Smarter, Faster Ways to Get Your Product to Market
By Mike Drummond
Wanted: Talented inventor to help conceive and commercialize innovations to improve the human condition. Must be passionate, creative and collaborative. Science background preferred.
Salary: Low six-figures.
Send resume to: Menlo Park Laboratory, care of Thomas A. Edison. No phone calls, please.
Who would turn down that offer?
George Washington Carver reportedly did.
Some among us would question the wisdom of that decision. But no one, not even Carver’s friend Edison, would have questioned his IQ.
The 20th century agricultural chemist was the father of soil-enriching crop rotation who invented hundreds of uses for peanuts, soybeans, pecans and sweet potatoes. Carver’s techniques lifted Southern farmers from dependence on cotton and tobacco and created new after-markets for soil-regenerating crops.
While Edison amassed 1,093 patents, Carver only obtained three and declined to profit from his inventions and discoveries. “God gave them to me” Carver would say of his ideas, “How can I sell them to someone else?”
So in addition to possessing a fertile mind and a mastery of soils, you also could argue Carver was a pioneer of modern open innovation or OI, the market practice of finding new products or technologies outside your own company. Indeed, automotive magnate Henry Ford and other turn-of-the century industrialists consulted with Carver to help develop new, money-making products.
It would be another 100 years before Henry Chesbrough would pen his 2003 seminal work Open Innovation: The New Imperative for Creating and Profiting from Technology. The book helped give voice to and define the practice of companies seeking innovative commercial goods from outside their own payrolls.
At its best, OI speeds new products to market, builds new revenue streams, decreases R&D costs and increases return on investment. On the inventor side of the ledger, OI offers a friendly pipeline for grassroots inventions to see the commercial light of day. Even more so than the American Inventors Protection Act of 1999, OI represents the greatest potential boon for modern independent inventors – provided they know the rules of engagement.
While Chesbrough’s book seemingly marked the turning point of the “not invented here” corporate mindset – a closed-loop, insular approach to innovation that the U.S. automotive industry ironically still embraces – the fact is many companies were already engaged in OI.
Procter & Gamble offers one of the largest and, to date, most successful examples of OI. It launched its Connect + Develop program in 2001 with the goal of delivering 50% of the company’s innovation through external collaboration.
P&G met that goal in 2005, two years ahead of schedule.
Late last year, P&G set a goal to triple the impact of its Connect + Develop program by having it deliver $3 billion of annual sales growth and become the “partner of choice” for external innovators.
P&G markets more than 300 branded products in more than 180 countries. It notched nearly $79 billion in net sales in 2010. It has some 70 Connect + Develop people in global hubs searching for new products. With its focus on consumer goods – brands include Braun, Gillette, Pampers, PUR and Wella – P&G is a natural for many independent inventors.
To be sure, P&G says its Connect + Develop is “about collaborating for mutual value creation with anyone, anywhere to accelerate P&G’s innovation and deliver growth goals.”
P&G keeps its open innovation pipeline primed through suppliers such as DuPont and Mattel, academic institutions such as Duke and Cornell, manufacturers such as GE and Whirlpool, innovation enablers such as Innocentive and yet2.com and even competitors such as Kimberly-Clark and Pepsico.
P&G says there’s room at the open innovation table for independents as well.
Chris Thoen, director of Innovation & Knowledge Management at P&G, notes that small- and medium-sized enterprises or SMEs generate more than half of the nation’s $13 trillion national gross domestic product.
“SMEs,” says Thoen, “are the fastest growing source of intellectual property. They are a gold mine of innovation opportunities.”
Yet many, if not most, of the open innovation product successes P&G typically cites were forged through relationships with other large companies. The Swiffer disposable duster came about through a partnership with competitor Unicharm. The Press ‘n Seal plastic storage bag was a result of a deal struck with rival Glad. Likewise, P&G’s Olay Regenerist wrinkle cream owes its commercialization to a connection with France-based cosmetic giant Sederma.
Much of this high-level open innovation is born from trust and existing relationships. As P&G’s Thoen points out, “The second deal with the same partner takes half as long and is worth twice as much as the first.”
Another hard reality: Many independent inventors and small businesses lack business polish.
In 2008, P&G received more than 4,000 leads or ideas. To be successful submitting to P&G, you must adhere to its submission guidelines and read its needs page on its Connect + Develop website.
Moreover, the company requires submissions have some form of verifiable intellectual property, be it a patent, copyright, trademark or trade secret.
“IP is an important currency of open innovation,” Thoen says, noting it, clarifies and defines “ownership or exclusivity of the opportunity.”
Michael Fruhling of open innovation consultancy BFS Innovations, distinguishes between “closed” open innovation and “open” open innovation.
Closed open innovation is “the stuff that goes on that’s not public, not promoted or not discussed publicly,” says Fruhling, who started his career at P&G and is a former professional of new business development at Bath and Body Works and United States Playing Card Co.
Fruhling says closed OI is born from trusted corporate relationships – a trust that many independent inventors and small businesses fail to build in part by failing to present themselves and their ideas in a professional manner.
“Too often there’s this misconception among inventors that if they what they believe is a really good idea, the large company will be charmed by that and underwrite all the hard stuff to finish the product’s development,” Fruhling says. “That’s just wrong-headed.”
The increase in company product-idea solicitations, inventor casting calls and various clarions for inventions from infomercial companies, innovation enablers, brokers and others in the fragmented inventor industry have given rise and currency to open innovation. And the maturation of open innovation websites has given an always-on feel to licensing opportunities.
Asked if it’s easier now for inventors to get their products picked up by companies because of open innovation, Fruhling paused.
“It’s easier now for them to get confused of their real prospects of getting their products to market,” he says. “The folks submitting need to have more realistic expectations of what companies are looking for.”
Innovation enablers such as Edison Nation can help inventors put their best foot forward and remove some of the anxiety corporations can have when engaging with unknown and untested product developers. (Full disclosure alert: Edison Nation is a sister company of Inventors Digest.)
Rawlings Sporting Goods Co. conducted a Live Product Search through Edison Nation last year. A Rawlings official told Inventors Digest that while the company embraces open innovation, it doesn’t necessary embrace the notion of dealing with inventors, whom he said sometimes could be “difficult.”
That’s a common rap against inventors. But criticism flows both ways. Sergie Dovgodko, a manager and coach of Lean Six Sigma Operations at 3M, questions some of the very assumptions of open innovation and why companies even feel compelled to engage in it.
“I have hard time believing that established companies lack ideas,” he said via social networking site LinkedIn. “What is lacking is the ability to fully use creative abilities of their own organization.
“It seems to me established companies use a small fraction of their workforce’s creative and innovative potential,” he said. “Employees in the field have intimate knowledge of the market, technologies and the competition.
“Open innovation can relieve some symptoms,” he added, “but could be making the underlying corporate ills worse over time.”
Don’t tell that to Carlos Barroso, a former senior vice president for research and development of global foods at Pepsico and now founder of open innovation firm CJB and Associates.
Several years ago while at Pepsico, Barroso was tasked to finding ways to reduce sodium in its Frito-Lay brand of chips. He turned to the “usual suspects,” including Cargill, and came up empty. Established players in the industry are very good at what they do, Barroso notes, but not so good at innovating.
So he broadened his search, including ETH in Zurich, the MIT of Europe. There he found researchers were working with nano particles to fill holes in bone created by osteoporosis. As it turned out, researchers were using salt as a demonstration medium because it was plentiful and easy to work with.
While use of nano particles was not the answer Barroso was looking for, the encounter did inform and refine his search for a solution. The ETH researchers turned him on to micro milling, a common technique in the pharmaceutical industry.
Pepsico was able to reduce the surface area of salt, but still retain a salty punch.
“We were able to build a crystal to get more salt taste per gram of salt,” says Barroso. “It never would have occurred to us to go through orthopedic sources for this solution.”
And thus he hits on one of the elements of open innovation: surprise.
“The more leads you pursue outside of the usual suspects,” he says, “the more likely you’ll hit those serendipitous moments. You have to be open to discovering you’re wrong.”
At the end of the day, the onus is on companies to make open innovation succeed. And for that to happen, companies need to have a system and infrastructure in place to capture and analyze ideas from the outside, says Bryan Plug, CEO of innovation management consultancy Accept Corp.
The best examples of functioning open innovation are where companies have dedicated resources to solicit and process outside ideas.
A recent survey Accept conducted of some 280 executives representing product management, marketing and development from a diverse array of companies, industries and geographies showed that about half of their new product launches failed.
Many in the inventing industry would say a 50 percent success rate is very high. Indeed, batting .500 as an inventor is unheard of. Yet Plug sees room for improvement, at least on the corporate side.
“If you don’t have a catch-and-analyze system in place, you’re failing,” he says of company open innovation efforts. “If there’s no system in place to handle outside ideas, open innovation breaks down.
“You have a greater risk of making the wrong product faster,” he adds. “And without connectivity or a network in place, you’ve more than likely created a place where good ideas come to die.”
Best Practices – Companies
- Must have system to handle unsolicited ideas
- Be responsive – ‘No thank you’ better than no response
- Submitted ideas must have legal protection
- Network with suppliers, vendors, competitors, inventors
- Don’t be afraid of uncharted waters
Best Practices – Inventors
- Know what target companies are looking for – How will your product company’s need?
- Follow submission guidelines to a T
- Make sure your product/idea has intellectual property protection
- Have close to finished product as possible
Open Innovation Enablers
Brings inventors’ products to companies through Licensed Product Services.
Network of innovators available to collectively help companies solve problems.
Crowdsources R&D for biomedical and pharmaceutical companies.
Companies sponsor product, service & business model challenges the online community helps solve.
Started in 2000
First open innovation services provider helping companies develop value from their innovation programs.
Connects scientists, inventors with companies seeking R&D help.
Online forum for inventors to help sponsoring companies find ideas/solutions.
Editor’s note: This article appears in the February 2011 print edition.
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