Harnessing ideas through ‘open innovation’

To place the text of this article in context, we begin by publishing feedback from a Zimbabwean living in the diaspora.  Part of the feedback reads:  “I follow your articles with great interest and I’m inspired by your desire to see Zimbabwe produce world class entrepreneurs.  I am sitting on web and mobile (phone) based ideas that can change the lives of ordinary Zimbabweans and other people around the world. Unfortunately, Zimbabwe lacks a synergistic approach to unleashing powerful ideas and building them into businesses.”

Our dear reader’s feedback sign-posts the central issue this article sets to tease out. Potentially, we seem to have a significant number of Zimbabweans with potentially viable product ideas (ideators) but lacking supporting business models to commercialise their ideas. Ideators are not necessarily entrepreneurs.

One way of bridging the apparent disconnect between innovative ideas sources and potential consumers of these ideas is establishing an open innovation market connecting suppliers and consumers of ideas.  To understand what open innovation entails, the findings of a recent study will guide this discussion.

Isolationism to brokerage
In September 2011, three business management researchers, Ulrich Lichtenthaler, Martin Hoegel and Miriam Muethel published their findings on a study of 211 German firms’ approaches to generating and managing innovations. They came up with a taxonomy of four approaches to generating and managing innovations.

 

  • The first cluster of firms comprising 36% of the sample is nomenclatured ‘technology isolationists’. Technology isolationists are firms which solely rely on their research and development (R&D) efforts to generate and develop ideas into commercial offerings. Technology isolationists, as a matter of policy do not get ideas from sources outside the firm. Technology isolationism results in a firm sitting on spin-off ideas that are not related to their current core business. For instance, a firm whose core business is pharmaceuticals will squirrel away ideas that might be relevant to paper manufacturing. This paradigm of innovation sourcing appears to be prevalent in Zimbabwe. To harness potential bankable ideas from Zimbabweans living here and abroad, Zimbabwean firms need to wriggle out of the isolationist box or closed innovation model. 
  • The second cluster of firms making up 27% of the sample is referred to as ‘technology fountains’. Technology fountains generate their own ideas internally. However, they sell or licence their Intellectual Property (IP) to a network of partners. For instance, after 10 years of intense research, P & G developed a technology called Nodax which is used to manufacture plastics from renewable resources (traditionally plastics are made from non-renewable petroleum derivatives). P& G are not in the business of manufacturing plastics. Casting aside technology isolationism, P&G sold the Nodax technology to a company called Meredian Inc. who would harness the technology to manufacture plastic-like products that decompose naturally, solving the age-old environmental problem of non-biodegradability of synthetic plastics. In the case of Zimbabwe, technology fountains will be individual ideators endowed with creative prowess but lacking either business acumen or social and financial clout to turn ideas into viable business propositions. 
  • The third cluster of firms totalling 21% of the sample is labelled ‘technology sponges’. Technology ‘spongeism’ has an inbound component only. Technology sponges are firms which are open to product development ideas from outside sources. However, technology sponges do not licence out their own Intellectual Property to outsiders. In view of the paucity of a strong R&D culture at firm level in Zimbabwe, established firms could act as technology sponges absorbing ideas from technology fountains alluded to earlier.
  • The fourth cluster of firms summing up to 16% of the sample is christened ‘technology brokers’. Technology brokers accept product development ideas from external sources and have deliberate policies to licence their own R&D findings ideas to outside networks. P&G is a good example of a technology broker. Technology brokerage has inbound and outbound components. P&G have a dedicated open innovation programme called “connect + develop” which is administered through a dedicated website. Potential partners can submit their ideas through the website. P&G claim that more than half of their product initiatives ‘involve significant collaboration with outside innovators.’ P&G invites potential innovation collaborators to submit ‘promising product, technology, business model, method, trademark, package or design that can improve the lives of world’s consumers.’  The outbound component of P&G’s technology brokerage open innovation model seeks to make profit from by-discoveries that do not relate to their core business. Interestingly, P&G formed a joint-venture with its competitor Clorox to develop a new category of products arising from a plastic film technology developed as a by-product of P&G’s diaper research. Instead of shelving the incidental technology, P&G instead, piggy-backed on Clorox’s established brand equity in the wrapping product area to develop a product called Glad Press’n Seal®.

Open innovation case
Being alive to the possibility that very few firms in Zimbabwe have dedicated and well-funded R&D programmes, a more relevant example is needed — the Edison Nation model.  Edison Nation is built on the notion that ordinary people can generate powerful ideas that can result in inventions like the legendary serial inventor Thomas Edison. In the Edison Nation model of open innovation individuals are invited to submit ideas they believe can solve an everyday consumer problem. The submitted ideas are then analysed by Edison Nation’s business and product development teams for commercial viability. Once the idea is commercialised the ideator and Edison Nation split profits product fifty-fifty.

In helping potential Zimbabwean ideators and recipients (technology sponges) to assess the market viability of ideas being offered, the following guidelines can be employed.

  • First, the product idea must address at least one customer-job-to-be-done. In our example, Kaufman’s idea addressed the job ‘help me avoid the unpleasant experience of peeling a hardboiled egg.’   The problem of notoriously hard-to-peel fresh farm boiled eggs was solved as reviews from country dwellers would later reveal. The utility lever Kaufman’s idea pulled is convenience.
  • Second, the product idea must address more customer-jobs-to-be-done at various utility points such as customer productivity, personal de-risking (reputation, losses), fun and image, environmental and social responsibility and simplicity. For instance, Kaufman’s idea enhanced customer productivity by eliminating the time needed to allow a hardboiled egg to cool down before peeling.  On the risk minimisation lever, Kaufman’s idea eliminated waste associated with parts of the egg white sticking to the shell in the case of fresh eggs brought to boil. Health-conscious consumers could boil the egg-whites only to control cholesterol intake by excluding the egg -yellow..

Chulu is a management consultant and business strategist. Let’s discuss at brettchulu@consultant.com.

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