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From the Innovation Tools WebLog

Three forms of open innovation: Cases from GE Capital, Coca-Cola, Hyundai and LG
April 30, 2009 | By Stefan Lindegaard| Category: Open innovation

In previous blog posts, I have stated that open innovation is a process in which your company works with external entities during the innovation process. It goes deeper than just involving others in the idea generation phases; the contribution from outside your company must be significant. It is also more than just a partnership where you pay for specific services.

Everyone involved in an open innovation process focuses on problems, needs and issues and work them out together. Open innovation is also tied to the 10 types of innovation as developed by Doblin instead of just being limited to products and services.

When you apply such a broad definition of open innovation, which can be summed up as the opposite of doing everything yourself, you also get the sense that open innovation is actually much more about mindset than processes. You also understand that almost every company already applies some kind of open innovation today. To prove this point, let’s take a look at these quite different examples from GE Capital/Hyundai, Coca-Cola and LG.

GE Capital and Hyundai learn new skills in Korea

An interesting article in BusinessWeek – GE Brings A New Strategy To Life - gives us an example on how companies can get involved with open innovation in the financial industry. The background is a merger of activities between GE Capital and Hyundai in which Hyundai originally sought an investor to make up for losses in it’s credit card business while GE Capital entered the joint venture to break out of a period of zero growth in market share.

In the article, Hyundai acknowledges that the capital injection was the smallest of the benefits as it turned out that the risk-management and financial knowhow skills brought to the table by GE Capital really made a difference. On the other hand, GE Capital learned from Hyundai’s marketing skills, which included involving top designers to work on the look of their credit cards and the design consultancy IDEO to revamp and simply the bills and the website.

The result has not only given great financial results to both companies; they have also opened up to learning even more from each other – and in the long run probably also from other companies.

Coca-Cola brings us an unlimited choice of pop

In another example, Coca-Cola brings micro-dosing technology used to measure precise amounts of dialysis and cancer drugs, a smart phone operating system from Microsoft Corp. and style tips from Italian auto designers together in its latest attempt to revive falling sales of fountain drinks.

This new self-serve beverage dispenser can pour as many as 120 drinks while using 40 percent less storage space than traditional six- or eight-tap fountains. The development team grew from seven full-time employees to 50, with another 50 employees contributing time so it is fair to say that Coca-Cola spent significant resources on this project. Besides having their own big budget and bringing different components together in the machine itself, Coca-Cola also worked closely with existing customers such as McDonalds, which helped guide and test the fountain.

Although some analysts argue that this investment might be difficult to bring home as Coca-Cola needs to convert Pepsi-exclusive restaurants through this new offering, we should bear in mind that the dispenser could also work as a marketing machine helping Coca-Cola expose new soft-drinks to customers. After all, Coca-Cola holds trademarks for more than 450 sparkling and still brands globally.

I do not have much background information on how Coca-Cola worked with partners to bring this together, but it shows how complex our world has become and that open innovation-like initiatives are needed to bring out the full potential in your business.

LG designs with consumers

Marketplaces such as Innocentive and NineSigma are becoming increasingly important players in the open innovation community. LG has just initiated a partnership with a related player called CrowdSpring which is a marketplace for creative services. They have developed a competition in which consumers have the chance to design their vision of the next LG phone and compete for more than US$80,000.

You can argue this initiative only brings external input to the early idea- and design phase rather than the entire innovation process and it is also most likely that such a competition works best on the marketing front. However, it is interesting to see how large companies begin to partner up with the online marketplaces. It should also be noted that LG recently did some interesting projects with Netflix and I look forward to follow future open innovation initiatives of LG.

I think these examples although being quite different in terms of industries show that open innovation works well when you apply a holistic approach to innovation. Let me know if you hear of other open innovation initiatives worth mentioning in the blog world. The more we can learn from and inspire each other the better.

From the Innovation Tools WebLog

Innovation strategy: Five steps to make change happen
April 27, 2009 | By Stefan Lindegaard| Category: Innovation Strategy

I believe everyone needs a personal strategy for change. Here are five steps to help you develop your change strategy based on my work with innovation leaders and intrapreneurs:

1. Realize and acknowledge your issues – and choose to change.

It is quite simple. You need to realize and acknowledge your issues before you can commit to changes. Only you can make changes in your life, and it starts with opening your eyes to the differences between your current situation and the values and picture of success that you’ve developed for yourself.

Here’s something I hear a lot: “I am too old for change” or  “Change is too difficult.” You only need to look at any of the famous examples of people who achieved success relatively late in life to know that the first statement is not true. The second statement is undoubtedly true – change is indeed often difficult – but that never means it’s impossible. Also, choosing to continue on the path you’re following even though that patch has little chance of leading to the definition of success you’ve set out for yourself is every bit as difficult as bringing on change.

The reality is that you always have a choice; you just need to realize and acknowledge the issues that are holding you back and choose to make the required changes.  Among the changes that might help you move forward is the argument by American urban studies theorist Richard Florida that the choice of the place you live is one of the most important choices you can make. In The Rise of the Creative Class and Who’s Your City?, he argues that the factor that is most predictive of our personal happiness is the choice of where we live. By choosing to live where creative people cluster, your ability to achieve change and become part of a force that drives innovation may be greater.

I would argue that choosing the organization you work for based on how well its values match the values you want to live by is similarly important to achieving success and happiness. If there is a mismatch in values, this should be a strong motivation for finding a new employer that is a better fit.

Here are other questions to ask yourself about your work environment to determine if it is a good match for you or whether you need a change:
  • Do you feel passionate about the company’s vision and mission?
  • Do you like the people you work with? Do you share the same values?
  • Do you feel a need to be a different person at work than you are off work?
  • Do you often compromise your own values in order to get things done?
  • Does senior management think long-term and support innovation and change or are they mostly focused on quarter-to-quarter financial results?
  • Do you have the resources necessary to push innovation forward?
You could consider testing whether you are in the right company by setting the stakes a bit high. Imagine that you have an on-going case where you continue compromising your values. What would happen if you put your job at risk in order to make this right? Are you a valued employee who they really want to keep you or will they let you go and ignore that they have an employee willing to fight for something he/she believes is worthwhile? Be careful with this test as you might get what you ask for. I also agree this is a bit risky in these turbulent times.

In our world of seemingly unlimited choices, part of your change-making strategy must include developing the ability to say no. You will need to eliminate some choices after carefully evaluating them and concluding that they won’t take you to the success you desire. However, other people – who may not be aware of your values or your definition of success – may pressure you to say yes to things that aren’t in your best interest. At such times, being able to look at things with clear eyes and eliminate outside influences is essential, as is the ability to firmly but politely refuse to be pulled in directions in which you don’t want to go.

2. Understand the difference between push and pull when it comes to change.

You may be either pushed or pulled to create change. You might decide to pull change toward you by proactively choosing to have a mentor, coach or friend help you work on the change you wish to create. Or you may be pushed to react to factors external to you.

Once you realize and acknowledge your issues, you might feel things are under control and that you are in charge of the problems caused by your issues. I used to believe this. For many years I worked on issues such as an occasionally hot temper, impatience with people who cannot follow my ideas, and mood changes. I used to think, “Yes, I have some issues, but at least I know of them and I am working on them.” I did make progress, but it was quite slow. Things did not really change until I had an unexpected external push that forced me to take a hard look on myself and realize what I could lose if I did not make the necessary changes. This push was from the personal part of my life, but the pattern is similar on professional and career development.

I have helped many innovation leaders and intrapreneurs on skill and career development issues. It usually goes like this. At first, there is a lot of build-up with very little action. This can last for years. Then something happens. A few create a pull effect in which they understand that someone can help them and so they reach out for that help. The external feedback makes it easier to see the full picture and understand that more is needed to make change happen. Then they move forward with actions mentioned later.

More often, it is an external push. It could be that the future becomes uncertain due to a major organizational restructuring process. You might get a new boss or a new board of directors. You might even loose your job. Pressure piles up and some people frown. But your experiences as an innovation leader or intrapreneur have heightened your threshold. You are used to pressure and you understand that such an external push can be turned around for something positive.

The most important thing about external involvement is that it can help you give you the impetus to act. As author Anthony Robbins points out, people will change when the pain of staying in the status quo becomes greater than the pain of leaving.

3. Set goals.

You will need to set change goals and determine how to measure your progress. A good place to begin is to write out the reasons why you want to change. Next, develop your goals for change and the detailed action steps that will take you there. Finally, you need some way to measure your progress, both in the short-term and over the long haul. Set metrics that you can check in with periodically to make sure you’re moving in the right direction.

On a cautionary note, make sure your goals are realistic. Don’t complicate things too much by having too many goals and not enough priorities. Better to make slow, steady progress in one or two key areas than to get weighted down with so many goals that the burden becomes overwhelming and nothing really happens. As Carmine Coyote writes in his blog, Slow Leadership,“When everything is important, nothing is. You must prioritize or increase the risk of failure. Focus on what truly matters most — just one thing, if possible — and get it done. Then move on to the next. Success breeds success.”

4. Build accountability into your change effort – and begin to change other’s perceptions of you – by communicating your goals to key stakeholders.

This is similar to the dynamics of good teams. They work well because the team members keep each other mutually accountable while having a sincere concern for each other. Most likely, you are not comfortable telling everyone about your issues, but it would be of great help to be able to tell someone you trust in order for them to be able to act as good “team members” helping you reach your goals.

There are also reasons to tell a broader audience. Whether you like it or not, the world does not evolve around what you believe of yourself. The perception of others affects your ability to make change. By conveying to others that you’re working on making changes, you can help begin to change perceptions that are working against you. This in turn can make it easier to reach your goals

5. Create rituals to enforce change.

Research into how people change existing habits and form new ones suggests that many people do not have the self discipline that change requires. Yet some people do make significant changes in their lives.

There are many reasons for recommending the book Happier: Learn the Secrets to Daily Joy and Lasting Fulfilment by Tal Ben-Shahar; his discussion on change is just one of them. On change, Ben-Shahar points to a book by Jim Loehr and Tony Schwartz entitled The Power of Full Engagement, in which they suggest a way of thinking about change: “They suggest that instead of focusing on cultivating self-discipline as a means towards change, we need to introduce rituals. According to Loehr and Schwartz, ‘building rituals requires defining very precise behaviours and performing them at very specific times – motivated by deeply held values.’”

Experts generally advise introducing no more than one or two rituals at a time, and making sure they become habits before introducing new ones. Incremental change is more likely to succeed than expecting vast change to occur overnight. One only has to look at people who make New Year’s resolutions to go to the gym every single day versus someone who sets a more reasonable goal of gradually increasing their gym use from one day to two days and then to three days a week. Nevertheless, both goals have to start by going to the gym and this could be set as a ritual.

According to Ben-Shahar, “People are sometimes resistant to the idea of introducing rituals because they believe that ritualistic behaviour may detract from spontaneity or creativity–especially, when it comes to interpersonal rituals such as a regular date with one’s spouse, or artistic rituals such as painting. However, if we do not ritualize–or plan– activities…we often don’t get to them, and rather than being spontaneous, we become reactive (to other’s demands on our time and energy). More important, we can integrate spontaneity into a ritual, for example, deciding spontaneously where we go on the ritualized date.”

Change is difficult. I hope my suggestions on how to approach this can be helpful. Let me know what you think and please share your own experiences on change.
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