Institute For The Future

Moving Beyond Open Innovation

Opening up R&D organizations to outside ideas has become a powerful weapon in the strategic arsenal of research managers. As Henry Chesbrough writes, “[O]pen innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.”  This strategy has been associated with notable commercial successes, such as Procter & Gamble’s SpinBrush, sourced not from internal R&D but rather a group of inventors in Cleveland. Increasingly, we see a coterie of firms from IBM to GlaxoSmithKline orienting their research strategy around open approaches.

But even textbook applications of open innovation still reflect a traditional emphasis in large organizations on large bets and big breakthroughs. In the end, what open innovation accomplishes is a shift of source for some big breakthroughs, from inside the company’s R&D organization to the outside.

The lightweight innovation models emerging in the web industry certainly make great use of open innovation. Twitter, one of the fastest growing social web services has sourced almost its entire innovation ecosystem outside the company’s control. This inversion is so complete, that most of the in-house innovation has been inferior to that of third parties using its standard Application Program Interface. These firms, numbering in the tens of thousands have built a rich array of popular innovations around Twitter’s core open platform.

But openness is not the only trick these companies are employing to innovate fast and cheap and with great relevance to their users’/customers’ needs. Indeed, they have taken the principles of open innovation and put it at the core of their R&D strategy. But on top of this they are layering new strategies  – rapid incubation, de-construction of problems into small pieces and the incremental evolution of platforms. 

Let’s look at each of these innovations lightweight models are bringing to the process of innovation:

• Rapid Incubation. Lightweight innovation processes purposely shorten the design and incubation stage by launching new products and services early. As web entrepreneur Reid Hoffman put it, “If you're not somewhat embarrassed by your 1.0 product launch, then you've released too late.”  The first public beta versions of Gmail and Twitter were written in a day and two weeks, respectively. FarmVille, the most popular game on the web today, was completed in five weeks. Lightweight web companies achieve this speed in part by focusing on barebones functionality – in fact, avoiding “feature creep” is a core principle of the “agile development” style of project management favored by many contemporary web software engineers. A recent retrospective survey of twenty popular websites noted how similar their present versions are compared to their initial launch. In the meantime, they have been endlessly tweaked and scaled, but the core results of the rapid prototyping process still contain the main added value. This suggests that lightweight innovation can quickly prove concepts to which traditional heavy R&D resources can be redirected to achieve scale, reliability, and precision.
• De-constructing problem solving. Open innovation largely sees crowdsourcing as a technique for idea generation, but  lightweight innovation sees it as a way of broadly re-organizing the lab, the workshop, and the studio. Whereas open innovation transforms just one part of the R&D process, lightweight innovation threatens to completely re-plumb the entire pipeline ideas traverse on their way to market. Twentieth-century science and engineering was characterized by massive, micro-managed approaches to solving large and complex problems. In contrast, the incremental nature of lightweight models offers the advantage of distributing pieces of larger problems to an array of solvers. New technologies for communication and project management reduce the transactional overhead of coordinating such large and distributed teams. 
• Evolutionary, scalable platforms. In traditional R&D systems, platforms were big, capital-intensive projects that provided support services for a broad array of actors – such as the Human Genome Project. In lightweight models, platforms evolve constantly from the need to coordinate distributed actions. In contrast to the Human Genome Project, the BioBricks Foundation is developing tools to coordinate open source biological research, rather than seeking massive sustained NIH funding to build a traditional research platform of labs, conferences and journals. Furthermore, because lightweight R&D efforts thrive on everyday sharing and coordinating highly distributed teams, they are particularly good at creating new platforms that are open, scale well, and reset the baseline of knowledge and capabilities for everyone.

 

Lightweight innovation models are still in their infancy. It is not yet clear how they will translate outside the web software sector. It is tempting to dismiss this trend on the basis that the innovations it produces are merely incremental.  Big research organizations need to produce big results. But while lightweight innovation’s focus is tactical that's not to say that it can only produce incremental advances (which it is very good at). Over time, small innovations produced by lightweight processes can add up to create significant breakthroughs in basic science, applied technology and business models.

The sheer speed at which lightweight models of innovation can evolve a series of incremental advances into major breakthroughs is both its most threatening characteristic to large organizations, and the most compelling one for thinking seriously about what can be learned from it. To compete with lightweight models, large organizations will need to learn how to  evolve open innovation models that are more lightweight; agile, lean and user-driven.

How might this play out in practice? Rather than picking a handful of big projects to fund from an idea network of internal and external experts, organizations will need to build capacity for high-velocity, incremental and parallel innovation over long periods of time. It won’t be enough merely to source innovations outside the laboratory walls – those ideas need to be developed through lightweight R&D frameworks that can also engage large networks in prototyping.

This evolution from open innovation to lightweight innovation will lead traditional R&D managers into new territory. Focus on several key shifts:

• From open ideation to open prototyping – Companies that have adopted open innovation are getting better at sourcing ideas from outside laboratory walls, but the next step will involve sourcing working models and even accompanying business and manufacturing process innovations as well.
• From locking in IP value to unlocking IP value - Traditional R&D, even in open innovation frameworks, seeks to protect IP aggressively – lightweight innovation often seeks to find value in aggressively unlocking IP. 
• From top-down priorities to bottom-up - More often than not, research priorities, budgets and assignments in traditional organizations are handled from the top-down. Lightweight innovation shifts a good deal of that organizing and planning to the bottom. GetSatisfaction.com epitomizes this approach, by combining technical support for web startups with user-driven innovation tools. In this sense, supporting and troubleshooting the current product and planning the next one become merged into a single activity.
• From big budgets to lean financing structures – In many large organizations, its hard to spend small amounts of money and be taken seriously. But making small investments quickly is the next big challenge. As veteran venture capitalist Alan Patricof recently commented, “Our biggest challenge today is to think smaller for venture capital”. For large companies, it will be even harder.

 

The differences don’t end there, but these are a few of the key incongruities that will need to be delicately managed.