Innovation at the Speed of Life
Matt Bross - CEO BT Innovate and BT Group Chief Technology Officer
If you feel the world is spinning faster these days, you
certainly are not alone.The pace of change is accelerating
all the time.
Even in the world's wealthiest countries, it was at
least 50 years before the majority of homes were receiving
electricity from a main power line. When broadband
came along, similar levels of take up were achieved in
some countries in less than a decade.
But even these rates of adoption pale into insignificance
compared with those for the latest online services.
In Korea, Rep., for instance, the Cyworld social networking
site counted "almost every Korean in their 20s"
among its subscribers by 2005, according to its founder,
Yoo Hyun-oh.This astounding achievement took little
more than five years.
It is the same story all over the world. Once they
have captured the public's imagination, innovations spread
like wildfire. It's dizzying, and so too is the rate at which
new ideas are reaching market. And innovation is no
longer just about new technology. Indeed, innovations
in the way firms do business can have a bigger impact
on their success than new technology alone.
Whatever its focus, however, innovation is essentially
a chain reaction. From the beginning of time, every
advance the human race has made has inspired others.
Consider the telecommunications industry, for
instance. Oersted's discovery that a wire carrying a current
could deflect a magnetized compass needle led to
the invention of the electric telegraph.The telegraph led
to the phone, which made it much easier for a head
office to coordinate the efforts of teams in different
factories and offices. In doing so, it paved the way for
the multinational, multisite organizations we are familiar
with today. It's the same today, but globalization and
technology have come together to accelerate every step
of the process, stimulating the creation of new ideas and
speeding them on their way to market.The ideas then
trigger a new cycle of innovation-one that may well
progress at an even faster rate.
The result is an explosion of creativity that shows
no sign of coming to an end-the Innovation Big Bang,
a unique event in human history.
1. The Innovation Big Bang
The past decade has seen tremendous progress in many
different areas of information and communication
technologies (ICT).The increases in the power of
microprocessors, the capacities of disc drives, and the
bandwidths of data networks are examples. In each case,
performance has advanced at an exponential rate, making
a whole lot more possible.
Now imagine each direction of progress as a vector
whose length defines what is possible. Imagine further
that the set of vectors is arranged as the radii of a sphere
of possibilities.This is where the combined impact of all
the separate advances becomes obvious. If each radius
were to grow by a factor of 10, the sphere that defines
what is possible would grow by 100,000 percent!
Depending on how you look at it, this explosion
of possibilities presents the world's corporations with
one of two things: a major headache or a tremendous
Traditionally, firms depended on their in-house
research and development (R&D) departments for new
ideas and to drive those selected for deployment through
to market. Often, these departments were shrouded in
secrecy.To maintain the corporation's competitive
advantage, ideas had to be kept confidential until they
were adequately protected by intellectual property
rights, or until products or services were launched. Strict
"need to know" policies operated within firms and few
outsiders ever got involved.Those who did were required
to sign comprehensive nondisclosure agreements up
One result of this approach was that the pace of
innovation was limited.With fixed team sizes and budgets,
only a certain number of ideas could be worked on
at any one time. Inevitably, this favored larger firms that
could afford to spend more on R&D.
Another-and perhaps more troubling-result was
that firms could find it difficult to think "out of the
box." Closed communities tend to focus in on themselves,
sometimes even developing their own languages to
describe technologies or ways of working.This further
isolates them from the world at large.
Those managing internal R&D teams can also face
a conflict of interest.The budgets on which they depend
may come from those whose views and policies need to
be challenged. Under those circumstances, it should be
no surprise to find in-house researchers who are reluctant
to challenge established wisdom, even when that is
the right thing to do. Instead, they water their ideas
down or hold them back to avoid upset.
These are not new issues, of course.Where they've
existed, they have always hampered creativity and weakened
competitiveness. Historically, though, the consequences
have not been that severe. Research by McKinsey
in the 1980s, for example, found that companies that
were three to six months late to market could see their
profits reduced by between 10 and 33 percent. Although
clearly a cause for concern, there was no suggestion that
the delays might bring firms to their knees.
The Big Bang has changed all this forever. As far as
innovation is concerned, the room for poor performance
is already small, and it's vanishing fast. Firms that have
too few of the right ideas will soon find business ebbing
away. So too will businesses that are slow to turn their
ideas into marketable products and services.
The photography industry has provided a graphic
example of the consequences.There, makers of film were
surprised how quickly digital cameras sold, and how soon
people took to swapping photos online.They were not
prepared for the new era, so their sales plummeted. Only
swift and radical change prevented the firms' collapse.
2. Innovation at the speed of life
The experience of the photography industry also highlights
the opportunity the Big Bang has created. If you
have a winning idea and can get it to customers quickly
enough, the market could well be yours for the taking
-even if it's dominated by firms from a completely
different industry than your own.
The problem, unfortunately, is that any lead might
be short lived. New ideas can come from anywhere at
any time-that is, after all, how you "stole" the market
in the first place. Add to that the fact that it is getting
easier and easier for firms to clone their competitors'
products, and it is clear that having one or a few winning
ideas is going to be far from good enough.To take and
hold the initiative, you need a pipeline that can pour
innovations onto the market at what, by yesterday's
standards, would be a blistering pace.You may only have
a few weeks', or perhaps a few days', head start on your
competitors, so there is no chance at all to stand still.
The ideal would be to be able to innovate at the
speed of life-that is, to be so at one with your customers'
thinking that you consistently deliver the new
products and services they are looking for at just the
moment they need them, and ensure there never is a
gap between what they ask for and what you offer.And
what matters is the speed at which customers are able to
improve their personal and professional lives, not the
speed at which new technologies become available.
As far as customers are concerned, genuine innovation
happens only when their daily lives actually get better
or their firms achieve greater success as a result.
This is an ideal, of course-a level of performance
a business can approach but will never reach. But it is
impossible for firms even to get close if they use traditional
methods of innovation.To aspire to match the
speed of their customers' lives, firms must innovate the
way they innovate.
3. Open innovation
Now that the innovation genie is out of the bottle, firms
have little alternative but to change their approach.
Those who get it right will reap big returns. According
to Arthur D. Little,"Top innovators have 2.5 times more
sales and get more than 10 times higher returns from
their innovation investments."
But how exactly can firms transform their innovation
processes to deliver the throughput they will need
in the future?
The answer varies from industry to industry, and
from business to business. Central to the success of many
firms to date, however, has been the concept of open
In open innovation, firms invite people from outside
their traditional R&D teams to take part in the innovation
process.They may be people working in other parts
of the company-in sales, marketing, or customer support,
for example.They could be university researchers and
academics, business partners or suppliers.They could
even include the firm's customers and the public at large.
Equally, adopters of open innovation recognize that
there are more ways of getting returns on their innovation
investment than turning them into products and
services or using them to improve their own efficiency.
Ideas that are good but don't have a role in their own
business can be licensed to other firms, used as the basis
of spin-out companies, and so on.
Businesses have been doing such things for many
years, of course. Suggestion schemes are hardly new, and
firms often trade intellectual property or work together
to exploit new opportunities. But it wasn't until Henry
Chesbrough established an intellectual framework that
brought the elements of the approach together that open
innovation attracted significant attention.
Chesbrough is now executive director of the Center
for Open Innovation at the University of California at
Berkeley, a part of the university's Haas School of
Business.While studying Xerox's failure to reap the
benefits of ideas pioneered at its Palo Alto Research
Center (XEROX PARC), he recognized that this had
not been the failure of management that many had
suggested. Rather, it was the result of the company's use
of the traditional, closed approach to innovation. Like
others, Chesbrough noted,"it sought to discover new
breakthroughs; develop them into products; build the
products in its factories; and distribute, finance and
service those products-all within the four walls of the
In contrast, open innovation engages a much broader
community in the creation and development of ideas,
and exploits many more routes to get innovations to
market and generate returns.
As Joel West, associate professor at San Josï¿½ State
University's College of Business, has noted:"Open
innovation means treating innovation like anything
else-something that can be bought and sold on the
open market, not just produced and used within the
boundaries of the firm."
At first sight, this definition looks simply to bring
together all the different forms of relationship corporate
R&D departments have developed and used to advantage
over the years and put them on a more formal footing.
In doing so, however, open innovation has opened
the minds of executives all over the world to the possibilities.
Why limit suggestion schemes to your employees
when you could ask your customers for ideas as well?
Why cling to intellectual property you don't have a use
for when others could be making money from it and
giving you a share of their profits? Once you recognize
that innovation is a commodity you can trade, there are
all sorts of options to explore.
The question, of course, is whether the business
case holds up. Is there money to be made from open
This is where the move online has had a huge
impact.The Internet makes it easy to involve many, many
more people in the innovation process-not just business
partners and universities, but people companies don't
know and have never met. Crucially, it allows this to be
done at an acceptable cost. It is this that has taken open
innovation that vital stage forward-from being just an
idea to being an idea whose time has come.
Toronto-based mining company Goldcorp Inc. provides
a dramatic example of what has become possible.
Chairman and CEO Rob McEwen was frustrated by
the failure of his in-house geologists to find significant
new deposits of gold on the firm's 55,000 acre stake in
Red Lake, Ontario.The answer, he decided, was to see
if anyone else in the world could do better.
To do this, Goldcorp had to take the radical step of
making confidential geological data available to outside
"prospectors."When the Goldcorp Challenge was
launched in 2000, more than 1,400 corporations,
consultants, agencies, and universities from 50 countries
downloaded it to begin their virtual exploration.
The Challenge's judges were astonished by the
creativity of the entries.The winners-Fractal Graphics
of Perth, Australia-had worked with Taylor Wall &
Associates from Queensland to build a 3-D computer
model of the mine and identify probable deposits.The
innovative approach worked: by 2002, Goldcorp had
drilled four of the winner's five top targets and had
struck gold every time.
Others who have benefited by adopting open
innovation include the food company Kraft; oil, gas,
and chemicals business Shell; aircraft maker Boeing;
car maker BMW; electronics giant Philips; and ICT
companies such as BT.
BMW is one of many companies to post challenges
on its website, enlisting the help of customers and others
in coming up with solutions. It received thousands of
responses after making a toolset available that allowed
customers to design features for cars of the future. Some
of those ideas have since been implemented.
Another company to take this approach is Kraft.
Its "Innovate with Kraft" website openly welcomes ideas
from the public, offering rewards up to US$5,000 for
those selected.The first product to reach market as a
result of the scheme combined a block of Parmesan
cheese with a disposable plastic cheese grater.The idea
was submitted to the American firm by a small grocery
store in Italy. Open innovation also led Kraft to launch
the first-ever microwaveable hot dog and bun.
As Kraft's example demonstrates, open innovation
is not just about making big advances. Small ones can
just as easily create good revenues and competitive
advantage. Nor is open innovation restricted to the areas
typically associated with corporate R&D departments-
new technologies and their application, for example.
Firms can apply the approach right across their activities,
from technological innovation to the delivery of customer
And customer service is one of a broad range of
areas in which telecommunications company BT has
been using open innovation to drive itself forward.The
company designed its My Customer program to focus
its employees' attention on the importance of customer
service and make it clear that everyone in the company
has a vital role to play-not just those who work at the
customer interface. Each year, a tournament called the
Challenge Cup is organized to encourage people from
diverse backgrounds to come together and generate ideas
that will deliver improvements. In 2006, more than
2,500 people from every part of the company took part
in the 319 teams that submitted entries.
Like the other forward-looking companies that
have adopted open innovation, BT has been delighted
with the results. In addition to achieving advances that
have improved customer satisfaction, it has brought many
new products and services to market. And to take things
further, it has launched a software development kit that
puts the opportunity to innovate directly in developers'
hands, which has been downloaded more than 3,000
times so far. Taken together, innovations brought in
from suppliers, partners, and academia contributed
around £ 500 million in potential new product and
service revenues between 2002 and 2006.
Little wonder, then, that few regard open innovation
as hype. A 2006 survey by the Research & Technology
Executive Council found that three-quarters of respondents
felt expectations of the approach were realistic or
4. ICT: Fueling open innovation
A feature of open innovation-especially when it is
enabled by advanced ICT-is that it has changed how
the innovation process works. Ideas no longer flow step
by step from research through development and engineering
to delivery. In open innovation, the process is
generally much more iterative, with users and/or customers
being involved at as early a stage as possible so
their views can help shape the eventual solution.
Research conducted by Mark Dodgson, David
Gann, and Ammon Salter of Imperial College, London,
suggests that open innovation involves three overlapping
activities.They call them "Think,""Play," and "Do."
Think is the creative process-the activity that generates
ideas and finds answers to problems. Play involves the
use of rapid prototyping and similar techniques to get
feedback from users and/or customers very early in the
process. And Do is about making the innovation real-
building the version that will be taken to market.
Whether or not you agree with their analysis, it is
clear that ICT is playing a central role in broadening
participation in the innovation process and accelerating
each of the activities involved.
Something that great innovators have in common is
their breadth of knowledge. Because their thinking is
not constrained by the artificial boundaries that define
subjects such as physics, chemistry, biology, engineering,
or the social sciences, they can draw on their understanding
of one area to create advances in another.
The same is true of other, perhaps less prominent,
people. Studies of scientists and engineers, for instance,
have shown that those with access to the widest variety
of information are the most creative. This stands to
reason: if innovation is a chain reaction, the more ideas
someone is exposed to, the more he or she is likely to
In this context, the World Wide Web has had a
major impact in enabling many more people to access
information and encounter ideas. Knowledge that was
once locked up in the libraries of corporate R&D
departments is now either freely or readily available to
anyone who can get online, regardless of their location
and, to an increasing degree, their economic circumstances.
As the report produced after the 2005 UN
World Summit on the Information Society in Vienna
observed:"ICTs triggered the Information Revolution,
dissolving the boundaries of material media and setting
free human inspiration from most restrictions in form
Other features of modern ICT that have broadened
participation in the innovation process are its escalating
performance and rapidly reducing cost.When Bill
Hewlett and Dave Packard decided to go into the electronics
business in 1939, they needed a garage to house
the equipment needed to design and test their first
product. Now you don't even need that-powerful PCs
and global networks serve as a global platform for innovation
that is available wherever you happen to be.
In a growing number of cases, products no longer
have to be built until the very last minute. Computer
models can be built and simulations can be conducted
to evaluate the product's likely performance. And there
is no need to worry if you need access to an expensive
item such as a supercomputer. Increasingly, you can
"timeshare" such things over the Internet. People can
use Sun's Grid Compute Utility for as little as US$1 per
central processing unit (CPU) hour, for example. At that
rate, a calculation that needed to use 1,000 CPUs for
one minute would cost only US$17.
Life-sciences company Applied Biosystems is among
those to have used Sun's facility to accelerate its innovation
process. By being able to access a much more
powerful computing facility than it could afford to
maintain itself, it was able to develop millions of new
genomic assays-tools researchers use to characterize
variations in human DNA-in a matter of days rather
Dassault, a French aircraft manufacturer, is another
striking example.To accelerate the development of its
Falcon 7X business jet, Dassault teamed up with IBM to
create a virtual development platform that would allow
the 27 partners involved in the project to work on the
design of the prototype simultaneously and share information
in real time. Assembly time and tooling costs
were both cut by half as a result of eliminating physical
Innovation rarely happens in a vacuum, of course. It is a
social activity-even within corporate R&D departments,
people like to "bounce ideas off one another," get
together to "kick the tires" of their ideas, and so on.
Such interactions are routine when people are
located together. But as firms use open innovation to
involve more and more people in their innovation
process, the likelihood that the people who need to
exchange their ideas, work on designs, and so on will be
located in the same premises is reducing fast. Chances
are they will be on different sides of the world.
Technologies that make it possible for people to
collaborate at a distance are therefore of prime importance.
Significant among these are audio, video, and
Web-based conferencing services; unified collaboration
tools that bring such services together with email,
instant messaging, and office automation applications;
and wikis and other shared online workspaces.
The impact of wikis and other Web 2.0 technologies
that facilitate collaboration has been dramatic. As Peter
Gloor and Scott Cooper of MIT's Sloan School of
Management have noted, they enable collaborations of a
scale and pace far beyond what we have seen before.
These "unleash tremendous creativity, spurring exciting
and valuable innovations" that extend "from the realm
of idea generation and product development to the very
essence of doing business."
An example of the result is Wikipedia-the collective
work of more than 100,000 volunteers. By September
2007, their efforts had resulted in some 8,700,000 articles
in more than 250 languages. True, the accuracy of
some of its content is questionable. As a result of one
mischievous posting, several British newspapers and TV
channels wrongly reported the achievements of a
prominent composer who died in 2007. But a study
commissioned by the journal Nature in 2005 found
broadly comparable numbers of errors in both Wikipedia
and the online version of the world-renowned
Encyclopaedia Britannica. Checking their entries on 50
different topics, it found 162 errors in Wikipedia and
123 in the Encyclopaedia Britannica.
Creating marketplaces for ideas
The Web has also been used to create marketplaces for
InnoCentive, for example, is an online forum that
gives the world's scientists the chance to earn big money
by solving complex challenges posed by companies such
as Dow AgroSciences, Eli Lilly and Company, and
Procter & Gamble. Most challenges attract an award of
between US$10,000 and US$100,000, but one-for a
device that can measure the progress of motor neuron
disease-is being advertised at US$1 million. Set up in
2001, the site now claims to allow companies to connect
with "a global network of more than 125,000 of
the world's brightest minds." Similar marketplaces are
operated by NineSigma and the InnovationXchange.
Yet2.com operates in a different arena. It was set up
to help firms create new revenue streams by licensing
intellectual property that is underused or no longer key
to their own businesses. Licensees benefit by getting
access to tried and tested ideas-many created by the
world's leading corporate R&D departments-without
having to develop them themselves.
In addition to these examples, numerous companies
operate their own "shops" for ideas, often with the aim
of involving their customers in the innovation process.
The websites used by BMW and Kraft were discussed
earlier, for example. BT's website provides another
example. In November 2007, it offered developers the
chance to win £ 1,000 by creating an application for
Wi-Fi-enabled smartphones based on the Symbian
operating system. Applications were required to make
use of the phone's Wi-Fi connection.
Accelerating testing, production, and delivery
BT is also one of a growing number of companies to
use its website to obtain early feedback from customers
on the ideas it has under development. One service that
has been on trial recently on the BT.com Beta site is
BT BizBox. Developed in partnership with Tierlinear
Web Applications, it provides a fully integrated suite of
Web-based business productivity tools.The service offers
customer and contact management tools, timesheets,
calendaring and scheduling tools, and a document
Vodafone's Betavine website serves a similar purpose.
Managed by the company's corporate R&D group, it
allows Vodafone to assess the likely interest in its ideas
and gain feedback on the usability and performance of
alpha-stage and beta-stage prototypes.
Intel's CoolSW (cool software) website operates in
a somewhat different way. Recognizing that professional
pundits often get it wrong when it comes to identifying
the software applications that will be biggest commercial
successes in the future, the CoolSW encourages independent
developers to post details of the new software available
for trial.Visitors to the site are then asked to vote
for their favorites. Developers gain from the feedback,
while Intel gets the chance to learn about new independent
software suppliers and identify promising
In a very different area, book publisher Simon &
Schuster has partnered with Media Predict, a company
that operates a website that uses prediction markets to
identify work worthy of investment and development.
In Simon & Schuster's Project Publish literary contest,
players were given fantasy money they could use to buy
futures contracts in various projects. As in a real-world
market, prices associated with the book proposals that
were posted rose and fell depending on how well users
thought the works would perform.This helped the publisher
identify the proposals it should take forward.
Such open feedback is becoming increasingly essential
to open innovation.The process is harsh-a case of
kill or cure-but it does identify winners quickly and
drive rapid progress. By making software available
through its beta test site, Internet giant Google was able
to take its Google Maps application from trial to launch
in just eight months.
This highlights another of the benefits that ICT is
delivering: reducing the costs and timescales associated
with engineering new products and services and readying
them for sale. A number of organizations are making
it easy for people to use their applications and data as
the basis of new developments, for example.Among
these is the British Broadcasting Corporation (BBC),
whose Backstage network allows developers to make use
of the corporation's content in their prototypes.
Mashups-Web applications that combine data
from more than one source into a single integrated tool
-are another example of how developers can get ideas
to market quickly by piggy-backing on existing innovations.
Wikipedia cites as an example the use of cartographic
data from Google Maps to add location information to
real-estate data from free-ads website Craigslist, thereby
creating a new and distinct Web service that was not
originally envisaged by either source.
Elsewhere, software companies now have the option
to reduce the need for up-front investment in computing
infrastructure by renting capacity in an operator's
data center, while sites such as YouTube give new talent
the same chance to access global audiences as established
film makers and TV companies.
5. Open innovation: The cutting edge
Taken together, the current applications of ICT in open
innovation are having a significant impact in broadening
the world's innovation pipeline, accelerating the pace of
innovation and giving many more innovators a chance
But these are early days. Some of the approaches
and applications of ICT discussed are still in their infancy,
while others are far from reaching the end of their lifecycle.
A great deal of progress is yet to come.
The dawn of the innovation prospector
Some progress will be achieved by increasing still further
the numbers of people able to participate in the
innovation process in one way or another.
Firms that adopt open innovation will, in effect
become innovation prospectors.
To ensure that they can supply their customers in
the future, prospectors working for oil companies and
mining businesses are constantly searching for new
deposits.Those who are first to identify, say, a new oil
field stand to make the biggest gains. Similarly, firms
that adopt open innovation are constantly looking for
new sources of ideas and innovations they can tap.
Communities with different backgrounds and cultures
have different experiences to draw on and look at problems
in very different ways, for example.The ideas they
come up with often have the edge firms are looking for.
The younger generation is an obvious example.
"Generation Y"-people born between 1975 and
2000-grew up in the information age.Technology is
an integral part of their lives, not the adjunct to it that it
is for older generations.They are quick to adopt innovations,
and they do so in imaginative-and sometimes
unexpected-ways.Text messaging was originally promoted
as a way for secretaries to keep their bosses up to
date, for example. Some do that, but it was Generation Y
that took to texting in a big way and has driven the
development of advanced text messaging services.
Unsurprisingly, innovative firms have been quick to
engage with these young adults and tap their brains for
winning ideas. Microsoft is an example. Now in its sixth
year, the company's Imagine Cup is the world's largest
technology competition for students. Each year, students
are asked to form teams to come up with novel solutions
to a particular global issue-the competitions in 2006
and 2007 focused on health care and education, for
instance-and thousands of entries are received.Those
selected as winners go on to take part in the Innovation
Accelerator-an intensive two-week program where
students get help in turning their ideas into reality from
some of the best minds at Microsoft and BT, co-sponsors
of the program.
No doubt Generation Z-those born between 2001
and 2021-will prove to be an equally productive source
of new ideas. But the younger generations of developed
societies are only some of the new sources of innovation
that can be tapped.There are many living in the developing
countries who will be able to make just as valuable
a contribution to advancing the state of the art.
The Economist noted recently that many in China
and India use their mobile handsets as their primary
interface to the Internet.Their requirements may therefore
be very different from those of Western users, most
of whom use computers at home or work. It also
noted that villagers in Africa and Bangladesh have gone
straight from having no phones to having mobile phones,
making a big jump up the technology ladder. Such a
"democratisation [of innovation] releases the untapped
ingenuity of people everywhere and that could help
solve some of the world's weightiest problems," it said.
It is certainly the case that the unique challenges
faced by the world's developing countries have inspired
those from the developed world to come up with innovative
solutions. Lifelines India, for example, supports
the UN's Millennium Development Goal of helping
developing countries become part of the digital society.
The Internet has yet to reach the more remote areas of
India, depriving those who live there of access to agricultural
and veterinary advice and other information
that would enrich their lives. LifeLines enables them to
get answers to their questions using the few landline
phones that are available in local kiosks.
Another project in India is I-Shakti. Supported by
Unilever, it has helped women to set up information
kiosks to give those living in their villages access to
information for education and business purposes.
Similar services operate in Africa. Sponsored by the
International Institute for Communication and Development,
the IKON Telemedicine Project allows people
living in remote areas to get medical advice over their
mobile phones. It also allows doctors in regional hospitals
to get advice from senior colleagues working in cities.
Another advance inspired by the problems of the
developing countries is the XO-a laptop computer for
use by students that costs around US$100. Developed by
the One Laptop per Child (OLPC) initiative, the XO
employs several radical innovations to keep costs down
and address the realities of life in disadvantaged communities.
One is a novel user interface called Sugar.
According to IEEE Spectrum, the OLPC team abandoned
the desktop metaphor, reasoning that it is both
outdated and irrelevant in societies where desks are
scarce. Instead, Sugar displays a world of collaborators,
clustered around icons representing work in progress.
Once the communities the XO is designed to serve
are online, open innovation will have many more minds
it can tap-those of people whose imagination is
"uncontaminated" by the ideas and solutions of the past,
but who have a real thirst to advance in the future.
No doubt innovation prospectors will pursue these
communities as sources of ideas and feedback as they
emerge, but in doing so they should not overlook the
potential of underdeveloped communities closer to
home.YourEncore, for example, has built a network of
retired scientists and engineers that can provide firms
with the proven experience they need to accelerate
their pace of innovation. It claims to be "uniquely positioned
to help clients recover lost knowledge and to
enable them to make remarkable connections to solve
challenging problems using expertise from a variety of
Achieving innovation at the speed of life
Another area in which significant progress can be
expected is in reducing the time it takes to get innovations
to market-matching the "innovation at the speed
of life" goal discussed earlier.
Bottlenecks and other problems have to be eliminated
from every step-especially those that isolate people
involved in the innovation process from the point of
customer contact.Whether it is a clever innovation that
is poorly productized, a clever product that is poorly
delivered to market, or a well-delivered product from a
company that cannot scale up in line with its success in
the market, failures severely damage a firm's success and
limit its chances of capitalizing on innovative thinking.
This is one reason why agile development methods
are attracting so much interest from the software community.
According to the Agile Alliance, a global organization
with almost 4,000 members,"agile approaches to
software development ï¿½ deliver value to organizations
and end users faster and with higher quality." They do
this by changing the entire product development
process, from the identification and evaluation of new
opportunities to the development and delivery of those
with the best chance of success. Software developers,
business specialists, marketers, and others work together
throughout, focusing the full breadth of their expertise
on the project such that a better result is achieved and
it's achieved much more quickly.
The need for greater agility also explains the growing
enthusiasm among larger firms for making resources
they would once have guarded jealously available to
small businesses and other innovative third parties.
Amazon and BT are among the firms that have followed
the trend set by Microsoft and others to offer
access to the capabilities that underpin their businesses
online through software development kits (SDKs).
Amazon's e-commerce service allows developers to build
novel applications that they can use to make money selling
Amazon products, while BT's SDK allows developers
to incorporate the company's phone and messaging
services in their applications. BT's SDK also provides
functions that developers can call on to authenticate the
identities of users and manage their access rights.
Building leadership skills
Of course, open innovation demands more than new
technology alone. As essential to its success will be the
development of a range of new management and leadership
Many of today's executives began their careers
working in firms where departmental boundaries were
set in stone and collaboration-even among colleagues
working in different parts of a business-was difficult, if
not actively discouraged. Competition was encouraged
at all levels. Many companies operated internal marketplaces,
for example, and the door was firmly closed
between "us"-the company-and anybody outside, be
they customers, suppliers, or competitors.
This couldn't be further removed from the world
we live in today. Managers often have to lead teams where
they are not the "boss" in the traditional sense, and they
may not "own" the budget or the other resources they
need to get the job done. Leaders have to be effective at
harnessing the rich diversity that people from different
cultures and backgrounds bring to a business, especially
when it comes to understanding and responding to the
needs of customers in different parts of the world.
Open innovation pushes these skills to the limit.
Those who manage the process will have to be good at
marshalling the efforts of vast numbers of innovators,
with many of whom they won't communicate directly
or ever meet.They will need to know how to sort
through many thousands of ideas and responses.And
excellent negotiation skills will be essential-for example,
to agree on the financial and commercial basis on
which ideas can be used. Human challenges such as
these are likely to be among the most difficult to solve.
There is no doubt that open innovation is the way of
Looking back, it's clear how easy it is for firms to
lose the initiative and sink without trace. Of the companies
included in the Fortune 100 when it was first published
in 1917, 61 no longer exist. Of those that remain,
only 18 make the list today-and only 2 of those have
performed better than the average over the past 90 years.
And it is a similar story on the other side of the
Atlantic. Only 24 of the companies listed when the
FTSE 100 Index was established in 1984 remain in the
The Innovation Big Bang increases the stakes.To
ensure that their competitiveness is sustainable and differentiable
in the long term, firms must now look well
beyond the limits of their own R&D departments and
indeed their own payrolls.The world is full of people
who are keen to offer their ideas, and firms will need to
become exceptional exploiters of this immense pool of
talent if they are to survive.
For those used to relying on their own resources, it
is a tremendous change-both in approach and in outlook.
But it is a change that offers big benefits, and not
just to firms themselves. By creating opportunities for
many more people to participate in the innovation process
and share the wealth that is created, open innovation
will help overcome the digital divide.
- The first electricity networks in the United Kingdom date from
around 1880 (see http://en.wikipedia.org/wiki/Electrical_power_
industry). Thirty-three percent of homes had electricity in 1931
and 67 percent in 1939 (see http://homepage.ntlworld.com/
- UK Office of National Statistics, 2007, quoted in
"Broadband Markets: Europe, Asia and North America," IDATE,
December 2003, http://www.idate.fr/fic/news_telech/117/
- Cameron 2005.Top
- IEC 2007.Top
- Arthur D. Little 2005.Top
- Chesbrough 2005.Top
- West 2007.Top
- Australian Government 2001; Tischler 2002.Top
- See Shell Chemicals 2003.Top
- Business Innovation Insider 2006a.Top
- Philips Research 2004.Top
- BT 2006.Top
- Gloor and Cooper 2007.Top
- Business Innovation Insider 2006b.Top
- BT, "Web21C SDK," http://web21c.bt.com/.Top
- Radjou 2006.Top
- Research & Technology Executive Council survey, "A Crowding
Market for Externally-Sourced Technology," January 2007.Top
- Dodgson et al. 2005. Top
- PKasperson 1978.Top
- UN 2005.Top
- See Sun Microsystems, "Sun Utility Computing,"
http://www.sun.com/service/sungrid/index.jsp. Data accurate as of
November 1, 2007. Top
- See Sun Microsystems, "Sun Helps Genomics R & D Group in
Leading Life Sciences Company Get Critical Research Tools to
Market in Record Time," http://www.sun.com/customers/
- See IBM 2006.Top
- Gloor and Cooper 2007.Top
- See http://en.wikipedia.org/wiki/Wikipedia:About.Top
- Giles 2005.Top
- See the InnoCentive website, http://www.innocentive.com.Top
- See BT, "Wi-Fi Developer Challenge,"
- BT BizBox, http://www.btbizbox.com/about/.Top
- Intel Corporation, CoolSW website, http://coolsw.intel.com.Top
- See Simon & Schuster 2007Top
- Musser et al. 2006.Top
- See BBC Backstage website, http://backstage.bbc.co.ukTop
- See Microsoft, "The Imagine Cup," http://www.microsoft.com/
- The Economist 2007a.Top
- The Economist 2007b.Top
- See BT, "Lifelines India," available at http://www.btplc.com/
- I-Shakti website, http://www.hllshakti.com/sbcms/
- Wray and Mayet 2007.Top
- See Perry 2007.Top
- YourEncore website, http://www.yourencore.com.Top
- The Agile Alliance website, http://www.agilealliance.org.Top
- Amazon Web Services website, http://aws.amazon.com.Top
- BT, "Web21C SDK," available at http://web21c.bt.com/.Top
Arthur D. Little. 2005. Innovation Excellence Survey.
Australian Government, Department of Communications, Information
Technology and the Arts. 2001. Media release, "Australian
Company Wins International IT Competition," April. Available at
Business Innovation Insider. 2006a. "Boeing and the Art of Global
Collaboration." April. Available at http://www.businessinnovationinsider.
---. 2006b. "Open Innovation at Kraft." June. Available at
BT. 2006. "Embracing Open Innovation." Available at
---. "Lifelines India." Available at http://www.btplc.com/
---. "Web21C SDK." Available at http://web21c.bt.com/.
Cameron, D. 2005. "Koreans Cybertrip to a Tailor-Made World."
The Age, May 9. Available at http://www.theage.com.au/
Chesbrough, H. W. 2003. Open Innovation: The New Imperative for
Creating and Profiting from Technology. Boston: Harvard Business
Dodgson, M., D. Gann, and A. Salter. 2005. Think, Play, Do: Technology,
Innovation, and Organization. Oxford: Oxford University Press.
The Economist. 2007a. Special Report on Innovation, "Can Dinosaurs
Dance?" October: 8.
---. 2007b. Special Report on Innovation, "Something New Under
the Sun." October 4.
Giles, J. 2005. "Internet Encyclopaedias Go Head to Head." Nature,
December. Available at http://www.nature.com/nature/
Gloor, P. A. and S. M. Cooper. 2007. "The New Principles of a Swarm
Business." MIT Sloan Management Review, Spring. Available at
IBM. 2006. "Dassault Aviation Revolutionizes Aircraft Development
with the Virtual Platform and PLM." Available at
IEC (International Engineering Consortium). 2007. "IEC and BT Discuss
Innovation 'Big Bang.' "July. Available at http://www.iec.org/
Kasperson, C. J. 1978. "An Analysis of the Relationship Between
Information Sources and Creativity in Scientists and Engineers."
Human Communication Research 4 (2): 113-19.
Musser, J. with T. O'Reilly and the O'Reilly Radar Team. 2006. Web 2.0
Principles and Practices. O'Reilly Radar Report. November.
Sebastopol, CA: O'Reilly Media, Inc.
Perry, T. S. 2007. "The Laptop Crusade." IEEE Spectrum. April.
Available at http://www.spectrum.ieee.org/apr07/4985.
Philips Research. 2004. "Open Innovation." Password Magazine. July.
Available at http://www.research.philips.com/password/
Radjou, N. 2006. "Transforming R&D Culture." Forrester Research Inc.,
Shell Chemicals. 2003. "GameChanger Case Study." Available at
Simon & Schuster. 2007. "Touchstone Imprint of Simon & Schuster
Teams With New Website Media Predict for its Project Publish
Literary Contest." May. Available at http://www.simonsays.com/
Sun Microsystems. "Sun Helps Genomics R & D Group in Leading Life
Sciences Company Get Critical Research Tools to Market in
Record Time." Available at http://www.sun.com/customers/
Tischler, L. "He Struck Gold on the Net (Really)." Fast Company
Magazine. May. Available at http://www.fastcompany.com/
UN (United Nations). 2005. UN World Summit on the Information
Society, "Towards a Global Cooperation for Quality Content in the
Information Society." Available at http://www.wsa-conference.org/
West, J. 2007. "What Is Open Innovation?" August 28. Available at
Wikipedia. "Wikipedia: About." For current statistics, go to
Wray, R. and F. Mayet. 2007. "Upwardly Mobile Africa: Key to
Development Lies in Their Hands." The Guardian. October 29: 27.