Internal resistance to tech scouting initiatives is not uncommon. Strong centralized R&D cultures may initially view ‘not invented here’ ideas as representing a dilution of brand. However, firms can share the innovation challenge with R&D and demonstrate the benefits of tech scouting solutions as a complement to internally-generated innovation, as well as ensure that open innovation is supported throughout the organization.
Ideally the push for OI comes from the top. Jeffrey Immelt, Chairman and Chief Executive, General Electric, was just quoted in the Wall Street Journal (Sept. 29, 2011): “We very much believe that we are never going to invent everything inside the company, and that we need to have the spirit of open innovation to be as good a technical company as we want to be.”
GE’s Ecomagination Challenge has grown into a $21billion business. AJ Lafley, Procter & Gamble’s CEO at the time, started a multi-billion dollar business with his quest for 50% of ideas to come from outside. Both organizations have made open innovation an integral part of corporate strategy.
At the implementation level, expert Jay Paap stresses the importance of managing the “3 Rs”: Resources, Risk, and Resistance. External sourcing must be promoted as a valued option, emphasizing the benefits of going outside such as accelerated development and growth.
Additionally he recommends:
- Provide support and tools for searching and acquiring.
- Remove disincentives – both personal and project.
- Reward deals considered, not just deals that are done.
- Consider setting up a formal program.
- Location not as important as visibility and support.
- Concentrate on cooperation – not competition – with related functions.
Among participants of Management Roundtable workshops, practices include:
- Form a dedicated core team that is incentivized to create new business, led by an entrepreneurial individual with both technical and market knowledge.
- Insulate teams from short-term pressures of quarterly results.
- Establish clear frameworks, processes, metrics and rewards.
- Make sure the search for innovative ideas begins internally, that company-developed IP is not overlooked.
- Hold company-wide events and/or publicize activities and successes.
- Dow AgroSciences first developed a pilot Open Innovation project with support from senior R&D leaders. Dow also planned to develop an infrastructure throughout R&D with teams of trained “focal points,” local champions, mentors and OI facilitators.
- Onsite events: Avery Dennison’s Innovation Days (cycles of 3 one-day meetings) and Corning‘s Technology Days to stimulate ideas and identify potential leads.
- GlaxoSmithKline identified that R&D was best done in smaller more productive units and introduced Centres of Excellence for Drug Discovery (CEDDs). “With no internal pipeline to manage, the cedd is completely focused on the success of alliance companies’ programs.”
As OI evolves, compatible R&D skill sets tend to evolve with it, paving the way toward greater acceptance of open innovation-based strategies and stronger internal/external development programs.
Incentives are key to successful tech scouting programs by encouraging and rewarding quality participation. It is important to offer incentives that are meaningful, clearly understood, tied to objectives, and which encourage going outside the company.
Finally, in today’s resource-strapped environment it helps to win over R&D if you can encourage breakthrough thinking, even on a budget. A Wall Street Journal interview (March 1, 2010) with 3M Chief Executive George Buckley offers excellent advice.
In corporate research and development labs, staffers dream of creating sexy products. But at 3M Co., Chief Executive George Buckley is rallying his team to make cheaper respirator masks. Mr. Buckley trimmed R&D spending 8% last year to $1.29 billion but kept it steady as a percentage of revenue at 5.6%. In an interview, he described how he motivates employees to innovate.
WSJ: You trimmed R&D spending but didn’t slash it. Why?
Mr. Buckley: If you don’t invest in the future, there isn’t going to be one. A lot of the stuff we spend on may not deliver a product for two or three years. There may be no return. But the alternative—not doing—is worse.
We often think innovation is making a breakthrough at the top of the pyramid. That’s often not where the hardest challenges are. The hardest challenges are often: How do I make a breakthrough for next to nothing?
WSJ: How do you get your R&D team excited about this?
Mr. Buckley: When we first talked about going after this stuff at the bottom of the pyramid, a lot of them felt what was interesting was what was at the top.
These people are turned on by things that are intellectually challenging. [We had to] convince them the intellectual challenge is making a real innovation that costs next to nothing. Initially it was hard for them to buy into. But once they bought into it they said, “You know what? We like it. You get volume, we get expansion. What’s not to like?”
WSJ: How do you motivate employees to work on projects that aren’t seen as sexy?
Mr. Buckley: I remember my meeting with Chris Holmes [who heads 3M’s abrasives business]. I had been in the company maybe a month. During a business review I said, “Tell me what is going on in abrasives. What innovations are we doing?”
Chris said we were doing this and that, but abrasives [were] not considered sexy. I said, “Why not? I think abrasives are sexy. Why can’t abrasives be sexy?”
I think it’s those simple comments to people who have been convinced over a period of years that they are unimportant. Chris was utterly inspired by that.
WSJ: How else do you get your people to be creative?
Mr. Buckley: Everybody wants to find out how to can creativity. You can’t. Creativity comes from freedom, not control. We let all the people in the R&D community spend 15% of their time researching whatever they like. The creative process, whether it is with me or anybody else, is a discontinuous process. You can’t say if I put more money in it I am going to get more out.
This article published in conjunction with MRT’s workshop series:
Technology Scouting to Accelerate Innovation – Implementing an External Sourcing Program – check our website for the latest dates and locations of this popular seminar.
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