The Art and Science of Open Innovation

Guest post by Roland Harwood of NESTA.

Open innovation appears very attractive yet can be challenging to implement, especially for organisations that are traditionally used to sourcing new innovations from within. Yet it is an increasingly important business strategy due to the increased connectivity and movement of people, ideas and money.

Successful open innovation requires both careful consideration of various technical and cultural factors and is, therefore, I believe it is both a science and an art. Therefore, in this article I wanted to share some of the lessons we, at NESTA, have learned over the past few years, having worked now on open innovation projects with hundreds of organisations including numerous Multinational Corporations, (including Procter & Gamble, Oracle, Virgin Atlantic, McLaren, and Cancer Research UK), Universities, Start-ups and Social ventures.

All of our projects with corporations are based on the simple hypothesis that they would benefit from opening up and diversifying their approach to innovation as it provides access to new ideas, solutions and markets. To test this hypothesis in each of our projects, we have developed a different business model to encourage corporates to collaborate with various partners including with their customers, innovative small companies, and other corporates.

We have found that open innovation happens in three distinct phases, broadly in sequence but with iteration and overlap between each:

1. Explore - the fun bit - working together to find a common purpose and opportunities for collaboration across organisations and sectors.
2. Nurture - the risky bit - vulnerable phase when ideas aren’t fully formed enough for clear decisions to be made. It requires confidence and persistence to develop further.
3. Exploit - the hard but important bit - when ideas are turned into tangible economic or social benefits.

On top of this, we think there are three major cross-cutting themes which need to be considered and managed at each stage of the open innovation process.

1. Difference – Incorporating new perspectives leads to creative collaborations but also have the potential for tensions to emerge. Roles and responsibilities need to be agreed in by the time you reach the Exploit phase.
2. Relationships - Trust between participants needs to be earned and developed so that a shared language and respect emerges. Crucially, risk and reward must be shared as equally as possible, over the course of the collaboration.
3. Interactions - Light facilitation is required early on, with ongoing participation arising through self selection (through the law of two feet i.e. move/leave if you want). Clear management and leadership kicks in later, once the opportunities are defined.

We’ve tried to capture these three phases and themes in a framework for successful open innovation in the grid diagram below:

Figure: The Open Innovation Grid – the three phases and themes of successful collaboration

We have used and developed various tools and techniques for successful open innovation at each stage. For example, we have used unconference formats and hothousing events at the Explore phase to allow ideas to emerge and coalesce. Later, in the fragile Nurture phase, it really helps to have a trusted agent (or intermediary), particularly if the process is new to either partner. They help to manage the interactions and protect the interests of both/all sides and drive the collaboration towards the creation of a visual business case or prototype. Finally, at the Exploit phase, the agreements regarding shared risk and reward are required through written agreements or contracts.

We have lots more information, tools and learning that we’d be happy to share about our experience to date, but in this article I just wanted to share the framework we are building through our open innovation experience, and to see how it relates to the experience of others. I hope it is of use to others and would welcome feedback and discussion.

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NESTA is the National Endowment for Science, Technology & the Arts. Its mission is to transform the UK’s capacity for innovation. NESTA Connect is a campaign for more open and collaboration innovation underpinned by the core belief that 1+1=3. For more details, please take a look at the blog.

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