Michael Fruhling's Blog

A bunch of stuff about innovation…

Posts Tagged ‘open 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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Open Innovation Cures Blackberry Thumb!

Posted by mdf4u on May 24, 2010

The following story is fictional.  However, I’ve applied and proven the priniciples described in client engagements.  I hope it prompts you to think about its potential applicability to your business.

Mary Sellers, Marketing Manager with an OTC products company wishes to pursue new products for young people suffering from Blackberry Thumb.  Blackberry Thumb is a repetitive strain induced hand injury caused by excessive text messaging.  Mary’s research shows that significant numbers of young men and women (aged 13-19) suffer from this condition.  Further, trends show double digit annual growth rates.  Importantly, there are no products being sold at food/drug/mass market retailers that specifically address this condition.

Mary and her colleagues have concept tested topical analgesic products.  These are similar to many available OTC products like Aspercreme and Ben Gay, but are positioned as being specially formulated for Blackberry Thumb and other repetitive stress disorders like carpal tunnel syndrome.  The results are generally favorable, but consumers do not perceive the products as especially unique.  After consulting with an orthopedic surgeon, R&D manager Joe Hale suggests a regimen consisting of the topical remedy, intermittent cryotherapy and joint stabilization to help address pain and swelling associated with Blackberry Thumb.

Joe contacts bfs innovations (!) and asks me to identify some potential solutions for him to evaluate.  Drawing inspiration from other industries, I contact a company that uses a flexible silica gel technology in cold packs for physical therapists. Joe fashions a demi-glove prototype using this material.  It provides excellent relief without causing discomfort.

Mary is very encouraged by Joe’s thinking and the productprototypes.  She incorporates the “Cool Hand” concept into  qualitative consumer research.  Young male consumers in particular, are very enthusiastic about the new idea. They see the system as truly different and something that they personally would use.  They liken the glove to “wearing a cast” “…it’s like a war wound”.   They also like the topical remedy…”It’s for me…it’s not my parents’ medicine.”  Mary and Joe have identified a promising product system that a significant portion of the target audience finds appealing!  They realize that their work isn’t done, but they sense that they’re on the right track.

I trust that this example helps describe the possibilities of applying external innovation in creative collaborations. You’ll note that in the example above, external innovation was introduced during the concept development process prior to the product concept having been fully defined. When Marketing and R&D collaborate early in the concept development process and incorporate well-reasoned external inspiration, they can create exciting product options.  Contact me if you’re interested in discussing and in employing this approach.  You’ll be glad you did.  It works!

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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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Serendipity, Innovation and You

Posted by mdf4u on February 1, 2010

Last week, Todd Abraham, SVP Nutrition and Research at Kraft Foods related a fascinating anecdote during his CoDev10 keynote address.  He recounted how Kraft had been seeking a “clean water” additive for their powdered drink mixes.  This would permit residents in developing countries to safely enjoy Tang and Crystal Light.  While unable to solve Kraft’s specific challenge, TyraTech instead suggested a safe, affordable technology that would prevent waterborne parasitic infestation that chronically afflicts millions of Asian, African and South American residents.  

In speaking about the enabling technology, Abraham said, “It addresses the problem with the problem”.  Kraft seized this tantalizing opportunity and is developing a daily-use beverage incorporating TyraTech’s technology.  It has the potenital to improve millions of lives.    To be absolutely clear, Todd didn’t suggest that companies should exclusively or even predominantly rely on serendipity to drive innovation…and certainly not at the exclusion of searching out approved technology needs. He simply acknowledged that open innovation and serendipity can create attractive, strategically relevant innovation opportunities, if one is open to them and if appropriate, is willing to champion them:  “It would have been easy for us to have said we’re not interested…You have to know an opportunity when you believe it exists …You may find something a little different than what you looked for, and that’s important too.”  

Echoing this sentiment, Chris Thoen, P&G’s Director of Global Open Innovation writes, “serendipity and connecting the unexpected dots are very important still in addition to the targeted proactive searches for new opportunities”.   Related to the importance of serendipitous innovation, is the important role that champions play in advocating for candidates that lack broad corporate acceptance.  By now, most people are familiar with the origins of the 3M Post-it Note.  Did you realize that the scientist who devised the easy-release adhesive was initially unable to attract interest within 3M?  It took off only after a colleague successfully sold the concept to 3M management 4 years (!) following its discovery. 

As the person who recognized, conceived of and validated the Cheer Free laundry detergent concept (i.e. safe and effective for folks who claim detergent sensitivites) while with P&G, I am skilled at recognizing and creating unobvious consumer insight-driven product opportunities…and with being a successful new idea champion.  A global consumer products external business development executive describes me as ‘the best I’ve ever seen”. A global food products R&D VP says my “skills as a story teller are absolutely top notch”.

 So, I ask: is your team tasked with providing bold innovation?  Does it seek, recognize and champion compelling, strategically relevant “outlier” opportunities?  Does it currently struggle to successfully sell innovations to internal stakeholders?     

If you answered “yes” to any of these questions, please call or write me today at (614) 937-2408 or michael@bfsinnovations.com.  

 

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“Not Invented Here” Was Not Invented Here

Posted by mdf4u on January 10, 2010

 

Among companies contemplating an external innovation aided product development strategy, you should expect and address negativity from the people most directly affected by the implementation of the strategy. This resistance may be covert, but it will very likely exist. 

How to deal with it?  Carefully.

Employee negativity can represent a substantial threat to the successful implementation of an external innovation strategy.    Shrewd external partner selection can be as important to program success as the technology or capability that may have served as the initial basis for the relationship.  However, even if a company is very careful about partner selection, it will still likely have to address tensions that an inbound technology or product may induce among its employees.  

A few years ago, I participated in an inaugural external innovation project within a major consumer products company.  The mission was to customize the aesthetics of a product developed by a non-direct competitor to allow its sale in the company’s retail outlets.  While a technically straightforward exercise, this project prompted a fair amount of internal resistance from the product development team tasked with the customization effort. Why?     The technology customer’s product development team (TCPD) resented that the external innovation strategy and partner was being imposed upon them by top management.  Further, TCPD was concerned that the new product would be better accepted than products developed internally.  Also, unlike some of the close knit supplier relationships that TCPD had built over a period of years, they wouldn’t be able to control the relationship with this external partner.

Is this type of behavior unique and specific to TCPD teams?  Hardly. As evidence of this, separate from the above example, scientists from the Technology Supplier in the case I cited above were guilty of sitting for 6 months (!) on one of my technology submissions.  Why was this?  My contact admitted: “Some of the scientists were concerned about advancing a technology that they might have been expected to have devised themselves.”  And so it goes.

I’ve read a lot of literature that describe negative corporate entities as “antibodies”…almost as if they are an infection that somehow needs to be eradicated.  While antibodies need to be dealt with decisively, one must be careful to not “kill the patient”.  Top management needs to be sensitive to the fact that the attitudes revealed in the example above reflect simple human nature.  The rest of the organization will be watching closely to see how management deals with the issue as a bellwether. 

I don’t believe that it’s enough for management to offer verbal assurances to employees that external innovation won’t be a threat to their employment and to their position within the company.  In today’s corporate world, outsourcing and downsizing is becoming increasingly common. Who wouldn’t be suspicious of management’s intentions, given the type of business environment we all live in? 

So, what should be done about this?  Upper management needs to be very transparent and specific with employees about the new strategy, why it’s being implemented, how it’s going to contribute (and be additive) to existing business results to allow the company to meet shareholder expectations.  Employees also need to be told how their roles will be altered to accomodate the new strategy and why this will be critical to its success.  Those employees who choose to “get with the program” will do so, while those who don’t will exit the business, sooner or later.    Importantly, employees will need to experience a reality that is consistent with what management has promised.  If management walks the talk, and if business operations unfold as promised, then the naysayers should recede into the background.   Companies should anticipate and actively manage these types of issues before they open their doors for external innovation business.  I feel it’s naive to assume that your company is somehow different and that these issues won’t exist for you.  The ones that address them head-on should increase their odds of long term external innovation success.

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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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