Model for Open Innovation
Increasingly, companies are establishing open innovation groups, allocating funds, and measuring results. Based on cooperative and collaborative relationships, open innovation is a catalyst for innovation for all partners involved. To help organizations effectively implement an open innovation strategy, certain established tools and processes can be used.
One such model is the “Want, Find, Get, Manage” (WGFM) model for Open Innovation that companies across industries are embracing, from food service to electronics, from chemicals to consumer products. Asking first what a company wants in order to meet its objectives, then how to find the needed resources, and finally getting it through collaborative relationships and managing those relationships, the WFGM model provides a framework on which to build open innovation.
Phase 1: Want
The “Want” phase asks what the organization needs to accomplish their objectives. This may include making improvements to existing products or gaining access to new markets. If you can obtain your “wants” through traditional channels or internal development, there is no reason to continue pursuing an open innovation relationship. But often the desired resources are not available internally, and the organization has to seek it elsewhere. Sometimes this means purchasing it, of course, but a collaborative alliance is often a more lucrative path for all involved.
But often the desired resources are not available internally, and the organization has to seek it elsewhere. Sometimes this means purchasing it, of course, but a collaborative alliance is often a more lucrative path for all involved.
During this phase, the organization should begin to incorporate external thinking into their planning process, keeping in mind that internal planning processes may result in product objectives that are simply extensions of current product lines, limit employee thinking and rarely engender significant growth. This phase is about determining what the organization needs and evaluating whether it is advantageous to developing it internally or partnering with external entities.
Phase 2: Find
Locating possible sources of external assets is what the “Find” phase is about. There is a lot of variation in how companies go about doing this. Some use third-party agents; others designate internal scouts. Many companies are now even using the Internet to source third-party contributions.
The decision is based on the company’s objectives, its existing scope of contacts, and its internal abilities. Employees, databases, and consultants often possess extensive knowledge that companies may not be aware of and can be leveraged.
When the search goes external, companies must realize that the process is a two-way street. The company wants to find the best collaborative partner, but at the same time, potential partners are looking to find the best match for their own needs. The competition can be fierce, so the company has to show itself to be a promising partner, demonstrating that it is efficient, effective, and committed to open innovation through all its stages.
Phase 3: Get
At the end of the “Find” phase, the company will have compiled a list of potential sources; this list could include just one source, or multiple. The “Get” process helps the company determine which source is the most promising and whether an alliance agreement can be negotiated. “Get” is also a bilateral process, meaning that as the company is deciding on a source, the potential partner candidates are also engaged in the same process.
Establishing internal alignment, and then maintaining it, is a core element of the “Get” phase. Remember that each alliance is really three: the external alliance between the partners, and the internal alliances within each company. A major reason for failure at this stage is a lack of alignment within one or both companies. Structured processes for internal planning and negotiations are also key for this phase.
Phase 4: Manage
The “Manage” phase starts when the contract is signed. Coordination and integration of both parties’ resources defines the goals of the “Manage”. Making sure everyone understands who is expected to do what and how information is to be disseminated is crucial. Neglecting this key communication is a common pitfall and will lead to mistrust.
A kick-off session can teach managing partners how to integrate both sides’ contributions into the whole. Be prepared to encounter differences in systems and processes at this stage. The session can also be used to make sure everyone shares an understanding of the base principles in their agreement. Finally, ensuring that managers of both companies are trained in conflict resolution will help better resolve any prickly issues that may arise.
Developing and managing an open innovation relationship is a highly complex process. Starting with a clear definition of what the organization wants to achieve, the strategic planning group can then move on to evaluating the best methods of fulfilling those wants. Once a method is identified, then the organization can go about setting up the alliances, clearly defining each partner’s role and establishing the groundwork for managing intellectual property rights. Establishing, and then managing, these alliances effectively will go a long way towards keeping the organizations open innovation initiative on firm footing.