Oxford University Institute Study on Open Innovation to Be Released

29 08 2008

A new study has been completed by Oxford University Internet Institute (UK) and will be published next month that was funded by McKinsey and Company.  Titled “The Wisdom of Collaborative Network Organizations: Capturing the Value of Networked Individuals” the study abstract says…

“Digital networks, particularly the Internet, are used widely to search for information and to share expertise and knowledge between peers. Such collaborative problem solving and co-creation of services and products go beyond traditional organizational boundaries and geographical constraints, raising major questions about how to manage networked individuals and capture the value of their activities. This paper conveys the findings of a series of case studies designed to explore these questions. This led to a framework for categorizing the networks which suggests the management and performance of ‘collaborative network organizations’ will be contingent on the ways in which they are used to reconfigure information and communication flows for the distributed sharing, generation or co-creation of content..”

OII’s research observations included the following:

  • Distributed Problem Solving Networks (DPSNs) do indeed present major opportunities to their participants. 
  • DPSNs offer clear challenges to managers and professionals who wish to create and sustain them that will address their goals and objectives. 
  • DPSNs encompass more approaches than originally envisioned which led the OII team to add new cases during the course of the project and to develop a range of competing typologies of these organizational forms. 

For those of you who need a non-research-centric translation… open innovation (and networking sites whose business models or product/service experiences are “open”) is indeed a significant and viable strategy to use to add member value.  We just need to think through the customer experience, governance, product development, and incentive model.

In the coming months, the OII will be considering ways to further develop selected case studies and topics, such as the investigation of governance structures and the multiple points of control within several distributed problem solving networks.

Among the current case studies is Sermo an online community of 50,000 licensed physicians in the US that we profiled last year on os.a. Physicians can ask and answer questions and surveys posed primarily by doctors and pharmaceutical firms. The Sermo community identifies interesting health trends, case and other novel health insights for the benefit of multiple stakeholders.

The reason my view of Sermo is different than say InnoCentive as a model to consider is in how it constructs participation and information flow.  The former seems opaque to me while the latter is much more transparent.   Sermo needs to be more transparent and one would hope the AMA (if they are still involved) wants that too.

Here’s an interesting story from NBC’s chief science and health correspondent Robert Brazell from last month on Sermo.

There doesn’t seem to be any update in 2008 on this partnership and how it has worked for the AMA. If anyone can provide an update it would be appreciated.

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Tapping Your Global Brain – An Interview with Author Satish Nambisan

30 11 2007

“This is a very important book on a very important topic by two of the world’s foremost authorities in innovation. It bears the hallmark of great business writing. The authors do not sell a one-size fits-all prescription for every company’s innovation problems. Rather, they offer different roadmaps that can be tailored to each company’s situation. This is what makes their work so broadly useful.”

Clayton M. Christensen, Harvard Business School

That’s a pretty good plug from a pretty credible source of management innovation. If we as associations hope to be around in a significant way for the future of our members, we need to understand how “open innovation” can be practiced within our current business models, operating cultures, and the means we use to deliver value to our stakeholders. os.a is pleased to welcome Dr. Satish Nambisan, Associate Professor, Technology Management & Strategy, Lally School of Management & Technology. An acclaimed researcher, thought-leader, and consultant his work encompasses the fields of technology and innovation management, and includes technology strategy, product development, strategic alliances, and inter-firm networks. Through his articles in publications such as Harvard Business Review, MIT Sloan Management Review, Academy of Management Review, and Management Science, he continues to influence both research and practice in the above areas. He has been recognized for his research with awards and grants from several organizations including the IBM Center for Business of Government, Ernst & Young, and the National Science Foundation.

Together with his colleague Mohanbir Sawhney, McCormick Tribune Professor of Technology and the Director of the Center for Research in Technology & Innovation at the Kellogg School of Management, Northwestern University, they co-wrote a fascinating look at network-centric innovation networks and how to create them entitled “The Global Brain.”

A Conversation with Satish Nambisan

os.a:

Satish, thank you for taking the time to visit with me today.  Please share what motivated you to write this book and the previous research you have done on open innovation practices.

 

Satish:

In the last few years, much has been written about the need for organizations to open up their innovation processes and to ‘look outside’ for innovation. However, despite all the hype, most companies don’t seem to have any clue how to actually go about it – except perhaps to imitate the much-touted examples of a P&G or an IBM. There’s an enormous gap between awareness and execution as far as external sourcing of innovation is concerned. And, my goal in this book has been to help companies close that gap.

In this book, I argue that a ‘one size fits all’ approach’ is not going to work – every firm needs to find its own roadmap for harnessing the “Global Brain” – the creative potential of the world outside its four walls. There are many different approaches and models for network-centric innovation. We show how large firms can bring a method to the madness by identifying four very different models for network-centric innovation, and by identifying the approaches that work best for a specific firm, based on its business context.

os.a:

You mention in your book that the Global Brain “reflects both the global scope and the inter-connectedness of a company’s external innovation partners” who contribute both industry or subject matter expertise and creativity. You go on to say, “to innovate more effectively, you must harness powerful new sources of creativity from both inside and outside your company.”

How would the four defining principles of network-centric innovation in your book (shared goals, shared “world-view”, social knowledge creation, and architecture of participation) help associations adapt their closed models to become more open and innovative?

Satish:

Well, in the context of associations, the primary network partners for innovation are their members themselves. So associations, first, need to develop a shared set of innovation goals and objectives with their membership – establishing such a shared innovation agenda will be a gradual process. They also need to ensure that there is shared situational awareness – everybody needs to be able to see the same picture and this requires a good communication infrastructure. Innovation or new knowledge is created through interactions, i.e. the social aspect of knowledge creation. So associations need to facilitate continued dialog among their members – such dialog becomes the context for ideas to emerge and evolve. Finally, how will the members share in the rewards from contributing their innovative ideas? – So associations need to specify mechanisms for the entire community to benefit from the innovation.

os.a:

In my own studies, I know of only one association (Australian Industry Group) that developed a member service based on an open business model or another (American Health Information Management Association) that created a massive communities of practice that drives substantial member value.

Has your research ever studied any associations who developed a successful network-centric strategy? Why do you think companies (who until recently never felt the need for creating and promoting community as a system for product or service management) have suddenly leapfrogged associations to create vibrant, even passionate communities?

Satish:

I have not studied associations per se. However, I have examined service-based companies, some of which have very similar business models. And much of the concepts discussed in my book apply very well to the association context.

Most companies have discovered that their customers are perhaps their best innovators. Companies such as Ducati, Microsoft, Sony, etc. have all established customer communities and implemented network-centric innovation initiatives to source innovative ideas from their customers. I have a new article forthcoming in the MIT Sloan Management Review (Winter 2008 issue) on the topic of customer communities for innovation.

os.a:

Associations play a critical role in our society. But we seem stuck in old ways. What can you suggest to association executives on how to develop their own network-centric innovation networks? Of the four major approaches you discuss, is there a model that might fit associations better?

Satish:

I am not quite ready to state that any one model would be most appropriate for all associations. Given that different associations would have different goals and different governance structures, one needs to carefully examine the contextual characteristics before deciding on a network-centric approach. Indeed, that is central message from my book – one size doesn’t fit all. And, I bet that is true for associations as it is true in the cost of most other industries and companies.

os.a : In your book you talk about the “execution gap.” What do you mean?

Satish:

To be successful in network-centric innovation, one need to get beyond just awareness of concepts like open market innovation, crowdsourcing, etc. Companies need to be able to do three things: First, understand the landscape of network-centric innovation (what are the alternate models). Next, they need to situate themselves in that landscape – taking into consideration their particular industry/market/product/service characteristics – and decide which type of network model and which specific role is appropriate for them. Once you know the innovation role in the network, you can identify and build the capabilities or competencies that would be needed to execute that role.

os.a:

The cultures you mention in your book the “not-invented-here” (NIH) and the “we-know-everything” (WKE) syndrome is common among associations. How should associations manage the cultural shift needed to overcome this thinking among their volunteer leadership and staff? How to engage the great unwashed rank and file member or non member subject matter experts as one adapts existing peer review models?

Satish:

Such a cultural shift requires the commitment and continued support of the senior management. There is no easy way out here – it takes time, it takes resources, and it is bound to be painful to many. So one needs patience as well as a clear vision of the goals and of the potential benefits from the networked approach. Better alignment of the incentives of all the network partners (including the rank and file membership) can also help in this regard. Establishing online discussion forums and other open forums can enhance the transparency and thereby appeal to a wider set of the membership to get engaged in the collaborative innovation process.

os.a:

You talk about “developing a deeper understanding of the various innovation opportunities that exist and relating them to the firm’s own unique innovation context.” That resonates very much with me. I look at InnoCentive and contrast their model with a traditional hundred year old technical society. The former has created an open business model that let’s researchers around the world pursue their passion for chemistry and get paid for it while driving faster and cheaper product innovation. Meanwhile, the old traditional technical society focuses on the back end research – peer review publishing and misses the opportunity to expand the value chain of their members in the practice of doing the research.

How can associations avoid missing such opportunities for innovation?

Satish:

I hope my book will help in this regard! The key objective of the book is to help organizations – including associations – not miss such opportunities for innovation. A good understanding of the network-centric innovation landscape can help them evaluate the potential opportunities and implement the most appropriate approach.

os.a:

What are the organizational competencies needed to be successful in a network-centric world?

Satish:

I have described three broad categories of capabilities in my book. Good leadership is very important – leaders who can ‘build the faith’ of the organization in such network-centric initiatives. Equally important is a relevant set of mature processes to manage and coordinate the innovation and an appropriate technological infrastructure. You also need to be able to measure what you are achieving – so an appropriate portfolio of success metrics is also required.

os.a

This blog has featured InnoCentive, NineSigma, InnovationXchange, SellaBand, ArtistShare and others including companies who use online communities to drive innovative product design and delivery like Nike, Minnesota Public Radio, Gannett, and tiny Slim Devices. Do you have some favorites?

Satish:

I don’t have any favorites. I think at this stage many of the companies are still experimenting with the different approaches and models and finding out how they can use each of those innovation intermediaries that you mentioned.

os.a:

It seems like we are approaching a radical new age. One that will be driven by openness. What is the collective potential effect of open innovation?

Satish:

The ‘global brain’ presents a lot of innovation opportunities for companies. However, there are also contexts where such external collaboration may not be warranted. And so, the ‘local brain’ (internal R&D efforts) is also equally important. It complements the global brain – and together can drive innovation in radically new ways.

 

 





Gallup: Cultures That Promote Strengths & Engagement = Better Products & Services

18 09 2007

Yet another study on what makes innovation work this time from the folks at Gallup to confirm that management must develop strategies to enhance one’s intangible assets – our people (staff and volunteer leaders).

In the past we posted about how intangible assets can make or break your organizational strategy (See customer intimacy post here) as well as its impact on building winners, turning around a loser to a winner, or sliding into a long term losing streak (See Confidence post here).

You Need to Walk the Talk

The Gallup Management Journal (GMJ) surveyed U.S. employees to determine the effect on individual creativity and workplace engagement when employers emphasize developing employee talents and strengths.

Here are some highlights on what they found:

  • Organizations that emphasized strengths development were more likely to demonstrate innovation and creativity than those who did not. So training to one’s strengths can be a powerful factor in creating and sustaining a workplace culture that allows innovation to grow and employee engagement can intensify this effect.
  • In contrast, organizations that were not committed to building the strengths of their people demonstrated significantly less creative ideas.
  • Managers play a significant role (plus or minus) in strengths development and people engagement by making sure that job roles leveraged these strengths properly or not at all.
  • Management receptivity to new ideas were significantly higher (65%) among organizations with a culture supported by programs that built strengths and people engagement versus those that didn’t (2%).
  • This was also true in the degree to which managers fed off their teams creative ideas. Stronger cultures had more confident managers who promoted creative exchanges.
  • This in turn led to a higher degree of employee friendships and a very high degree of job satisfaction within teams due to the more positive and engaging culture in which they worked. In contrast, organizations that didnt support this culture exhibited far fewer on the job friendships and far less job satisfaction. For instance, Eight out of ten engaged employees (83%) who strongly agreed that their organization is committed to building the strengths of each associate also strongly agreed that they have a friend at work whom they share new ideas with. This number drops to 5% among workers who are actively disengaged.

What Kind of People Do You Have?

If I had a dollar (or maybe a Euro since they are worth more these days) for every manager I have known who didn’t feel the need to worry about this “culture” thing I could have retired long ago. But the good old days of making easy money are gone for most of us. That means we need to cultivate the kind of organizations we hope to become or remain.

So as you look at your overall strategy:

  • What kind of leadership development program exists within your association for staff and volunteers? Is it competency based? Do they map to the core competencies you need to create compelling product and service experiences? Tell me you have one…please.
  • Does your staff or volunteer leadership performance evaluation process reward for idea creation, collaboration, staff development, teamwork, or taking risks?
  • Do you have systems and practices to promote knowledge sharing and best practices?
  • How aware are your people of the strategic goals and core strategies of your organization? How well aligned is the work of your boards and committees to your core strategy?




How Business Uses Web 2.0 – It’s All About Relevance Says McKinsey Study

31 08 2007

 

Yet another McKinsey Study examines the perspectives of global business executives on the outcome of their Web 2.0 technology investments and future plans.

Here are excerpts from the full report available here (Free sign up required).

  • By and large, executives are satisfied with their previous investments in Internet technology, and most are investing in trends that promote automation and networking online. Nearly three-quarters say that their companies plan to maintain or increase investments in Web 2.0.
  • Companies that acted quickly in the previous wave of investment are more satisfied than late movers.
  • Asked what might have been done differentlyForty-two percent say they would have strengthened their companies’ internal capabilities to make the most of the market opportunity.
  • The most frequently cited investment in Web 2.0 is Web services, being used or considered by 80 percent of the respondents familiar with the tools. Peer-to-peer networking also is popular; 47 percent say they are using or considering it.
  • Nearly two-thirds of those investing in Web 2.0 think they are important for maintaining the company’s market position, either to provide a competitive edge or to match the competition and address customer demand.
  • Though China and Latin America say that their companies are late followers or had invested cautiously, they now plan to invest at the same rate or even faster.

 

 

  • Executives say they are using Web 2.0 technologies to communicate with customers and business partners and to encourage collaboration inside the company. Seventy percent say they are using some combination of these technologies for communicating with their customers.

 

 

  • To communicate with business partners and suppliers, companies are using Web services, peer-to-peer networking, collective intelligence, RSS, and peer-to-peer networking.
  • Companies are using the same technologies to help manage knowledge internally. Just over half of respondents say they used one or more Web 2.0 technologies for that purpose. Just under half use these tools for designing and developing new products—for example, setting up systems to gather and share ideas.

 

 

  • Blogs, podcasts, and mash-ups trail technology trends that allow people to contribute knowledge to a common effort or allow machines to exchange information more easily.
  • Some 43 percent of companies are even more focused on networking and collective intelligence technologies than the global average. These companies are likelier than others to be large, in high tech, and in Asia. And some 22 percent are much likelier to have invested in RSS, blogs, and podcasts than others; these companies are also likelier to be in industries such as media and telecommunications and located in North America.

 


 

 





Open Innovation Research Feature on opensource.association

30 08 2007

Over the past six months, I have been piling up a ton of research from outsider thought leaders to help illustrate the power of open innovation, content co-creation, customer experience management, emerging business units, role of managing intangible assets to advance innovation practices, and building sustainable business practices.

So to make it easier for subscribers of this blog to find and use these rich resources you can now access them conveniently from the “Open Innovation Research” navigation to the right side of these posts.

As I locate and write about more of these, I shall add to the growing list. And if you have any you would like to share, share them in response to an article I write by appending to any post.

Let me know if you have any suggestions for improving access and usability to this site.

PT





Trouble Building Community or Custom Products and Services? Try the Lead User Method

27 08 2007

As we have featured from InnoCentive to NikePlus, companies are innovating by involving their customers in product/service design and delivery through the integration of product development methodology with peer production, crowdsourcing or crowdfunding customer engagement strategies.

The byproduct is robust online community, customer evangelists, and more open innovation models. But it doesn’t happen on its own.

So how can associations catch up? How can we tap our brand power to create online relationships built on the trust we have carefully built and promote customer-focused product/service development?

Stop Treating Everyone the Same

For starters, we need to apply what we already know about how people learn. We know that how I like to learn may be different than your own preference. So we devised various means for delivering messages and learning experiences via face-to-face or online programs.

Why shouldn’t this rule be the same for building online community or product development?

One often hears executives exclaim that they have too many “lurkers” and not enough “seekers” who aren’t afraid to interact and build content. But often you find they don’t have any core strategy for fostering community. Like for instance, how online community will specifically support existing products and services or how online interactivity of end user members will achieve a specific outcome they need filled.

You have “seekers” but they are smart, engaged, and don’t have time for activity that has no purpose. In product development, they refer to these folks as “lead users.”

Imagine you are a baseball owner and you just finished building the next state of the art ballpark. Would you open your doors to the public without a team of ball players? People who know their positions, roles, and responsibilities? People who can play to objectives and change as you need?

Sadly, we have built “ballparks” everywhere in the form of discussion boards, listservs, project spaces like Sharepoint or Groove, and full blown community applications. But many of us have not addressed the questions above. We field teams (more like mass chaos) where the “Friday topic of the week” or “copy fests” (e.g. one person asks for a copy of something and you get ten me too’s) become rampant.

How does this help people learn, apply new ideas, and (shutter to think) help you create new revenue opportunities that promote member evangelism? Remember Jacki Hubba…”assume member retention… you need owners who promote you.”

The Alternative

My own experience with lurkers reminds me of my days at MPI (91-94) when we launched MPINet- a community within the old CompuServe system. Remember them?

The web was in its infancy and lots of folks were timid then too (the Mosaic browser didnt arrive until 1993), but we were able to develop a plan that got us to 750 registered users online in 12 months. Most of these folks were lurkers but we concentrated organizing the top ten percent (about 100 ppl) to serve specific roles with specific duties from chapter leadership mgmt to topic focused discussions. This encouraged healthy interchanges and encouraged lurkers to chime in. Sort of like creating an editorial calendar for online discussion. Ultimately, we found the more activity and content created was due to how well that content satisfied the “user outcomes/needs” of the early adopters which made lurkers less timid to engage.

Deep Diving on Lead User Method

MIT Sloan Professor Eric von Hipple has written and spoken a great deal on the “lead user method” for product development. Read my first post on him here.

Hipple explains the lead user method this way:

“Lead users are users whose strong needs will become general in a marketplace months or years in the future. Since lead users are familiar with conditions which lie in the future for most others, they can serve as a need-forecasting laboratory for marketing research. Moreover, since lead users often attempt to fill the need they experience, they can provide new product concept and design data as well.”

If this interests you, read his 1986 paper on Lead User Method here.

If you think about it, communities are as much a product experience as a meeting or magazine, only it’s organic in construction. It lives 24/7. So it takes a different POV to keep it going.

All you need is to create community around a product that lead users want to make better and the lurkers will feed from them and grow in confidence.

Think back to the adoption curve above and work along the curve from left to right with your innovators and early adopters. Make sure you are designing for their needs and
the lurkers (pragmatists and skeptics) will come along.

So if you plan meetings and education programs toward specific objectives why do you approach the online world any differently? Would you have a meeting without an agenda or a course without a syllabus?

Study InnoCentive and NikePlus to see how they create product or service-oriented community that creates new value, better product or service experiences, and grows revenues.





Businesses That Excel at Customer Experience Mgmt Lead in Profitability

27 07 2007

Research conducted by Peer Insight, LLC show that businesses who focus on designing systems to create and maintain a compelling customer experience also deliver better profits than businesses who focus on operational excellence.

Looking at the chart above:

Customer experience (cX) leaders are companies that deliver value through the experiences they create around their products and services (e.g. Starbucks)

Operational Excellence (Op-X) leaders excel at the efficient and productive delivery of their product or service (e.g. Wal-Mart)

When you compare the financial growth of cX leaders with the S&P 500, the results are show that a hypothetical $1K investment in a customer experience portfolio would outperform the S&P 500 by a 10 to 1 margin from 2000 through 2005.

Peer Insight studied 104 distinct service innovation projects. They found that the use of Customer Experience Design was a key differentiator between success and mediocrity.

Their study entitled “Seizing the White Space: Innovative Service Concepts in the US,” presents 12 case studies of companies who have successfully developed new service concepts and service businesses (one features NineSigma an open business model service we featured in an earlier post).

Using the “ten types of innovation model” developed by the Doblin Group (see below), Peer Insight contrasted each of these companies approach to innovating their customer experience.

The most successful companies included these approaches to designing compelling customer experiences (bold highlights provide links to previous posts on this subject):