Point: By picking where open innovation occurs and what it communicates to the rest of the organization, innovators can protect open innovation efforts from corporate antibodies

Story: All organizations, especially large ones, have an “immune system” in the form of an army of fine-tuned antibodies that root out risk and threats to the smooth-operating status quo.  These antibodies help drive efficiencies, attack waste, promote uniform performance, and prevent infection for foreign ideas.

That’s good for efficiency, but innovation requires taking risks and changing the status quo to create more value.  That makes innovation a prime target for the cleansing action of antibodies.  Open innovation is especially prone to antibody response because it involves foreign ideas.  At the December 2009 Open Innovation Summit, presenters from HP, CSC, Clorox, and Shell described how they avoided corporate antibodies at their companies.  The techniques addressed who participates in open innovation, where they operate, and what they communicate so that innovation succeeds and doesn’t get killed by antibodies.

For example, Russ Conser, Manager of EP GameChanger at Shell, offered a good metaphor for where to do open innovation.  He showed an image of a young girl building a castle in a sandbox under a large umbrella. The sandbox metaphor works on two levels.  It provides a protected place for innovation to do its value-creating experimental work.  The sandbox also is the container for the innovator’s gritty sand, protecting the larger organization from the risky rough ideas.

Phil McKinney, SVP and CTO at Hewlett Packard, concurred — HP put its OI in a quiet corner of the Personal System Group. The sandbox creates an antibody-free zone for innovation work and protects the larger organization from the early-stage risks of innovation.

When communicating about open innovation efforts, innovators’ communications can either attract attacking antibodies or help pacify them.  What innovators and their representatives say determines how antibodies react. For example, Lemuel Lasher, Chief Innovation Officer at CSC, cautioned that innovators shouldn’t be too quiet or too secretive, especially when the facts are on the side of the innovator.  Innovators should be provocative as long as they don’t provoke too strong an immune reaction.

Ed Rinker, Manager of the Technology Brokerage Group at Clorox, used hard-hitting facts to convince his organization to deviate from its brand strategy.  Consumer trends toward gentle green and natural products seemed antithetical to the Clorox brand of strong cleansers.  Rinker used facts like marketing tests that proved  consumers preferred GreenWorks with the Clorox name on the product to convince the antibody nay-sayers.

The most-cited communications recommendation, used at HP and Shell’s programs, is communicating what the innovators did and not what they are doing or planning to do.  This focuses the discussion on the new products, new customers, new revenues, and new profits generated by innovation, rather than on the potentially risky or disruptive projects underway by the innovators.  Shell’s Gamechanger Group continues to thrive after 12 years inside the billion-dollar giant because they show results.

Action:

• Find an ‘air-cover’ executive who provides the umbrella of protection for innovation
• Use a quiet corner or sandbox where innovators can generate results without interference or creating risk
• Describe the good projects you did, not the risky projects you’re doing or plan to do
• Live on the boundary between sufficiently provocative and excessively provoking

EZWBSEYYT83H

Point: Organizing innovation investments into broad themes focuses energy and enables collaboration

Story: Until 2008, Hewlett-Packard Company (HP) Labs ran hundreds of research projects. Then new HP Labs’ director Prith Banerjee reduced the total number of projects and organized research into eight cross-cutting themes: Analytics, Cloud, Content transformation, Digital commercial print, Immersive interaction, Information management, Intelligent infrastructure and Sustainability. They then invited universities to submit research proposals within these core themes. In 2008, HP selected 45 projects at 35 institutions to receive HP Labs Innovation Awards. Winners in 2009 will be announced on March 16.

Similarly, Boulder venture capital firm Foundry Group invests in five themes: Human Computer Interaction, Implicit Web, Email, Glue, and Digital Life. The commonality among these five themes, besides the tie to software/internet/IT, is that the themes are horizontal rather than vertical. The themes cut across industries, just as HP’s the areas do. The Foundry Group’s goal is to identify underlying technology protocols and standards that have the potential to win big. When evaluating whether to invest in a new company, “our first question is, does it fit our investment themes?” said managing director Brad Feld. “We focus on broad horizontal themes where we can create market-leading companies.” For example, the Foundry Group invests in Lijit Networks, Inc. because Lijit’s search infrastructure services apply to any online publisher and because the search methodology uses people, their content, and their network connections to produce search results with unprecedented relevance.

Both HP and Foundry Group seek and invest in “big ideas” that have the potential to transform the marketplace. Investing horizontally means looking at transformational ideas that can lead to opportunities in many industries. For high-risk research and venture investments, choosing horizontal areas is a better risk management strategy for three reasons. First, it makes success less dependent on adoption of the idea within a given industry. Second, you avoid running into a major stumbling block, such as regulation or a big competitor, that could derail your success in a single industry. Third, it helps create agility by creating core innovations that can be adapted to a range of verticals, as needed. A horizontal approach lets you have more “irons in the fire” without being scattered. The grouping gives you a diversity of opportunity without the burden of a scattered approach.

Action:
* Aggregate and focus your R&D or project investment efforts into horizontal thematic areas
* Become an expert in those themes to seek out and nurture the big ideas
* Look for opportunities that cut across industries
* Avoid the temptation to be pulled in different directions that would dilute expertise or investment

For more information: HP Labs reports on its restructuring and open initiatives by Dean Takahashi

HP Labs’ eight theme areas

Foundry Group Theme Investing by Brad Feld

Silicon Flatirons Interview Series