There are many ways to innovate. The concept of Open Innovation has been with us for decades, but has only recently found space in the limelight as a way to address shrinking R&D staff and budgets. Companies that are being forced to do more with less look at Open Innovation as a potential way to tap into the vast potential of talent outside the four walls of a company.

This has always been done in the past. Companies have reached to outside universities to engage them in research, have reached out to independent inventors to access novel patents, and have worked with small start-ups to explore new markets and technologies.

So, why is Open Innovation considered a new ‘hot topic’? Much of the emphasis on Open Innovation links to two noteworthy points – AG Lafley at P&G and Henry Chesbrough at Harvard. Lafley insisted that P&G open its doors to outside ideas, inventions and collaborators so that no more than 50% of the company’s products would be developed internally. Chesbrough broadly disseminated the idea of the ‘porous funnel’ which allowed R&D projects to be seamlessly brought in and out of a company’s four walls to help gain the benefit of outside thinking.

While the notion of Open Innovation is a current hot topic, its diffusion into business is moving fast in some industries slow in others. Where does your organization fit?

In industries with broad innovation portfolios that include many parallel projects, such as consumer products, technology products, foods and games – we see early adoption of Open Innovation practices. Companies such as Kraft, P&G, General Mills, Clorox, HP all have outreach websites that provide outsiders with a way to connect with the company.

In industries with focused innovation portfolios that have highly interconnected projects, such as industrial products, commercial transportation, health care, and aerospace, we see a bit of a slower adoption.

Divisions with highly focused development programs may not wish to open their projects up, because it does not represent an appropriate benefit for the necessary risk. These divisions will be better served by traditional consulting relationships that preserve the confidentiality of a company’s product development portfolio. Open Innovators maintains a traditional innovation practice to meet the needs of these clients.

Divisions with a broad mix of programs that have less overlap are more conducive to open innovation. Why? Because each program is more self-contained and its success and failure will have less impact on the other programs in development. For example, a division with multiple toothbrush programs in its portfolio is less exposed to risk than a company with a multiple components of a new diesel engine in its portfolio. While the failure of one toothbrush project may be a loss, it has less likelihood of impacting the other projects around it than a failure to a critical engine component project.

So, assuming a company has a diverse portfolio, when is Open Innovation right for your company and your division? The following project criteria appear to be the key elements in deciding to move forward with Open Innovation.

1. Current project with insufficient internal facilities, capabilities or expertise (ie: project is a high priority, but needs additional brain power or specialized facilities)
2. Current project with insufficient funding or personnel resources (ie: the project is not prioritized high enough to receive adequate internal funding or talent and can be accelerated by socializing risks and benefits with a partner)
3. New opportunity outside of existing business units’ budget responsibilities (ie: idea has tremendous potential, but doesn’t fit the remit of current business units)
4. New opportunity conceived outside the company (ie: idea is a promising new technology, proudly discovered elsewhere, for which there is not yet sufficient internal talent or leadership)

Open Innovators is able to assist in organizing, facilitating and leading open innovation projects that fit within the criteria above.

Having facilitated brainstorming sessions for over a decade, Open Innovators knows that most companies have more good ideas than they know what to do with. Parsing out a small number of high-potential ideas for outside development can bring them to a point of maturity where an organization can better understand whether they are worthy of full investment or not.