How to reduce cost of Open Innovation

One of the assumptions when firms start open innovation is that it will cost less compare to innovating in-house, and this assumption is mostly true.  The subsequent question however is can Open Innovation itself be cheaper than what it costs today?

The primary cost of Open innovation can be divided into two main buckets.

Cost bucket One – In-house team which takes care of coordination with intermediaries and internal technology team.

Cost bucket Two – Intermediary costs.

For the cost bucket One, 3 key pointers to reduce cost

1) Avoid too many dedicated persons handling Open Innovation, instead time share, say 10% of the time of highly motivated people, who love innovation and would happily give that extra time and energy.

2) Have central budget for Open Innovation; this will offer prioritization decision in the hands of Open innovation team who will take decisions after hearing the ROI pitch from the technology requester team. This is a big cost saver.

3) Define Goals, it is tough to define Goals in innovation, so define goals for processes, for number of interactions, even number of failures. (Must fail 2 more time, nice!)

For the cost bucket Two, 3 key pointers to reduce cost

1) Avoid consulting cost, trust me consulting is overrated and overpriced. You might need consulting in some cases but when you need and how much you need must be scrutinized.

2) Shop around, you might be comfortable with the vendor you are used to work with, but don’t forget open innovation is all about trying out new avenues, apply this logic to vendor selection also. You might be able to see cost reduced to half, while outcome remain comparable. Try ideaken !

3) Make some of your fees to Intermediary linked to shortlisting of the solutions.
Where there any other points which worked for you in reducing the cost of Open Innovation. Do share.

How can SMEs benefit from Crowdsourcing?

Typically Crowdsourcing has been associated with large brand names that have huge budgets and try to involve the crowd to co-create products. Best examples which come to mind are Coca-Cola or Lays.  The key thing in these engagements is millions of fans and also budgets to spend on advertising and build up awareness.

So the question is - Can Small and Medium Enterprises (SME) use Crowdsourcing techniques since they don't have huge budgets or millions of followers?  Thankfully the answer is yes, and to do so SMEs can adopt some of the techniques described below.

More the merrier, yes but no – While it may be OK and acceptable for big brands to just focus on getting anybody to contribute, SME firms need to be very focused on who they are trying to attract. When you are small, you may not have a brand image which you can give back and which a contributor can relate to, so providing a very specific reason or a trigger is of utmost importance in order to get fewer responses which are more relevant. This will help you save lot of effort, time and money in dealing with thousands of responses. For example - if your product offering is for sports persons, then challenge their intellect such that they would want to be part of your innovation. 

Be trustworthy, but how? - Creating the trust of your customers is good for your business, but creating trust with a casual contributor overnight is not worth the effort. Use a trusted partner like ideaken, to reach out to large number of relevant and willing contributors. Once someone contributes, then you would also have time and reason to build the trust.

You are better than your bigger competition, at least at this one - One of the areas where large brands may falter is in acting on good suggestions from the crowd quickly.  This is mainly because large brands have existing businesses which they can't afford to change. On the other hand, SMEs typically don't have such limitations or say have less of it. Be nimble in your approach and act on good suggestions early.

You might as well learn few new things about open innovation while Crowdsourcing ideas for your business - which could open up new opportunities for you to contribute and benefit via open innovation initiatives by bigger players in your domain.

In summary, SME have much to benefit from Crowdsourcing, and knowing these techniques might help.

ideaken can help you Crowdsource for ideas, solution and innovation, get in touch for a special SME package.

Be method agnostic - for your innovation goals.

Every organization develops certain liking for methods to innovate over a time. I am using ‘Methods” as a broad term – starting from how the R&D division is structured, what are their goals & objectives, who they are answerable to,  processes in place, further extending to the tools and techniques the organization has been using till date.

By being methodical, the organization is trying to bring in some sort of certainty; however there is also a danger of settling in, and getting satisfied with what you come up with. Remember the whole purpose is to innovate, which by all purpose means to come up with something which is new and beneficial - then why not apply the same philosophy for the ecosystem around getting the innovation done?

How about structuring R&D division where every employee, irrespective of his job profile - has to spend say x months in every y years at R&D / Innovation division of the organization. Let’s assume this makes it 20% of your R&D staff is always a rotated staff from other non R&D divisions. While on rotation, you may not produce great results, but just the feel and experience of being in the middle of R&D will continue to add value to your productivity and also to the Organizational Research even after you are back at your usual job profile.

How about making an R&D division have P&L of its own?

How about giving the freedom to use any tool or technique? I know a company where they can’t use 6 thinking hats because they have their own in house methods to brainstorm, no harm in using own methods but why ban other methods.

Collaborative innovation is one of the ways to become method agnostic, because you won’t know what methods the innovator has used, or will not use, most importantly you won’t care about the methods. Other way around is also true, if you truly try to become method agnostic, you are actually becoming more collaborative, more open, because now an accountant also has a chance to be in the research lab, you are more open because you no longer hide your real revenue truly from new research and innovations, you are more open because now an employee is allowed to install a freeware and try out new things in her free time. 

Trying different things and being method agnostic will breed diversity, which has been shown to be the best way to get innovative results.

Not to forget that being method agnostic does not mean getting rid of methods, it mostly means that you are open, collaborative and flexible – basically you are innovative in doing innovation.