In this article on Innovation Tools Michael Dalton gives some useful tips on how to succeed with open innovation. In particular he gives some ‘premarital counselling’ to companies considering joining together in an innovation enterprise. The key points are:
I. Want – Do you have a clear understanding of what you want and need from the alliance? Open innovation alliances require clarity on what unmet customer need you are trying to solve, what value that creates and how much of that value you and the partner might be able to share. If you don’t have an effective process for finding and evaluating unmet customer needs, spend your time and resources shoring up that weakness instead.
II. Find – Do you know where to look for external solutions? Or is your alliance strategy left to the chance meeting of two like-minded CEOs or business development managers? Assign your R&D and business development folks to research the technology solutions that you “want” well enough to know who the players are and where the action is so that you can tap into the right networks. If you don’t have a network in place already, begin developing one within the companies and universities doing leading work in the area of your “want”. The players can change quickly, so you should also familiarize yourself with leading web-based open innovation sources such as NineSigma and Innocentive.
III. Get – Do you have a rigorous process for evaluating and negotiating partnerships? AMG’s Alliance Framework starts with these questions to identify where your partnership might be in jeopardy:
- Objectives – why is each partner considering an alliance?
- Roles – what part will each partner play in the alliance?
- Resources – what will each partner bring to the alliance?
- Boundaries – where will the partners be allied and where won’t they?
- Market model – who and what will the customer see?
- Strategic exclusivity – Will the partners be allied exclusively for any markets, regions, timeframes, etc?
- Intersections – Does either partner have existing arrangements, such as exclusive sourcing or distribution, that would legally constrain their actions within the proposed alliance?
These seven strategic assessment elements tell you whether there is a reason to go further and begin negotiating more sensitive items like financial pie split, intellectual property and termination. If not, you’ve quickly eliminated a relationship that could have needlessly tied you up for months if not years.
IV. Manage – Do you have the tools, metrics, and most importantly the discipline necessary to carry out the alliance? Managing alliances is complex. If getting silos to cooperate internally is a challenge, try dealing with three sets of them: those in each partners business and the new ones that can form in the alliance. You must not only agree on how to manage the alliance, but you must be confident that your organization will cooperate. If you haven’t mastered the elimination of silo behavior in your own business, you’re not ready for alliances.
Paul Sloane