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Organizations that embrace "open" will innovate better, cheaper, and faster. Here are three things to think about when implementing open-design principles
"Open-source software is one thing, but would you fly in an open-source aircraft?" This question was posed late last year at a gathering of senior design professionals in London. It was couched as a counterargument to the rise of open design and such companies as 99 designs and Quirky that offer low-cost, crowd-sourced design. The irony of this question is that, in fact, commercial aircraft are often made by an extended community of companies large and small. Indeed, it was Boeing that came up with the idea of X-teams—one of the fundamental stepping stones to open innovation and open design. Based on the work we have been doing at 100%Open, a U.K.-based open-innovation agency, we believe that those organizations that embrace and default to "open" will be in the best position to innovate better, cheaper, and faster. So what are the most important issues facing executives looking to implement or adopt open-design principles? Here are three of them: 1. Creating Intellectual Property "Airlocks" With more companies working across corporate boundaries, protecting intellectual property is becoming an ever hotter issue. Too often, IP regimes can be counterproductive, adding time and other costs into the equation and focusing participants on ownership rather than partnership. In the past two years we have worked with such organizations as Procter & Gamble (PG) and Orange to create an Intellectual Property "Airlock." Essentially, this is an open-innovation competition, where companies invite ideas in response to a clearly defined brief. Brokers—whom we call "trusted agents"—represent both the customer (usually a multinational company) and the innovation community. For a specific period of time, innovators respond to the brief, knowing their ideas are safe from being co-opted by the client, with whom ideas are not shared until the end of the process. At this point, developed propositions are presented to the client, which has a fixed time period—typically three months—to decide whether to proceed. If not, innovators are free to take their propositions elsewhere. Orange sought ideas designed to increase its audiences on Web, mobile, and TV, looking to generate revenue in excess of £20 million over three years. After the initial three-month period, executives decided to proceed with three of the seven innovations presented to them at the end of the airlock process. All are now in development and due to be brought to market later this year. 2. Structuring Interdependent Business Models Fundamentally, we all need to understand how we can get paid a fair price for our contribution when we are sharing risk and reward. Understandably, many companies are reluctant to place their fortunes in the hands of others, especially untried designs from unknown designers. Emotional issues of power and control arise, yet in practice, smart companies have already realized that they operate in interdependent markets and are learning how to make the most of their networks of customers, suppliers, and clients. Cancer Research UK and online collaboration company mo.jo worked together to build a community of people with ideas to create new viable £10 million companies with a view to curing cancer. The uniqueness of this program, called the Open Ventures Challenge, lay in building and supporting a genuine community of innovators with a common interest. To date, this has led to the creation of three new ventures that are anticipated to generate returns of 25 times the initial investment of £100,000. Three new ventures have resulted, including Open Gym, a company that provides a network of outdoor fitness groups and weekly exercise classes.
3. Fostering Collaborative Cultures and Mindsets The hardest issue to crack is creating open and collaborative cultures and mindsets. The innovation funnel and the "stage gate" model—setting up a series of innovation hurdles to filter out ideas and projects according to predefined criteria—are tried and tested. It takes significant bravery to adopt alternatives. Today's businesses are largely managed to minimize risk and often suffer from a "not invented here" mentality that rejects outsiders' ideas. However, companies are beginning to realize that many talented and entrepreneurial people are hidden among their consumers. We worked with Virgin Atlantic on a customer-led innovation program called V-Jam, the objective of which was to explore how social media might affect the future of air travel. The program brought together a community of frequent fliers, Web developers, and Virgin staff to develop new social media applications that might drive new revenue streams or enhance the customer experience. Crucially, the frequent fliers not only provided insights; they also co-owned and co-developed the innovations themselves—and retained all intellectual property generated through the process. In essence, Virgin Atlantic was looking to buy from, as well as sell to, its most informed customers. The initiative led to a return of 10 times an initial investment of £30,000. Six social media-based projects were born through the process, including a taxi-sharing scheme for Virgin Atlantic customers and a Facebook application that links with the company's "Flying Club." The very real challenges and barriers to the adoption of a more open approach to design and innovation should not hide the emergence of a set of tools and techniques that are showing how these tactics can create new and better value. In the words of Sean Miller, a service designer at consultancy Innovation Scout who spoke at a recent innovation event in London: "Designers should consider the many different, useful roles they can play. They can brief, judge, develop, collate, facilitate, connect, prototype," he said. "As well as simply draw."