Michael Fruhling's Blog

A bunch of stuff about innovation…

Posts Tagged ‘external innovation’

How Companies Can Kill New Ideas Faster!

Posted by mdf4u on June 28, 2010

Industry data indicates external technology submission reviews can take 4-6 weeks, and will overwhelmingly culminate in a rejection decision. Valuable corporate resources are expended on these reviews. With annual submissions per company continuing to climb, I suggest that companies should consider ways to review and reject them much more quickly.

I suggest that companies should examine their external submission review processes to enable faster rejection. To be clear, I’m not suggesting that this be the primary objective. There may be time and resource-efficient means to identify and disqualify unsuitable opportunities. In doing this, companies can reallocate resources to higher value activities.

I suspect that dramatic reductions in review cycle times can be achieved if review teams run their “last experiments first”. That is, consider the consumer/business opportunity posed by the submission prior to formal technology assessment. Under my proposed system, after an initial sift to remove obviously unsuitable opportunities (e.g. way off-strategy, inadequate IP, etc…), external submissions would be screened by a business team, instead of by R&D alone, as I perceive is the most common current practice. Rigorous assessment of the technology’s credentials would initially be set aside.

Under the proposed system, a review team would first decide its interest based primarily on the potential consumer/business opportunity.  If the team rejected the opportunity, there would be no point in subjecting its technology to formal review. This would result in a much faster rejection than if the technology were reviewed first, its eligibility being based upon compatibility with a set of “Technology Needs”. Conversely, if the team favorably viewed the opportunity they could prioritize technical review based on interest level. For instance, assume that a personal care products company received a submission for a “patented, effective, non-invasive, painless cellulite reduction method”. The company might not have previously articulated this as a technical need. However, a review panel could view this as a very attractive business opportunity. The technology could then be assessed by R&D. This could either result in a “hit”, or it could inspire an energetic technology search effort. A potential negative for this approach could be to reject high quality technologies obscured by poor positioning. I think these instances are possible, but are likely fairly uncommon.

The objective of any process re-engineering should be to achieve more efficient utilization of internal resources. I recognize that my remarks betray my lack of knowledge of the inner workings of corporate external submission review processes. Some companies may have already identified and implemented similar, or even better approaches. My purpose here is to stimulate thinking on this important topic. I welcome your thoughts…especially you corporate “insiders”! Please share.

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A Guide to Open Innovation Acronyms

Posted by mdf4u on May 13, 2010

The following are some Open Innovation acronyms.  Do any of these seem familar?

SIP (“Submit Idea to Portal”): Technology providers will commonly be requested by corporate open innovation representatives to “SIP” when they seek feedback on their external innovation candidate.  Proper Usage: John: You’re going to love my new innovation.     Mary: I’m sure it’s wonderful.  Please SIP it.

ROB (“Run Over By Bus”): Used by technology provider to describe a technology intermediary who does not respond or provide a timely update on the status of their submission’s candidacy. Proper Usage: John: I SIP’d my innovation 6 weeks ago.  Edith: Sounds as if you’ve been ROB’d.

WOG (“Works out of Garage”): WOG refers to the dynamic and colorful characters that populate the inventor world, and whose early work is often conducted in humble environs.   WOGs are a necessary and occasionally welcome segment in the total technology supply mix. Proper Usage: Mary: Have you had a chance to speak with the inventor of that time travel device?  Gary: Yes.  He’s quite smart and a real WOG.

NFBU (“Not Found by Us”): NIH describes the denigration of external technologies by corporate employees who feel threatened by them.  NFBU represents a version of NIH practiced among employees whose roles can involve adoption of external innovations. With NFBU, an influential person (e.g. person in charge) can champion select technology leads.  Leads lacking this advocacy are considered NFBU and tend to become disqualified from consideration when unable to fend off challenges to their candidacy.  Proper Usage: Mary: I like both ideas.  Which one do you prefer?  Edith: I like them both, too.  But, let’s drop the DIY brain surgery kit.  It’s NFBU.

LSD (“Looking for Sugar Daddy”): Early stage (and often naïve) technology developer seeking a heavily resourced partner to shoulder the cost and risk of completing development and to commercialize their innovation. Also may be a WOG.  Proper Usage: Kurt: This LSD must be smoking something.

POP (“We Pay Only For Performance”): Typically uttered by technology providers, though sometimes also by technology seekers.  Used when the party will agree to compensate the service provider only in the event that the desired result is achieved.   It reflects a desire on the part of the client to not assume any risk in a business development endeavor conducted in their behalf. (Not surprisingly, I don’t sign up for many of these so-called “opportunities”).  Proper Usage: Ted: Michael, sell it in and we’ll both be rich!  Michael: I’ll pass on the POP, Ted.

OI? (“Do You Own It?”): In open innovation, technology candidates can often become known to technology seekers through a daisy chain of network connections.  “OI?” is one of the first questions that a technology seeker will ask to determine the person with whom they should communicate to review a new candidate. (Note:  Do not confuse with the Yiddish exclamation, “Oy!” or “OI”(which, without a question mark stands for Open Innovation)). Proper Usage: John: You’ll love this new innovation.  It’s patented and clinically proven effective.  It’s…   Mary: OI?

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Bridging the Expectations Gap

Posted by mdf4u on April 26, 2010

Last week, I wondered aloud as to whether some consumer products companies engaged in open innovation may be practicing a form of “Not Invented Here” syndrome that I call “Not Found by Us”.  I suggested that even after excluding as (justifiably) unworthy the majority of external opportunities, those identified by the company itself fare considerably better than unsolicited external submissions in internal review processes.  

While I believe this may well be true, another explanation for the absence of unsolicited opportunities among commercialized products could be that it is virtually impossible for unsolicited external submissions to meet the collectively high standards required by most consumer products companies.   My sense is that there is a dramatic gap between the types of external opportunities that companies actively seek and develop and those that are proposed on an unsolicited basis. 

Companies are most interested in on-strategy, highly differentiated, commercially and economically viable, technically feasible and scalable opportunities.  How many of these options are being offered up on an unsolicited basis?  Very few, if any, I’d imagine.  I also suspect that many submissions are lucky if they meet more than one or two of these standards.  Yet, how many submitters are aware of these standards? Also very few, I’d imagine.  Many external submissions are relatively early stage, and as such, are far riskier, and therefore less attractive to companies than more finished propositions.  Opportunities proactively scouted by companies are more likely to meet more of their selection requirements than unsolicited ones.  Even if some may come up a bit short, there may still be sufficient internal “suction” (i.e. advocacy) for these options to treat these as manageable and surmountable deficiencies. 

If what I am saying is even mostly true, then I feel that companies would do the public a favor by being highly explicit about the necessary prerequisites for a credible candidacy.  They should also disclose the real (exceptionally low) chances of success for any submission that fails to meet these rigorous standards.  That way, an interested party can make an educated decision as to whether or not to invest the time in preparing a submission.  I expect that this will cause most to not pursue the opportunity.  Importantly, this disclosure will significantly decrease frustration and disappointment among unqualified would-be submitters.  Also important, it should help free up corporate resources to manage a few, highly credentialed candidates.

Even in instances where a submitted technology makes the so-called “first cut”, companies should continue to be extremely transparent and forthcoming about the overall process, milestones, investment decisions and standards in order to ensure informed decision making, including among individuals who may have unrealistic ambitions.   In my experience, prospects can be reluctant to ask such questions at risk of offending the company and in so doing, jeopardize their candidacy.  Companies, in turn, seem content to keep matters vague in order to avoid the risk of sending false impression as to interest and/or commitment.  In any relationship, open and candid communication is essential for the best shared outcomes.  It certainly should apply to this area.

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Could “Not Found By Us” Be The New “Not Invented Here”?

Posted by mdf4u on April 19, 2010

In considering various open innovation success stories publicized by consumer products companies, I am unaware of a single example of an unsolicited external submission that has reached market.  

On a personal level, until a couple of years ago, I had been a fairly prolific submitter of technology opportunites to corporate open innovation portals.  While I accept that screening processes are highly rigorous, and the odds of success are slim, I still expected at least something to pop.  In five years, not one of my dozens of submissions progressed beyond second pass screening.  In addition, none of my peers who have made unsolicited submissions to corporate portals has met with any success, either.  What could we be doing wrong to be so monumentally unsuccessful at this?   Are our submissions so markedly inferior to proactively scouted finds?  While it’s entirely possible…it does seem somewhat unlikely. 

With a couple of exceptions, all of my scouting successes have resulted from proactive searches done in behalf of, and in colloraboration with my corporate clients. This is consistent with industry data which shows that the vast majority of proactively scouted searches yield viable leads.  Beyond the insider knowledge that informs these searches and improves their precision, I also suspect that proactively scouted “finds” very likely invite internal champions who help shepherd them through the assessment stages. As most of us know, championed innovation candidates have far greater survival rates than those lacking advocates.

This causes me to raise two essential questions: Does proactive search invite internal advocacy?  (I believe it does.)  Do unsolicited external submissions have internal champions? (I strongly doubt it). 

If I’m right, then “Not Found By Us” is an artifact of existing open innovation portals and current corporate evalution processes.  There’s already a low percentage of potentially useful ideas that enter open innovation portals.  I believe this significantly lowers internal expectations for anything received through these channels.  I also believe that current open innovation evaluation processes don’t enable or encourage idea incubation and/or internal advocacy.  Put simply: I believe that unsolicited submissions have no sponsors, and as a result, they’re likely to die.

I strongly encourage companies engaged in open innovation to consider whether they may unintentionally be allowing at least some potentially attractive opportunities to get away, simply because there’s no one to fight for them.

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Enhancing Productivity of Innovation Portals

Posted by mdf4u on February 11, 2010

While attending CoDev10 a couple of weeks ago, a speaker representing a multinational consumer products company discussed the productivity of their open innovation web portal.  He shared that the site annually accepted over 3,000 submissions, out of which 8% were being worked on across various parts of the company. 8% out of 3,000 is “pretty good”, he exclaimed. 
 
8% actually is pretty good.  I feel it could be even higher if submitters actually tailored their submissions to address the company’s stated technology needs.  In my experience in working with this company and others with web portal programs, far too many submissions represent what an individual has to offer.  This is quite often not what the company has expressed as its need.  As a result, the signal to noise ratio for submissions is typically quite high…a fact that most companies will readily concede. 
 
Are there things that companies can do to encourage higher numbers of well-targeted submissions made to their web portals?  I believe there are:
 
For example, Procter and Gamble and others often prepare a detailed spec for each of their published technology needs. Web portals do not currently require an individual to “check off” on whether, or to what extent, the submission meets each of the individual criteria specified for the technology prior to hitting the “Submit” button.  Some online job submission applications incorporate this type of “self-qualification” approach within their process.  What if innovation submissions required this, as well? 
 
I’m also convinced that numerous submissions are dismissed because they are poorly written by the submitter.  Could web portals be configured to allow submitters to produce and upload short video product demonstrations instead of relying exclusively on the written word?  A picture is often better than 1,000 words…especially in instances where the innovation has been reduced to a functional prototype.  Pepsi is accepting video submissions as part of its Refresh Everything initiative (see www.refresheverything.com).  Why not others?
 
Companies should also consider rewarding “good behavior”.  That is, reward submitters who both adhere to published guidelines and also passed the first cut.  Companies could call these “entrepreneurial grants”, or simiilar.  For a modest financial outlay, they would encourage submitters to replicate good performance.  Not too long ago, I participated in a Your Encore challenge in which I was awarded a nominal sum for my submission, even though it was not selected as the winner.  Incentives can be used to encourage desired behaviors. 
 
They could also seek to enter collaborations with individuals with a track record of quality submissions.  At present, companies treat each online submission as a discrete event, with roughly 92 of 100 applications being rejected in the first pass, and many others ultimately being declined.  The relationship between the applicant and the company essentially “ends” once the company declines the opportunity.  Certainly, each web portal sponsor should be able to track which submitters consistently provide the highest quality submissions.  They could actively seek to cultivate these as more attractive technology provider resources.  What a pleasant, impactful surprise to applicants for companies to actually reach out to contact these individuals to enlist their assistance on a paid engagement or even on opportunities that had a high likelihood of a payout!   
 
In summary, open innovation web portals are a useful tool to enable companies to consider unsolicited opportunities.  It’s not too early for companies to start to explore ways to make them more productive.   

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Change the Game

Posted by mdf4u on January 22, 2010

Over the course of 5 years, I have dramatically redefined my business model and service offering to accomodate the realities of corporate external innovation and to better address my clients’ evolving needs.  This has allowed my business to grow and thrive.   Without having taken this action, I’d now be doing something else for a living    

 

Back in 2004, I naively thought that I could make an attractive living by representing technology providers to big name consumer packaged goods companies.  Why not?  Companies were starting to express interest in external technologies.  I have strong ability to attract and cultivate attractive technologies and providers.  I have excellent relationships and contacts at a diverse array of companies.   

Since then, I’ve made scores of unsolicited technology submissions to a variety of companies.  How many of these have been adopted?  Ummm….Two.  Why has my batting average in this area been so abysmal?  In hindsight, it’s actually quite simple to understand. 
 
If the problems were easy to solve, the companies would have solved them by now.
The largest companies engaged in external innovation are looking to fill technical needs that their considerable internal R&D resources have been unable to fully satisfy.  
 
Stiff competition:
While many companies routinely accept external innovation submissions to satisfy unmet needs,  they are simultaneously proactively pursuing multiple alternate approaches.  If it’s truly important, then companies will allocate money and resources to try to solve it.  They’re not just waiting around for an unsolicited solution.  Proactive search efforts may include designating technology scouts (internal and/or external) to search for solutions, placing incentivized challenges with companies like NineSigma, Innocentive and Innovation Xchange.  
 
Companies are looking for the Right technical solution, not just a solution:  
Many of the top companies have exacting requirements.  They can choose to be as rigid and/or as patient as they desire in addressing these.  They likely have a variety of solutions to choose from.  They may just not have found the optimal one yet.
 
Savvy Companies, Smart Solutions and Game Changing:   
In recent years, I’ve been pretty successful in getting technologies (and providers) adopted by client companies.  Importantly, I’ve achieved this from the “inside”, not the “outside”.  Through a combination of corporate technology scouting, new business opportunity creation, and technology brokering, my business has grown by about 200% in the past two years alone.  The reason for this success is primarily because I’ve significantly revised my value propositon.  As opposed to 2004, where I almost exclusively represented external technology providers, now, I primarily provide technology scouting /intermediary services for major corporate clients.  My clients KNOW what they want.  Instead of me guessing at needs and their nuances from the “outside”, I can be far more successful by collaboratively and iteratively identifying and evaluating multiple technical and product solutions.
 
Technology scouting absolutely remains an essential component of my work.  However, beyond solving precise “need gaps”, it fuels active collaboration to help my clients identify distinctive new business opportunities.  An intriguing “found” technology or new product can inspire my R&D clients to develop seed new business ideas.  I assist them to conduct early stage, exploratory on-line consumer reserach to build the foundation for new opportunity discussions with their Business Teams.  As my clients are actively involved and engaged in the creative process, they take ownership of select opportunities and will advocate for these with colleagues.  A technology that is intriguing but may not be “quite right” can prompt incubation and become an inspiration for further new opportunity creation.  It can prompt additional search and/or development efforts in which I can participate. 
 
I’m personally convinced that collaborative development via external innovation solution identification can offer companies robust opportunities for business growth.   The ones that choose to play this game and play it well can be big winners.  I’m happy to be able to join and assist some of them in this pursuit.    

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Escape From The Island of Unmet Expectations

Posted by mdf4u on January 8, 2010

This post is universally relevant, but is primarily directed to my friends in the retail business, as the concept discussed will likely resonate most strongly with them.

An interesting phenomena can occur in the retail world…based on judgment, market benchmarking and possibly some testing, management has high hopes for a new product line.  It sets high expectations, prioritizes company resources accordingly, sets budget numbers high, and orders big…and the product line underperforms.

This doesn’t necessarily mean that the line sucks wind.  Under some objective measures, it might even be considered successful.  Just that it doesn’t perform as planned.  For example, a $75MM line for a company that was expecting $150MM is a dismal failure.  On the other hand, $75MM can be pretty darn impressive if you’re used to staring at $30MM lines! 

Lines that underperform are usually sent to the retail gulag.  That is, it drops in sales priority, items start getting discounted, and a self-fulfilling prophecy of failure results as sales continue to decline and retail space dwindles.  

So, what’s my point?  First, there are a lot of  fully developed product lines that have underperformed and which were sent to the retail gulag.  I’m betting that a good number of these could potentially be resurfaced, repositioned and/or repackaged and/or “sold” to another party in a different trade channel, or geography…especially if there was nothing intrinsically wrong with the offering.  

Is anyone brave enough to consider this option?

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Plan for Success in External Innovation

Posted by mdf4u on January 6, 2010

Among companies contemplating external innovation, I would offer the following unsolicited but simple advice:

If your company struggles with decision making involving products and technologies that are grown organically within its own four walls, it should expect to have even greater difficulty in successfully implementing an external innovation strategy.

A number of the companies I’ve worked with have shared with me their frustrations with corporate decision making.  Whether this involves R&D waiting for direction from marketing on what it wants to put on the product launch calendar so that it can interpret these needs into technical development criteria, deciding what and how much information is necessary to advance an initiative to the next stage in a stage gate process, or gaining internal alignment on the consumer test action standards necessary to pull the trigger on a product launch, companies can be flush with opportunities for internal gridlock. 

In the context of an external innovation collaboration add the further complexity of seeking to coordinate the activities of two companies (a technology provider and a technology seeker) that don’t necessarily know each other well, or trust each other, or have similar product development approaches and/or philosophies, and things can get even dicier.

The smart companies understand this implicitly.  One of my colleagues at a larger consumer products companies shared with me an insightful observation.  We were discussing success factors for external innovation within companies.  Paraphrasing, she said, “It’s important to remember that there are always 3 conversations going on:  the one between the people at your company, the one between the people at your partner’s company, and the one between you and your partner”.  

I’m not suggesting that companies seeking to pursue external innovation initiatives should have low success expectations.  However, success probability will be significantly enhanced by careful preparation.   Said differently, successful companies prepare for success.  With this in mind, companies should objectively acknowledge their process and cultural strengths and actively address existing weaknesses before they open the door for business in external innovations.

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External Innovation “Dating Etiquette”: Who Pays?

Posted by mdf4u on December 27, 2009

It is common for a would-be technology provider to find that a corporate technology seeker wishes for them to invest in conducting supplemental work to validate their technology.  While a certain amount of this is to be expected and is appropriate, how much is reasonable?  At what point should the technology seeker also be expected to contribute?
 
A technology seeker typically has access to and knowledge of available, alternative solutions in the space that a technology provider may be seeking to fill.  The potential value of the provider’s innovation to the seeker must be weighed against these.  Investment decisions must be similarly considered.  

As one might expect, a technology seeker’s strong preference is to push costs and resource investments onto the technology provider. Realistically speaking, large companies can’t afford to invest in the validation of every potentially attractive opportunity. That said, a technology provider should seek to have good knowledge of how well positioned his technology is relative to the current art.  With this knowledge, he can decide at what point he feel he can request that the seeker share in this investment.  If the seeker is unwilling to make this investment, then their interest likely isn’t that pressing.  It further signals their apparent willingness risk losing the opportunity.

Importantly, a technology provider should seek where possible, to define a validation roadmap with the technology seeker before incurring costs.  In effect, they should seek to identify what information is necessary, what results will qualify their technology, and what specific actions will be taken by the seeker if these conditions are met.  With this roadmap defined, a provider can decide what investment they are willing to sign on for.  Technology seekers will not usually raise this issue as they do not want to be committed to anything prematurely, and because in some instances they don’t have authority to commit to anything beyond qualifying the technology as an input to another business decision in a staging process. 
 
Many technology providers are reluctant to broach this topic at the risk of offending the technology seeker.  However, without some  clarity, the provider has no sense of what obstacles must be cleared in order to achieve success, nor will they have a clear definition of what constitutes success. 
 
I recall several years ago, one of my clients having spent about 6 months seeking to validate a technology with a consumer products company, only to find that there was no internal business customer ready to adopt it once it had cleared this review.  After this experience, I have learned to seek clarity much sooner in the vetting process. Sometimes the answer simply isn’t available to be given.  And that can be useful information in and of itself. 
 
In conclusion, technology providers should approach interactions with technology seekers with clear eyes and a measure of sophistication.  Associated investment decisions should be viewed similarly. 

 

 

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End to End External Innovation

Posted by mdf4u on December 22, 2009

Many companies are eager to engage in external innovation.  They can mistakenly begin by opening the door for external submissions without first having a defined end-to-end process to manage the inbound flow.   While many companies already have in place a stage gate process to manage new product opportunities grown organically within a company, fewer have defined processes for accomodating candidates that may already be in a more advanced state of development without the customary standards and approvals that organizations apply.  Without having protocols for managing these “exceptions”, there’s bound to be confusion.

Another common challenge exists for companies knowing how to address unplanned opportunities, when these arise.  For instance, when Marketing and R&D are aligned on technical needs to support an approved product and marketing strategy, work flow is pretty predictable.  However, when an intriguing new opportunity arises for which no business case had been devised, many companies are ill equipped to accomodate this newness.  Besides the process gaps, some NIH mentality can creep in.   An internal advocate may not emerge, for instance.

Net, companies that plan to be open for business in the field of external innovation need to thoughtfully formulate processes and plans to accomodate the different scenarios that they are likely to face when they go “lights on”…before they actually do.

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