nobody wants to do that, but it’s not impossible.

C: We can find some resources, somehow.

D: We have funds set aside for this.

E: We have plenty of resources designated for this priority.

Question 7: Is your overall innovation strategy ready for open innovation?  

A:  We don’t have an innovation strategy.  Innovation- related decisions are being taken solely based on trends, politics and buzz words.

B:  We don’t have a specific innovation strategy.  When it comes to innovation we are taking decisions based on our overall corporate goal.

C:  We don’t have a specific innovation strategy.  When it comes to innovation we are taking decisions based on our overall corporate strategy.

D:  We have an innovation strategy but it is not very clear nor actionable, therefore it can’t guide decisions very well.

E:  We have a very clear and well defined innovation strategy that we are always using for decision making purposes.

Scoring & Interpretation
For each of your responses above, give yourself:
A:  1 point
B:  2 points
C:  3 points
D:  4 points
E:  5 points.

Sum up your points.  How did you score?  Find out what the total means.

7-14 points:  My business is not ready for open innovation.  Our organizational capacity or leadership capacity isn’t there yet; and/or our core business challenges may be so significant that we have to focus on emergency measures instead of exploration.

15-29 points:  Open innovation is perfect for me — we have enough time, resources and leadership to benefit from external engagement, and we can really use it!

30-35 points:  Everything is awesome already.  I don’t need any further open innovation (although, it might be a complement to what I’m already doing!)

However you scored — high, low, or in between — you’ve now looked with open eyes at the reality on the ground in your organization.  Large firms are rich in many of the resources needed for innovation-led growth.  But regulation, a complex stakeholder environment and sheer size make it extremely difficult to experiment quickly.  Now that you know where you stand, what will be your next move?