The Missing Link in Open Innovation: Where Product Managers Should Be Looking for New Ideas
Originally published: 2015
Read time: 12 minutes
The open innovation movement is in full swing, and companies everywhere are turning to external sources for new product ideas. But, with open innovation now the standard business model, how can your company truly gain a competitive advantage? More specifically, where can you look for new products that no one else has thought to look? Though it sometimes may seem like the well of new ideas has run dry, there is a practical, cost-effective solution that remains relatively untapped across industries. This white paper will examine this key resource, and how your company can employ it to find new products.
"Competitive advantage now often comes from leveraging the discoveries of others." -Henry Chesborough
A Brief History of Open Innovation
It was Berkley business professor Henry Chesborough who first popularized the term “open innovation” in 2003 with his book of the same name. Chesborough suggested that companies were severely limiting themselves by developing products exclusively in-house. He proposed that, in a world of widely distributed knowledge, it would benefit businesses of all types to look outside of their limited sights for innovations. With that in mind, businesses began “opening” themselves to the possibilities of licensing, joint ventures and idea sharing.
And one of the most amazing things is just how quickly the business world has adopted the open innovation model (at least in theory, if not entirely in practice). One of the key findings in IBM‟s 2006 Global CEO Study, which used interviews with 765 CEOs and business leaders to gauge emerging trends in business, was that, in the minds of top executives, “external collaboration is indispensable.” CEOs across industries and continents all stressed the importance of finding innovation beyond company walls.
Benefits of Open Innovation:
- Ability to develop new products on someone else's budget
- Unlimited resources for developing new ideas and technologies
- Option to sell or license unused ideas to other companies
- Greater flexibility for leveraging internal resources
- Opportunity to create a more innovative culture
- Increased risk-taking without risking as much
“If you think you have all the answers internally, you are wrong.” – Undisclosed CEO, The Global CEO Study 2006
The Evolution of Research and Development
Once the bread and butter of new product development, businesses are no longer focusing the majority of their energy on internal research and development (R&D). While internal R&D remains an important aspect of product development, it should not be a company‟s sole or overwhelming focus. For one thing, internal R&D places limitations on companies that ultimately may be detrimental to a business‟s staying power. These limitations include tremendous funding for equipment, space and personnel, along with ideas that are comfortably planted “inside the box.” By using external avenues, companies are no longer limited to their physical assets and traditional thinking. Isolation is over, collaboration is key.
Significant Sources of Open Innovation:
- Corporate Partnerships
- Independent Consultants
- Colleges and Universities
- Research Labs
“Open Innovation is fundamentally about operating in a world of abundant knowledge, where `not all the smart people work for you, 'so you better go find them, connect to them, and build upon what they can do.” – Henry Chesbrough
Unearthing a World of New Challeneges
Like anything else, along with the wealth of benefits open innovation offers companies, it also opens up a whole new set of challenges. One of these challenges is continuing to find innovative sources for new product development. Of course you want to look where your competitors are looking, but you also want to come up with inventive new means of innovation that your competitors haven‟t thought of. In fact, you want your competitors to be snapping their fingers wondering why they aren‟t doing what you are doing.
To become (or continue to be) a leader of open innovation in your industry, the key is remembering one of the fundamental ideas that fuels this model in the first place – keeping your business open to new ideas. This means looking for ideas in places your company wouldn‟t traditionally think to look, and keeping your eyes and ears constantly open to the world around you.
Businesses leaders should frequently ask themselves two questions:
- What differentiates our company‟s open innovation efforts from our competitors?
- Are we shaping the open innovation trend in our industry or just following it?
"We are much more of a 'not invented here'-type of company than we ever have been." - Dan Touhey, Spalding vice president of marketing.
Discovering Basketballs That Bounce Forever
One example of a company that decided to widen the scope of their open innovation efforts and found success was industry-leading sporting goods manufacturer Spalding. After the company had a hit with its Infusion basketball in 2001, they realized how innovation could pay off. So, along with boosting their internal R&D, they also decided to expand their open innovation effort. Becoming much more a “not invented here” company, Spalding opened its eyes and ears to everything from printed materials to backyard chatter.
It was through this approach that the company discovered a two-man operation had announced the invention of a ball that could retain air longer. Though inventors Don Sandusky and Michael O‟ Neil didn‟t even have a prototype, they did have an idea and experience as former engineers for DuPont. While other sporting goods companies disregarded the duo as “outsiders,” Spalding saw the potential and nine months later the Neverflat™ basketball hit the market. The Neverflat™, which stays inflated ten times longer than a standard ball, has become a signature Spalding technology that is now incorporated in their footballs, volleyballs and soccer balls.
“We want to be known as the company that collaborates – inside and out – better than any other company in the world.” -A.G. Lafley, president and CEO, Proctor & Gamble
Uncovering a Cheaper Electric Toothbrush
Similarly, Proctor & Gamble‟s battery-powered SpinBrush® also was created by a small team of inventors. In 1998, entrepreneur John Osher came up with the idea while walking down the toothbrush isle in a Walmart. He noticed that all the electric toothbrushes on the market from major companies cost over $50 - which was just not a practical purchase for the average consumer. So, he gathered a small team of inventors and decided to make a mechanical toothbrush that could be sold cheaply. After manufacturing a small inventory and getting it into a chain of Midwestern stores, the invention soon caught the attention of Proctor & Gamble.
Only a year after they began marketing and distributing the SpinBrush, it became the number one toothbrush (manual or electric) in the country. Once a very insular company, Proctor & Gamble has become more and more aggressive in pursuing outside products – and profits have risen as a result. President and CEO A.G. Lafley has even set a company goal of obtaining 50 percent of new product ideas from outside sources. Proctor & Gamble is now regarded by experts like Henry Chesborough as a sterling example of how to use open innovation effectively.
"Solutions come from places you'd never have imagined." - Paul Stiros, former director, P&G Corporate Innovation & Knowledge Group
Identifying the Missing Link (and Leveraging It)
This pair of examples illustrates that often times the best ideas come not from big business but from the little guys – small businesses, entrepreneurs, even individual inventors. Perhaps the most telling finding in the 2006 Global CEO Study was this: when CEOs and business leaders were asked to name their most significant sources of innovative ideas, three sources stood above the rest - employees, business partners and customers.
Innovative ideas are to be expected from employees, and the high ranking of business partners further attests to the increased role of collaborations in the open innovation model. But customers ranking third? If so many innovative ideas are coming from existing customers, why aren‟t companies using this resource more advantageously?
Moreover, how can companies use this resource more advantageously? The answer to that question may lie with the “everyday inventor.” Everyday inventors are primarily those who invent out of necessity. They can‟t find the product they need on the market, so they alter an existing product until it meets their needs. And, guess what? The products they alter are yours.
Here are some of the benefits of working with everyday inventors:
Built-In Market Research Since everyday inventors come up with new products based on need, chances are others out there feel the same way. Before they are inventors, they are consumers, and many of them go out and scour store shelves (and the web) for a product prior to designing their own. If your company had produced the product they desired, they would have bought it. Rather than spending valuable resources researching open-endedly for viable products, why not short-cut your efforts to develop products you already know have a demand?
Faster Product Development Inventors can offer companies an easy way to avoid a lot of the time and effort involved in searching for new products. Often times, the beginning phase of product development is the most difficult because employees are starting with a blank slate. But inventors can bring to the table mapped out ideas, prototypes, patents, working models or even product inventory - so companies can bypass the tricky early development stages altogether and learn from the inventors. Not to mention you can get products to market faster. After hearing the initial concept, Spalding was able to bring the Neverflat™ basketball to the market in less than a year.
Reduced Overall Costs It only makes sense that by cutting out large chunks of the product search and development process you‟ll reduce costs. The limited expenses of finding new product ideas and executing licensing deals ultimately end up being a fraction of what it would cost to do all the legwork on each new product inhouse.
Diverse Ideas One of the most fascinating aspects of inventions is the “aha” factor - seeing something that makes you say “why didn‟t we think of that?” But despite how obvious an idea may seem once it comes to light, that same idea can easily elude even the top experts, engineers and R&D masterminds. The ability of everyday inventors to approach a problem from a non-professional perspective is what makes them an asset. Often times, they identify market needs a company didn‟t even known existed.
More Ideas Just by looking at a TV show like ABC‟s “Shark Tank,” it‟s immediately apparent there are A LOT of inventors out there. Let‟s face it, businesses, even with collaborations and partnerships, are limited in their idea conception. A national survey reported that 40 percent of adults have had an idea for an invention or new product. When you think of the world population – that‟s a lot of potential ideas left untapped by the business world.
Unlocking the Potential of Everyday Inventors
So the benefits are there, but how can your company actually go about finding everyday inventors – especially in mass quantities? While the task may initially seem daunting, it‟s actually easier than you might think when you know where (and how) to look.
Here are a few significant resources for finding everyday inventors:
Trade Shows For any business looking to find new ideas, trade shows are a great place to start. They also can be an ideal place to find everyday inventors. Trade shows are generally a standard across industries, from housewares to toys to cement products to tools - though you may want to look beyond your niche for innovations and technologies than can be applied to your industry. Some shows are even devoted exclusively to new inventors seeking companies to license or manufacture their products. For example, the Spin Pop, a hugely successful innovation in the candy industry that is now produced by Hasbro, was initially discovered at the Invention and New Product Exposition (INPEX), an annual invention trade show in Pittsburgh. The next upcoming INPEX show will be held June 16-18, 2015.
Trade shows take place all over the world and there a lot of them (more than 14,000 a year just in the U.S. and Canada). So, by sending an employee or two to walk the floor at a trade show, you could potentially view a hundred or so new product ideas in a day. And, don‟t just look to the marquee shows. There may be just as much (if not more) value in smaller, more obscure and overseas shows. Sure, you‟ve heard of Toy Fair in New York, but have you visited Toy Fest West or the Hong Kong Toys and Games Show? There are a number of Web sites that feature searchable trade show directories including 10Times.com.
Contests The contest can be an effective means of attracting external ideas. This was done a few years ago by Goldcorp, Inc., which posted geological data for one of its gold mines on the Web and challenged people everywhere to pinpoint gold locations. Of the 110 potential deposits identified by the entrants, half were new to the company and 80 percent of those yielded gold. The company was even impressed enough by 10 of the contestants that it subsequently hired them.
Invention Companies Legitimate invention companies may actually offer businesses the most convenient way to find the largest quantity of everyday inventors. For example, a leading invention company in America, InventHelp, has executed hundreds of licenses for new product ideas – some of which are still performing well on the market today (e.g. Oatey‟s Twist „n‟ Set, Arnold Corporation‟s Maxi-Edge Universal Mulching Blade).
Inventors not familiar with the business landscape often turn to companies like InventHelp for assistance, so invention companies receive a lot of new product ideas you aren‟t likely to find at trade shows or solicit through contests. And, because they want you to license the inventions (everyday inventors are their customers), they will provide you with information about new product ideas for free.
Benefits of working with Invention Companies:
- Lots of inventions in one place
- Industry-specific searches
- Convenient (someone else finds inventors for you)
- FREE - no cost to you
Due to the quantity of inventions they have access to and their convenient delivery methods, invention companies can be very beneficial to businesses seeking out everyday inventors. The hardest part is finding the right invention company to work with. As with any other collaboration, you should choose an invention company based on industry experience and the quality of services provided.
How an Industry Leader is Bringing Companies and Everyday Inventors Together
In business since 1984, InventHelp is a leading inventor service company. InventHelp offers businesses in all industries a catalog of thousands of inventions and new product ideas available to license, market and manufacture. To join the InventHelp DataBank and receive new invention ideas, register on Intromark‟s website. Along with their DataBank of innovative ideas from everyday inventors, InventHelp also sponsors INPEX, America‟s Largest Invention Trade Show, which presents companies over 1,000 innovations, new product ideas and technologies available to license. And InventHelp‟s sister company, Intromark Incorporated, assists businesses in licensing and marketing new products adopted from the inventor community