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Optimizing Return On Innovation with 100%Open

BY GINA SPARROW | 27 min read

Innovation Heroes Episode.1 

The rate of market change and innovation increases with every passing day. Companies and governments are turning to innovation networked leaders, platforms, and agencies for support in keeping up - and that includes accessing resources like never before. The pace is fast but the outcomes are worth the hard work. Organizations are discovering new ways of doing business while transforming their culture and industry, creating a buzz around their brand, saving money (millions!), and finding new products and services in record time... all by opening up to the idea of "open" innovation. 

🔉 Click to listen 👇

(full transcript below)

In this episode, Adam welcomes David Simoes-Brown of 100%Open to the spotlight to discuss all things innovation:

  1. How to optimize and measure innovation ROI
  2. New industries where open innovation is trending into
  3. Tackling ambitious net-zero sustainability goals using Crowds
  4. Global innovation trends in open procurement and supply chain "nets"
  5. How EU laws are affecting corporate responsibility

Connect with David:

Twitter: David | 100%Open

LinkedIn: David | 100%Open

Toolkit: Open Innovation Metrics | Open Innovation Navigator | Open Organisation Test

100%Open is an award-winning London-based agency that helps the suits collaborate with the sneakers by connecting the best people, ideas & tech globally. They are truly open innovation pioneers and a small organization with a big network! 

 

The conversation covered a lot of ground, here are 5 key highlights: 👇 

(full transcript below)

 

1) Open innovation metrics ARE possible

 Principle number one is to measure the benefits and the costs from both perspectives in your open innovation partnership, and then have a jam, have a workshop, work through the list, and make sure both sides agree on what you're going to get out of it, and what you're going to put it into it. And then you've got a set of things to measure. We have an open innovation metrics tool that contains a list, and a formula. It isn't about just grabbing as much IP as you can and running for the hills. It's creating long-term stable relationships based on a fair, kind of fair.

#openinnovationpartnership #openinnovation #exchangevalue

 

2) The key impediments now are mostly cultural

 There's a kind of natural innovation antibodies in some organizations that resist external ideas… what we seek to encourage companies to think about is “proudly invented elsewhere”. Company culture is 5x more important than platform design for determining the success of open innovation, more important than the consequence of the innovation, getting the target audience right, motivation and incentive, and more important than sponsor engagement. If you know that, then your approach to oi design thinking will radically change.

#innovationantibodies

 

3) Open Innovation can get you ahead of the competition

 I think as the pace of innovation accelerates, open innovation becomes more and more part of the armory. I’m thinking about fintech, the market’s gotten so complicated, so fast-moving, it's difficult for larger organizations to keep up. Every time I look at blockchain and distributed ledger there are 20 applications for it, it seems every 10 minutes.

#fintech #blockchain

 

4) The key is to find your "Challenge Holder"

 The key thing here is to find somebody in the organization who's your “challenge holder”, and they have to be in some kind of pain sorry to say. They have a burning requirement, not a nice-to-have but a must-have.

 

5) Open procurement is about moving from supply ‘chains’ to supply ‘nets’

 Imagine rather than having one supply chain having a supply 'net' that would compete and collaborate and give you multiple buying points - all contracted to you. That's a whole different and more stable way to run an organization and business. Open procurement - it's the open innovation industry maturing beyond innovation. 

#openprocurement 

(full transcript below)

Thank you for checking out Episode #1 of the Innovation Heroes series! 

Let's keep the conversation going! Interested in chatting with Adam on an Innovation Heroes segment or recommending a guest? To join the queue, send an email to Attn: Adam with your name, email, and topic of interest (you can also use the HeroX contact form). 

 

🔉 About the Innovation Heroes podcast

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My name is Adam Olsen from HeroX. The Innovation Heroes series covers all things open innovation, crowdsourcing, and remote work. 

It’s time to open up the airways, share strategies, engage partners, and leverage the power of crowd intelligence to expedite solutions to the pressing problems facing every level of organization, individuals, and the world. The key word here is OPEN. 

We're bringing our partners in innovation, organizations who have run their own crowdsourcing projects, innovator powerhouses, and remote work legends into the spotlight. 

There is a global network ready to contribute time, energy and intelligence to just about any challenge that comes their way. All we need to do is provide the opportunity.

Thank you for being a part of the solution. 

 

Reach out anytime at

See open challenges here.

Discover the Power of the Crowd

***

Transcript: Episode #1 

 

0:00

My name is Adam Olsen from HeroX and I want to thank everyone for tuning in live to Innovation Heroes today.  We're very excited about this space with our special guests and partner 100%Open. 

0:13

100%Open is a leader in the innovation space. They help organizations create new products and services by connecting them to the best people, ideas and technologies in the world. And they've proven that it's the most efficient, creative, and fastest way to be innovating. 

 

0:32

Today we are joined by David Simoes-Brown, founder and CEO of 100%Open, to discuss how organizations can leverage open innovation to optimize their return on innovation, as we refer to it, ROI.
 

0:48

So welcome David, thank you so much for taking the time today to join us. Before we get started. Can you share a little bit about yourself and the 100%Open story?
 

0:57

Thank you. Yes, I will. So I'm a co-founder of 100%Open. Just over 13 years ago, there's obviously something in it. We've been really at the forefront of open innovation specialist services for way over a decade and the company had an unusual birth.
 

1:22

We were working with the British government-sponsored organization called Nesta (formerly NESTA, National Endowment for Science, Technology and the Arts - an innovation foundation based in the UK - Nesta) And they did a wonderful thing. They gave me some resources and space to experiment with this newfangled thing - open innovation. Could it work? Was it suitable for the U.K. What kind of tools and techniques would you need to make it a success? 
 

So that was a wonderful piece of freedom, and it worked. It worked well so that spun out from Nesta 13 years ago, and since then we've been really trying to remain at the forefront of open innovation. It's very easy as an innovation agency to not innovate yourself. So the big challenge has been to create new tools, new techniques, and new ways of bringing clients value since then. So we're a small organization with a large network. We have over 100 associates around the globe all helping their clients do open innovation. I think that’s probably enough to give you a bit of context for now.
 

2:33

Thank you for the bio and that is certainly one thing I really enjoy about you and your team, all the tools you provide and the education. If any of our listeners haven't checked out the 100%Open site there’s lots of resources they have on there. Make your way over there to check that out.
 

2:52

So I'd love to get a little bit more insight into how you approach supporting different organizations. You mentioned you work with a number of different ones so maybe you could elaborate a little further on that.
 

3:00 

Thank you, Adam, I will. We basically do four things. It's quite a short list so if you’ll bear with me if I just itemize it.
 

3:09

The thing that we work on together, which is, exciting is our Crowds offer. We don't have a platform, that's why we have great partners like HeroX. What we do have is a whole bunch of know-how for the services component of running an open innovation challenge - how you design it, how you reward it, how you position it, how you communicate it, how it all works and clients whether they're new to open innovation or experienced, often benefit from a service element to Crowds.
 

3:44

Jams are our second offer. Jams are increasingly, almost exclusively at the moment, online creative and diverse workshops. The idea is a bit like a bunch of jazz musicians following their inspiration. It's workshops, but not as we know it. 
 

4:05

Think is our third author and as you might imagine that involves strategic investigation into well, pretty much anything to do with open innovation.

 

4:18

The most often question we get asked is, why should we do open innovation? What's the use case? What's the business case for open innovation? Is it worth it for us? Is it the right kind of technique for us? So that's a really good strategy project where we go into the business case for open innovation, more of which later.
 

4:39

The last service line is Learn where we have somewhat accidentally got into culture change and mindset shift within organizations. We didn't set up to be a didactic organization, we set up to be a practical organization. 
 

5:04 

But actually, it turns out that unless the culture in a company is well prepared for open innovation, it doesn't work.
 

5:11

You've got to have the right networks, the right mindset, the right attitude, and the right what we call business empathy between large and small organizations, and once all that's in place, things tend to click. We've found ourselves over the years doing more and more culture change work.
 

5:28

So that's the thing that was brief enough to be not painful.
 

5:36

That was great. Thank you, David. What you said is really important because there are so many components to being ready to successfully adopt open innovation.
 

5:49

There's the culture, there's the right projects, there's the right platforms and partners, there are a lot of things that really come into play when, when organizations are starting to navigate their way down this road.
 

6:00

That being said, I'm sure you've had a lot of very successful projects and some exciting industries you've worked in.
 

6:07

Are there any specific technologies or industries that you've been seeing a lot of interesting innovation happening in right now
 

6:17

Oh, that's a difficult one. Yes, lots, I'm sure you guys have got even more insight with your amazing work with NASA and others, but I suppose it's sort of more product than service innovation, I could definitely say that and quite a lot of deep tech innovation that requires the inputs of many different moving parts.
 

6:48

So for example, we've been doing a bit of work for a thing called the Digital Twin hub run by Cambridge University and that's a crowd, a community of 3000 digital types from the environment sector and from universities and from startups, all trying to create digital twins of physical infrastructure. And that's pretty ambitious.
 

7:31

And it involves of course not just tech, although that's its point, it involves culture, involves connection, involves collaboration, involves connectivity.
 

7:41

So what starts off as a kind of deep tech project, it seems to me, always ends up being about cultural collaboration in some cases intellectual property. That's quite (interesting) and there's many other examples I could give on deep tech.
 

7:52

The other thing was government-based open innovation and I'll probably talk a bit more about this later. We've been working in the UK and in other places with procurement teams in government departments, looking at how they can diversify and open their supply chains to smaller companies. That's kind of exciting actually and I know you've got lots of experience working with the U.S. government so you can probably teach me a few things there.
 

8:29

And lastly, F.M.C.G. (Fast moving consumer goods). We've done a lot of work in finance and other sectors like that but F.M.C.G. seem to be embracing open information a little more, I don't know whether it is the pressures on costs or speed to market, or simply just there being enough case studies around for them to feel comfortable.
 

8:56

So those are the sort of three trends - I think deep tech, government procurement and collaboration and fast-moving consumer goods companies getting into a more rapid innovation cycle.
 

9:09

There's one more I forgot which is defence… a very unlikely you might think sector to do open innovation because often they're closed. And we've had a reasonable amount of success trying to open up innovation in certain defence organizations as well.
 

9:33

So that's four types of industry in tech that we've had recent interesting experience with.
 

9:42

Very interesting. Yeah, we've done some work within the defence industry as well and it is a very unique experience because they are typically so closed off but it is nice to see industries and organizations in such a traditionally closed environment starting to open up. I think that's a really great sign for the industry.
 

10:05

I agree. It's the same in banking to a certain extent, a sector that's built on secrecy and trust and a relative latecomer. Big pharma has been doing open innovation since before it was even invented. So that's a fantastic set of examples. Yeah, certainly we're seeing finance, defence, and other sectors chipping in there.
 

10:27

And, we've worked with a variety of interesting industries as well. Like you mentioned NASA, a lot of cool projects have come down with what they're working on.
 

10:39

They've been crowdsourcing and doing open innovation for years and years and they find a lot of success in it, we do a lot of government work and mining, and we've done some pharma as well, but in all these industries their projects can really look so different and unique to one another and that's where being able to figure out, did they have a good return on innovation? Was this a successful project?
 

11:10

It can be also very different when you're comparing apples to oranges because the projects can be so night and day. So when we look at ROI how do you typically measure success or is it really just on a case-by-case basis?
 

11:25

That's a great question and if you ask me that a year ago, I'd be giving you a completely different answer. We absolutely in our naivety in the early days, created this whole suite of tools for doing effective innovation.
 

11:40

Because my background is in advertising planning, so if anyone knows what that is, it is the strategy of communications, but also the effectiveness of communications.
 

11:54

So in advertising were really keen on proving to the clients whether it's worked and how it's worked.  In innovation, not so much, it's kind of an article of faith.
 

12:06

A lot of companies innovate and just point to the products,” look we innovated that”. Whether they cost $10 million dollars to produce and it's only sold five. It doesn't seem to matter. So there's less rigour, if I may say so, probably insulting over half my audience here, but there seems to be less rigour in innovation compared to communications and other things.
 

12:28

And so what we did in our naivety was we produced a Metrics tool in our 100%Open toolkit. And I think we may be tweeting the link to that kit and the tool, right now. 
 

It stayed there in the kit, dusty for the last 8 or 9 years of its existence. No one was interested. They're always interested in looking methodically at the return on innovation that you're getting.
 

12:58

And actually, it isn't a thing that's just restricted to open innovation. It's quite hard to find many companies or organizations that are rigorously measuring their innovation return.
 

13:16

But recently it's been out of the cupboard, our tool, and it's been dusted off and we've been using it kind of left, right and center. So what I'll do is I’ll lay out one or two of the principles of the metrics tool. 
 

13:29

The first key thing about open innovation metrics and I cannot emphasize this enough is that you measure the benefits and the cost to you of course, but you also measure and take responsibility for the benefits and cost to your open innovation partner.
 

13:44

Because open innovation is a give-get thing.
 

13:47

It isn't about just grabbing as much IP as you can and running for the hills. It's creating long-term stable relationships based on a fair, kind of fair exchange of value. So when you're measuring the exchange value, we say you have to measure that exchange value from both perspectives.
 

14:10

So you say, right, well, what are the benefits to us? (let’s say it’s Swiss Bank)… here are the benefits; we get new products, we get new partners, we get possibly new customers, great loyalty, whatever it is.
 

14:26

Well, the cost to us, whether it costs us two hundred grand to run the competition or whatever it is, and they can work out a formula more or less to see whether that worked or not. But if you don't measure the cost of benefits to your new partners, the relationship isn't going to last very long, it won't be a fulfilling relationship. And also that will affect your reputation as people to do business with, in terms of open innovation.
 

14:52

So principle number one is to measure the benefits and the costs from both perspectives and then have a jam, have a workshop, work through the list, and make sure both sides agree on what you're going to get out of it, and what you're going to put it into it.
 

15:09

And then you've got a set of things to measure.
 

15:14

We have a tool, open innovation metrics tool that contains a list of things, and a formula.
 

15:22

So we ask people to say; what are the top three benefits to both us and our innovation partner, are we actually after better quality of ideas? are we after sustainability revenue? are we after a reduced time to market? are we after better customer satisfaction? what's the thing we're trying to do?  And in terms of the partner; are we up to more revenue? are we after security of supply? etcetera
 

15:50

So you both have an open conversation about that and then you look at the costs; who's paying for this challenge? Who pays for the distribution of marketing? where do the network and scouting costs come from? If you're doing some venturing, who invests in what? where does the money for the resources for the production of the thing come from?


 

16:09

So what you end up with is a whole bunch of things that you can then measure. And open innovation value is simply the benefits of you and your partner divided by the costs of you and your partner. And you can work out with the whole thing was worth it.
 

16:27

So that's what we recommend in terms of value.
 

16:31

That's easy to say and actually quite difficult to do. What we found with a particular FMC company in Italy the week before last was that their avowed intent was to drive up customer satisfaction using open innovation. And that was easy because they measured it. The insight team knew what customer satisfaction was.

 

16:54

But the other thing was, they wanted increased speed-to-market, but they had never measured the speed to market before for innovation. So that required setting up a whole bunch of metrics within the organization, having someone responsible for them, and diligently recording the speed to market. And then after a while, you can compare the speed-to-market of open innovation versus closed innovation.

 

17:17

So they did a very brave thing. We had a workshop with them and some of their supply chain and we worked out the open innovation metrics with the customer and their suppliers together in the open, and that worked very well.
 

17:32

So that's the short answer. There's a tool for it. It contains two or three key principles that you should adhere to, and it's relatively unused because we haven't cared about it until recently so get in there now.

 

17:46

That's great David because it is such a complex thing to do. You can innovate in so many different ways around so many different areas of the company and the goal and the outcomes that you're trying to achieve are different. Do you have metrics around those and what does success look like for each project?
 

18:06

It's a very complex thing, and it's amazing that you and your team have managed to simplify that into a tool that is based on certain principles and it's able to provide a little bit of guidance for organizations.
 

18:21

How do you guys do it? because I'm really talking about output metrics ie. what happens as a result of the open innovation. I guess HeroX knows what a good challenge looks like in terms of response, engagement, and all that stuff. We have less knowledge about the mechanics of the challenge and more knowledge about the strategy of what's required and what happens

 

18:47

So do you have a feeling for what a lively competition is, and then some kind of benchmarks? or how does it work with HeroX?

 

18:55

For HeroX, it's a little bit more clearly defined I suppose in the early stages of running a project because we work very closely with challenge design and really outline what success looks like at the end of this project.

 

19:13

So we really know if we're working with NASA, for example, a project I just worked on with them was supporting them in designing a new ash management system for their trash removal system on a spacecraft.
 

19:28

And they basically said, “what success looks like at the end of this is some new innovations on how we can continue to reduce the garbage that gets produced by astronauts in space.” They had a machine that got it to a certain ash component and then they wanted to further reduce that, or be able to repurpose it, before they had to store it or put it outside of the ship or whatever it may be.
 

So they knew exactly what they were looking for and the components they needed. We really framed the challenge for the crowd to ultimately know “ok, in order to win this prize, this is exactly what we need to hit and these are the judging criteria.”

 

20:13

So, at the end of the day, if we successfully built a crowd around the project, we would have a solid number of submissions, although we don't really base the success of a project around the quantity of submissions, it's more so quality
 

We've had some challenges come in with 100 submissions and maybe only a handful of them are good and getting those marks. On the flip side, we've had some challenges where you might only get 5-10 submissions and it's almost impossible to pick a winner because they're all so good.
 

20:48

So really that's why it's a little bit more clear, I suppose, in the work we do because we work so closely up front to really define what that success looks like, and then on the backend, they've figured out what that monetary value is to those solutions, and that's what the prize is that they attach to it.
 

21:10

That sounds like we have parallel processes.
 

21:19

So I think it is about starting at the end, is what we say. A lot of people go into innovation projects starting at the beginning going, “well, let's invent something and see what we can do with it”, which is fine if you're an inventor, or possibly if you're an SME - if you’re a corporation less so. You've got to start with the intended effects of that innovation.
 

21:44

So you've got to have really clear unmet needs for your users. You've got to innovate towards a goal rather than from a point, I think that's the thing.

 

21:54

Our most successful projects are where we agree to the strategy and objectives clearly upfront with the client - which it sounds like you guys do as well.

 

22:04

Are there any examples of some interesting organizations you've worked with recently that have produced some good results?

 

22:13

Yeah, we've had a long-term relationship with UBS, the Swiss Bank I mentioned before, going back five or six years and it's been really interesting to see how they've changed culturally and in terms of connecting with the marketplace globally over that time and it's a privilege to be able to have been in that seat, watching it happen.

 

22:37

And I'm sure they wouldn't mind me saying that initially the open innovation that they were doing with the future of finance challenge that we run was as much about profile and creating a buzz as it was about actually accessing new fantastic fintech.
 

25:59:

Indeed in the first, when we launched, they were top of the Twitter charts in Zurich, Switzerland, which surprised everybody.

 

23:09

So that that worked, it raised their profile and said, “Hey, we're open for business literally, and we want to serve our clients as well as any financial institution can.”
 

23:27

But in the first couple of years, it wasn't hugely successful in terms of deals done with fintech but it was more about having the infrastructure and the expectation within the organization to assimilate and deal with and cope with actually, startups. Because obviously if you're a startup you've got a completely different mindset and a different state of development of all sorts of things. 

 

And what they have now, fast forward, is a highly successful machine which is global, which contains places on an accelerator that willing fintechs can join; which includes mentors and coaches from within the organization, helping fintechs through the competition process, and most importantly, an evidence requirement from within the business to which innovators are drawn.So there's a competition for something that they really need rather than something that they would quite like. 
 

24:42

Those three cultural factors have been some increasing steps on the success ladder for UBS's future of finance. Moving from seeking connections to seeking business partners, and then having the courage and the vision, and openness to set up such a landing strip within the organization, separate landing strips to support SMEs and that's been a privilege to be alongside that for five or 6 years. I could say more, but that's probably enough that that's great, thank you.
 

25:24

It is very interesting to see the cultural shifts. One thing we've really been seeing a lot lately is organizations really trying to use open innovation to tackle sustainable issues or to push their sustainability goals and I think just about every large organization has put out some pretty ambitious net zero goals.
 

25:53

Have you been working with any companies to help reach these goals? If so, how are you guys approaching it?
 

26:00

It's in every conversation Adam, quite right too. I mean, I would be ashamed of the industry if we weren't talking about sustainability the whole time, it's urgent and important and existential. In fact, it’s kind of hard as a small business, but I'm trying to say yes more to contracts that have that as their goal rather than others. 
 

26:24

We've worked with a variety of different organizations, I'll just pick it three briefly. There's one organization which is set up to do this kind of thing.
 

26:33

The Energy Systems Catapult in the UK and it's quite an obscure thing, but its remit is to transform the whole of the UK's energy system. You may not know in the UK, but it's partly privatized, there's a national grid that looks at distribution, there's a whole bunch of energy generation companies and it's a bit disjointed. Therefore to think of a system that makes it more efficient, more decarbonized, more collaborative and more responsive to customer needs, is quite an ask in such an environment.
 

27:10

So we've been working with them two to help them find “sparky” startups which are able to deliver parts of that puzzle.
 

27:29

Monitoring consumption, helping consumers reduce their use of power, all the way through to looking at how to reconfigure the national grid, how to make sure that renewable energy can be utilized at the appropriate time, and so forth.

 

27:48

So there's an organization that I love to work with that has a direct effect on our ability to go green. 

 

27:59

A somewhat more tangential case for a couple of years back I mentioned because it was in the States, I was working with Ford to look at essentially a transition from motors to mobility.

 

28:09

So if you're a car company basically at the moment what you're doing is you’re selling private vehicles that consume a lot of energy, whether it's fossil fuels or whether it's electric, and part of what we're doing with the city's challenges - we're working in Detroit and New York and other places too - to involve the community in solving their own transportation issues.
 

28:40

So looking at what's wrong with transportation in Detroit for example, it was mainly access to public transport - there basically isn't any, there wasn't any.
 

28:48

And so it's being a car company, not just making your money from selling petrol-based automotive products but taking a more lateral view of what your role as a company is, it's about getting people from A to B, not about producing cars, so that's super interesting.
 

29:09

And of course in that is a lot of sustainability, in that are a lot of sustainability outcomes.
 

29:18

Another thing we will be doing is trying to help UK startups export ‘smart cities’ solutions to different parts of the world.
 

29:27

So we've been scouring the U.K. for really good, in fact, the best UK startups, who are looking at the decarbonization amongst other things on a city scale, and then coaching them, mentoring them, preparing meetings for them in places like Shanghai and Malaysia, Australia and all over the world, and then trying to capitalize on the UK's expertise in smart cities to create global links.
 

29:57

There's a number of ways you can do this, you can work with organizations that are directly involved in being green and greener, like the A.S.C.
 

30:04

You can work in transforming organizations that have a model that's dependent on, on the old way of doing things like Ford and you can look at promoting brilliance, from within any different community and exporting and that's all about scaling up brilliance really, because it's no good just sitting there in a room with your own brilliant invention, it has to reach the marketplace.
 

30:29

So that's three angles I think, if that works for you.
 

30:37

Yeah, no, that's great, like, really painted an interesting picture of the different ways sustainability is being tackled. We see it a lot to ourselves. We just ran a really interesting challenge with Coinbase who just kind of went out and said, “we're looking for new innovative ways to leverage Blockchain technology”. They didn't even really have ambitious sustainability goals, but some of the solutions they had were very sustainability-based and it was really cool to see that's where a lot of the global innovator community mindset was. 
 

One of the winners that I thought was really interesting was they used Blockchain technology to put together this grid in a community that would help either share or sell solar power - if you had solar panels on your house you would be able to share that power or excess power with your neighbour, or sell it to someone down the street. I thought that was really unique.
 

31:41

We also ran three challenges at the same time with NASA all around reducing space waste. 

Even though it's their sustainability and waste reduction innovation is happening down here on Earth,  there's a lot of waste in space right now. And a lot of organizations are focusing on that. We've also done work with the Singapore government and the U.S. Government and a lot of their innovation goals are very sustainability focused.
 

32:12

So that's the kind of work I love doing, as you mentioned I think it's really important, it's urgent. It's awesome to see that it's at the forefront of a lot of these organizations.
 

32:23

It certainly is and it's a privilege to work with organizations that are big and powerful enough to actually make a difference if you can scale good ideas.
 

32:32

And I think that's where open innovation can really really support the green agenda… is getting the best ideas to market fastest rather than slow traditional ways of getting things to market.
 

32:52

We've touched on this earlier about the defence industry being a little bit closed off and banking industries and there are some organizations and industries that are a little bit more hesitant than others to dive into open innovation.
 

33:07

And one thing that we've seen a lot is the hesitation around; innovation can sometimes be a race amongst competitors, it can really be “okay who gets to the market quickest with a new product or an innovation?”. So, sometimes companies are a little hesitant to go open because their competitors might be getting eyes on what they're doing and then they might steal their ideas.
 

33:37

Have you found that certain organizations have had a tough time adopting open innovation because they're nervous about showing their hand to their competitors or giving insight into what they're working on?
 

33:52

Not so much nervous now, although definitely about five or 10 years ago, people who are new to open innovation thought, “oh gosh, that means I have to open everything to everybody”.
 

34:05

I remember having a conversation with a particular chocolate manufacturer around that time and they were adamant that they didn't want to let the competition know what they were lacking. Therefore wouldn't publish any challenges.
 

34:14

That, however, has completely changed and I suppose the key impediments now are mostly cultural.
 

34:29

Innovators in the audience will know if I mention N.I.H. (not invented here) syndrome. N.M.H., I just learned about, which is “not manufactured here”.
 

34:39

So there's lots of companies that pride themselves on their inventiveness and R&D and that's part of their value and DNA contribution.
 

34:49

So it's odd if you suddenly get a bunch of innovations from outside, it's like the R&D scientists are thinking, “what am I here for?”. 
 

34:54

So there's a kind of natural innovation antibody in some organizations that resist external ideas and there's Henry Chesbrough, who is the godfather of open innovation. He draws diagrams of organizations with perforations around them so the inflow and outflow of ideas are not impeded by this sort of false, skin, of ‘not invented here’.
 

35:26

And what we seek to encourage companies to think about is proudly invented elsewhere, not, “not invented here”, so proudly invented elsewhere means we have been clever enough to recognize the value in something and saved a whole bunch of money by not developing ourselves. 
 

We've made some people wealthy who are partners who are now when we provided a scalable solution for that, and therefore we've benefited our shareholders and our customers faster.
 

35:58

So if the game really is being ahead of the competition then open innovation can help you do that - IF you're not too proud to accept external suppliers. 
 

And in fact, what’s happening as I’m thinking about fintech because we’ve just been talking about UBS… the market’s got so complicated, so fast-moving, it's difficult for larger organizations to keep up. Every time I look at Blockchain and distributed ledger there's a whole 20 applications for it, it seems every 10 minutes. So how can organizations really keep up with that level of pace? it's really hard.
 

36:41

I think as the pace of acceleration accelerates, open innovation becomes more and more part of the armoury, I think.
 

36:54

I have something to share with you here, I was doing a project with an F.M.C.G company recently, and they asked me to look at if there's any research on what makes for effective open innovation. Can you benchmark for us what “good” looks like? I found this tremendous piece of research from 2016 because you forget this is a relatively young industry, right?
 

37:26

And it was called “Benchmarking the best practices in OI” by Gawde and Prakash, and it blew my socks off because they measured the contribution of different things to a successful open innovation challenge. They’re probably if they're sitting there, thinking this an oversimplification but there you go.
 

37:50

So they looked at; is the platform design very important? What about choosing the right target audience? Clearly, motivation and incentives are important things. What about the consequence of the challenge? sponsor engagement has an effect of course. And company culture might have an effect too.
 

38:16

They put these six factors into their research design and found something absolutely fascinating which was that of these six factors it’s the company culture that is the key determinant of whether open innovation is successful.
 

38:32

In fact, company culture - I'm sorry about this Adam because you guys run a platform - is five times more important than platform design for determining the success of open innovation. Isn't that incredible?
 

38:48

So, what does culture mean? I can talk about that a bit, but culture is more important than the consequence of the innovation (the effectiveness), more important than getting the target audience right, more important than motivation and incentive, and more important the sponsor engagement.
 

39:08

So if you know that, then your approach to open innovation design and thinking about it, I suspect will radically change.
 

39:25

So going back to the U.B.S. for example, it's the culture of openness and supportiveness and connectedness that really has made a difference for them. And not really the platform, we used our own platform or anything like that, so I think a little humility from us platform users would go a long way… but we both have a responsibility to talk about culture and think about culture and the organizations we support.
 

39:50

That's incredible stats and you'll certainly get the humility from me. At HeroX we hire almost strictly based on culture so we certainly see the importance in it and the value of having a strong aligned company culture. 

 

Like you said, it's part of our job to have those conversations with organizations that are getting into open innovation because it does hold huge importance and I think going out and getting ideas from the world, however you approach that is one thing but it's what you do with those ideas and solutions and innovations in-house when you get them that really makes the difference.
 

40:37

If you've found the perfect platform and you've built the perfect crowd and you get the amazing solutions and your company culture isn't set up to capitalize on these new innovations that you get… I’ve seen it quite a few times before… those things will fall flat. It's quite unfortunate because you do all this work up front, you invest this time and money and you get the results but you're just not set up internally to really further develop them.
 

41:11

And I know that's where you spend a lot of time helping your clients post-getting those ideas, is that correct?
 

41:18

Yes, as we said before we try to start at the end. So we look at what's innovators call “the landing strip” within organizations. Have you got the capabilities to actually, for example, G.S.K. British Drugs Drug Company has (or had the last time I looked) a team of about 20 people whose sole job is to manage open innovation relationships with startups they're working with.
 

41:44

It's a full-time job for a lot of people to make sure those relationships thrive and assault post-competition and make sure that I.P. is correctly assigned, make sure everyone's happy, make sure nobody starves, make sure milestones are hit.
 

42:01

That's organizational know-how that is part of culture. And if you don't have that the SME turns up blinking one Monday morning, “Hey, I won!” and people are looking at them going “well nobody asked the task of you and I've got no budget for you.” 
 

42:19

Try and start at the end. Try to find the key thing. 
 

42:22

The key key key thing here is to find somebody in the organization who's your sponsor, to forward a better expression, and a “challenge holder” we call it.  And that challenge holder has to be in some kind of pain really sorry to say. But they have a burning requirement, not a nice to have but a must-have.
 

42:48

And if you can find and isolate that person in the company, the whole value of the thing becomes super apparent to them and they will be waiting in that reception with open arms for their SME - not folded arms and asking “who are you?.”
 

43:05

That’s pertaining to what we're talking about today, the ROI. Because if you've made a business case, if you've got some numbers about a return on investment, then you're going to be more likely to put some effort and resources into looking after that relationship and making sure it matures.
 

43:23

One last question for you, David. We've been seeing huge increases in government budgets around open innovation over the years, especially in the last two years and we feel this is a great indicator of what's to come in more of the enterprise world as well.
 

43:44

Where do you see innovation or the open innovation industry in the next five years?
 

43:51

I think that the whole world of government procurement, and I'm talking not just about the U.K.

but other governments around the world, it's set up to be fair but not necessarily open.
 

44:10

Governments will increasingly buy services and products from large organizations and they don't really trust open innovation to deliver results for them.
 

44:24

We've been getting involved in the whole world of procurement which is different. Our clients normally aren't procurement people, they are innovation people.
 

44:33

If you deal with procurement people it's a whole different set of criteria that they use. It’s all about compliance and transparency and competition and driving the price down in order to create the supply chain that is reliable and cheap.

 

44:55

What we're seeing is a radical transformation from supply chains to supply nets.
 

45:02

Imagine rather than having one supply chain which is reliant on several companies passing a thing on, if you had a supply net that would compete and collaborate and give you multiple buying points all contracted to you. That's a whole different and more stable way to run an organization and business.
 

45:22

We call it open procurement, 100% Open Procurement, and it's a way of the open innovation industry maturing beyond innovation into and actually helping companies to run their everyday business as well. And that's a little bit pretentious I know but you did ask me about the future.
 

45:44

One of the things that's driving that is some new legislation in Europe called the Due Diligence Legislation, which means your supply chain has to be super transparent and prove all the way back to the first thing that's ever made that there has been no child labour involved, that there’s a full set of ethics there, that you’re carbon neutral, and that you can prove audit your entire supply. 
 

46:09

That is a revelation in terms of how manufacturers in particular will see their procurement systems, and adding openness to that can only improve and allowing suppliers to compete on ethics as well as dollars would seem to me to be a sensible step forward.
 

46:31

I think open innovation has matured, it is now a thing. People are wanting to measure it. They have a face on it, which is great, which is what we've been talking about. And I think it’s about to break out of its box into ministry procurement rather than simply getting the latest innovations into companies.
 

46:52

I wouldn’t call it pretentious at all. We're in the game of innovating and forward thinking and thinking of the future. We have to envision that and embody that ourselves.
 

47:07

I really appreciate kind of getting into your mind and your thoughts on where you see the future going. And on that note, I think that's a great spot for us to finish up today.
 

47:18

David a huge thank you to you for your time and your insights. It was an absolute pleasure hosting you as well as thank you again to our listeners who have tuned in. If you have any immediate questions, please feel free to connect with me on LinkedIn: Adam Olsen or tweet at HeroX or 100%Open (LinkedIn: David Simoes-Brown). We are always happy to chat and elaborate on some of the topics that we touched on today.
 

47:49

As mentioned earlier, we have that free tool that 100%Open has willingly provided to all of our interested listeners.
 

47:59

You can find that download link over on the 100%Open Twitter that I believe they just tweeted out recently.
 

48:06

So it should be top of the feed, keep an eye out for the recording and conversation highlights to share with your friends and colleagues. They will be released in the coming weeks.
 

48:16

So before we jump off David, any final comments?
 

48:18

Just a thank you to Magda who is our marketing executive who's been behind the scenes making it all happen. So thanks to you and to everyone that's tuned in, it's been really, really great fun and good luck with the next interview. I'll be tuning in with interest.\

 

48:39

Thanks to everyone. Have a great day


 

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