dw2

13 August 2008

There’s more to Open Innovation than Open Source

Here’s the challenge: How best to capitalise on the potential innovation that could in theory be created by users and developers who are based outside of the companies that are centrally responsible for a product platform?

This is the question of how best to make Open Innovation work. Recall the following contrasts between Open Innovation and so-called Closed Innovation – taken from the pioneering book by Henry Chesbrough, “Open innovation: the new imperative for creating and profiting from technology”:

The “closed innovation” mindset:

  1. The smart people in our field work for us
  2. To profit from R&D we must discover it, develop it, and ship it ourselves
  3. If we discover it ourselves, we will get to the market first
  4. The company that gets an innovation to market first will win
  5. If we create the most and the best ideas in the industry, we will win
  6. We should control our IP, so that our competitors don’t profit from our ideas.

The “open innovation” mindset:

  1. Not all the smart people work for us. We need to work with smart people inside and outside our company
  2. External R&D can create significant value; internal R&D is needed to claim some portion of that value
  3. We don’t have to originate the research to profit from it
  4. Building a better business model is better than getting to market first
  5. If we make the best use of internal and external ideas, we will win
  6. We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our own business model.

In the modern world of hyper-complex products, easy communication via the Internet and other network systems, and the “Web 2.0” pro-collaboration zeitgeist, it is easy to understand why the idea of Open Innovation receives a lot of support. The challenge, as I said, is how to put these ideas into practice.

It’s tempting to answer that the principal key to successful Open Innovation is Open Source. After all, Open Source removes both financial and contractual barriers that would otherwise prevent many users and external developers from experimenting with the system. (What’s more, “Open Innovation” and “Open Source” share the prefix “Open”!)

However, in my view, there’s a lot more to successful Open Innovation than putting the underlying software platform into Open Source.

To see this, it’s useful to review some ideas from the handy summary presentation by leading Open Innovation researcher Joel West, “Managing Open Innovation through online communities”. Joel makes it clear that there are three keys to making Open Innovation work best for a firm (or platform):

  1. Maximising returns to internal innovation
  2. Incorporating external innovation in the [platform]
  3. Motivating a supply of external innovations.

Let’s dig more deeply into the second and third of these keys.

Incorporating external innovation in the platform

The challenge here isn’t just to stimulate external innovation. It is to be able to incorporate this innovation into the platform. That requires the platform itself to be both sufficiently flexible and sufficiently stable. Otherwise the innovation will fragment the platform, or degrade its ongoing evolution.

It also requires the existence of significant skills in platform integration. Innovations offered by users or external developers may well need to be re-engineered if they are to be incorporated in the platform in ways that meet the needs of the user community as a whole, rather than just the needs of the particular users who came up with the innovation in question.

  • This can be summarised by saying that a platform needs skills and readiness for software management, if it is to be able to productively incorporate external innovation.

Motivating a supply of external innovations

The challenge here isn’t just to respond to external innovations when they arise. It is to give users and external developers sufficient motivation to work on their ideas for product improvement. These parties need to be encouraged to apply both inspiration and perspiration.

  • Just as the answer to the previous issue is software management, the answer to this issue is ecosystem management.

But neither software management nor ecosystem management comes easy. Neither fall out of the sky, ready for action, just by virtue of a platform being Open Source. Nor can these skills be acquired overnight, by spending lots of money, or hiring lots of intrinsically smart people.

Ecosystem management involves a mix of education and evangelism. It also requires active listening, and a willingness by the platform providers to occasionally tweak the underlying platform, in order to facilitate important innovations under consideration by external parties. Finally it requires ensuring that third parties can receive suitable rewards for their breakthroughs – whether moral, social, or financial.

Conclusion: On account of a legacy of more than ten years of trial and error in building and enhancing both a mobile platform and an associated dynamic ecosystem, the Symbian Foundation will come into existence with huge amounts of battle-hardened expertise in both software management and ecosystem management. On that basis, I expect the additional benefits of Open Source will catalyse a dramatic surge of additional Open Innovation around the Symbian Platform. In contrast, other mobile platforms that lack this depth of experience are likely to find that Open Source brings them grief as much as it brings them potential new innovations.

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3 Comments »

  1. Beyond Open Innovation…

    There’s more to open innovation than open source. I would agree. I see open source broadly as a means to an end, not an end in itself (for Symbian and others). Moving to open source does reduce the entry barriers and should lead to more users and external developers experimenting with the system, as you say. Having more people experimenting with the system helps, but this is not sufficient in itself to qualify as an end objective of course. Nor do I believe in fact, that it is sufficient to target to successfully stimulate “Open Innovation”, difficult as that is to realise in practical terms as you point out.

    I think to get the roadmap right you have to look to the likely shape and form of successful software companies in the future, and here I envisage a blurring of the lines of distinction between internal and external resources with both factions empowered to influence the direction of the new “corporate organism” – I make no apologies for the use of the biological term as I think this best captures the likely scale of the leadership and change management challenges which confront us going forward.

    If we use this simple “corporate organism model” as a lamp to illuminate the darkness, several things become evident (building on Henry Chesbrough’s open innovation mindset thinking):

    • Most of the really smart people don’t work for us.
    • Companies that leverage the external as well as the internal might survive. Companies which do not adequately leverage the external will not survive.
    • Companies that are “best in class” at leveraging the external will win.

    That there are issues with both the incorporation of external innovations and with motivating the external contributors I would also agree. With regard to the latter point I have observed that even the issue of responding to external innovations proves challenging for some in the open-source space!

    Part of the problem lies with the very concept of “product”. Go back to the time of the Austin 10, and it was black, no other colours were offered (so I’m told, before my time I’m afraid!). With a product (read one size fits all) mentality one tends to push back on user/external innovations, preferring instead to lean purely on internal thought leaders for direction on product specification etc. Coming from a services background myself, I’m more inclined to think in terms of solutions; the customer gets what he requires to meet a business need.

    Moving to the point of encouraging external innovation, and then putting in place the infrastructure to enable that innovation, will require a quantum leap in thinking for some organisations, and I suspect for many the chasm will be just too wide.

    To get it right you certainly need the mix of education and evangelism, the active listening, the platform flexibility and the rewards systems which you have mentioned.

    I would formalise this by saying that:
    • You need to create an “environment” for external/internal collaboration, in the broadest sense of the word. There are many facets to this.
    • You need strategies to motivate a stream of people to get involved with your evolving corporate organism in the first place. Clearly it is not enough to simply nurture new developers; you need to create a strong “pull” to attract star players away from the competition.
    • You need strategies to motivate people to innovate around the issues on a day to day basis i.e. to actively engage once involved.
    • You need to provide elements of vision/leadership (direction) and operational management befitting the culture of your external community. This is important. Taking “open” to the point of abdicating responsibility for providing “direction” (as some appear to) is unlikely to produce optimal results.
    • You need to provide a clear reward infrastructure (whatever the mix) which works reliably and in a timely manner.
    Symbian’s experience in the broad field of eco-system management is a given. That said the community stewardship challenges are complex and the situation (with any community) always in flux; what worked yesterday, therefore, may not work as well today.
    Getting this right is going to be of mission critical importance for many software companies. A new breed of leaders is going to emerge with a skill-set focused on the stewardship of external resource communities, with much of the deep expertise needed to handle the more complex issues passing into the hands of the specialists.
    In the meantime developers looking for a good return on their investment would be well advised to keep a close eye on the Symbian Foundation’s activities over the coming months, I suspect.

    Harry Wilson
    Managing Partner
    Greenflash Consulting
    greenflash@in2euro.com
    14th August 2008

    Comment by Harry Wilson — 14 August 2008 @ 9:38 am

  2. Harry,

    Many thanks for your insightful comments. I particularly agree with the following:

    >Symbian’s experience in the broad field of eco-system management is a given. That said the community stewardship challenges are complex and the situation (with any community) always in flux; what worked yesterday, therefore, may not work as well today.

    Getting this right is going to be of mission critical importance for many software companies. A new breed of leaders is going to emerge with a skill-set focused on the stewardship of external resource communities, with much of the deep expertise needed to handle the more complex issues passing into the hands of the specialists.

    I look forward to further exploring the essence of this emerging new skill-set.

    // dw2-0

    Comment by David Wood — 14 August 2008 @ 12:07 pm

  3. (What’s more, “Open Innovation” and “Open Source” share the prefix “Open”!)

    I couldn’t agree more. There is an overlap but they are not the same — orthogonal concepts or at best correlated (See Fig 5.1).

    Firms that want to make money off of open source need a revenue model — a point that Chesbrough makes and that so many companies either ignore or underestimate. Will a big company cross-subsidize an open source effort indefinitely? Sun pulled out of Mozilla pretty quickly, and while IBM is a major player in Linux and Apache they‘re not carrying the whole load.

    I think open source has succeeded wildly as a way to commoditize software or to let (very smart) users share their solutions. As a business model, the jury is still out.

    Comment by Joel West — 21 August 2008 @ 7:50 pm


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