Success Story: Designing an Open Innovation System

Confidential Client

open to partnershipBackground: In the age of collaboration, Open Innovation[1] is a way of choosing to run a company’s innovation activities with external parties. And it has become topic of major interest to strategic technology and business leaders.

OI offers the promise of better, faster, cheaper and lower risk product, process and service innovation. And it can be part of a path to superior financial returns and building an organization that endures in the long-term; those companies innovating openly and doing it well enjoy sector-leading operating margins.

Assignment:  The confidential client was a multinational chemical company involved in creating and marketing complex and valuable products and sophisticated manufacturing technology.  The purpose of the assignment was to examine the case for establishing a more Open Innovation system and make a recommendation for how such a system should be designed and develop implementation strategies focussed on good principles of change management.

Process: The assignment was completed by establishing clear objectives with the CTO and undertaking an in-depth research study to establish the state-of-innovation in the firm. A thorough review of innovation operations was conducted by interviewing 15 innovation leaders from a wide range of business units across the corporate innovation system.

Results: The results of the research study showed opportunities to shift innovation up a gear. Options were developed for Open Innovation-type management structures and a detailed report was submitted to the CTO.

Recommendations: Not surprisingly, the innovation health-check showed a mixed picture; from very good innovation performance to average and that for some businesses, operating mostly “closed” was most appropriate which highlights the contingent nature of innovation.  For most businesses, the following recommendations were made.

  1. Undertake a 3-year managed programme of change under a CEO-sponsored programme.
  2. Install the necessary Open Innovation infrastructure; for example a central OI-Office, knowledge management IT solutions, instigate targeted training in innovation tools and techniques and creating new measures and rewards for to shift innovation culture.
  3. Work to establish OI in businesses where process innovation matters most and where modular products are derived from multiple technology platforms.
  4. Use OI as a component of high-performance innovation, but it is vital to attend to leadership and governance, tools and techniques, innovation culture and ensuring strategic alignment.

Outcomes: The assignment provided a health check on the state of innovation in this sector-leading company, one that had never been done before which provided the board with invaluable insight.  It subsequently stimulated a debate on the innovation system in the innovation community and the company leadership.



[1] Henry Chesbrough, “Open Innovation: The New Imperative for Creating and Profiting from Technology”, 2003, Harvard Business School Press