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Open Innovation in Germany: The 2011 agenda

2011 has started with a huge uptake in Open Innovation in Germany. Firms are investing much more energy and budget for innovating their innovation management than they did last year. Based on discussions and projects within Germany’s largest firms and a formal questionnaire sent out to 80 German Open Innovation managers I see six issues on the German 2011 Open Innovation agenda:

Rationalization of OI approaches: Some of the most respected German firms conducted last year a formal inventory of existing open approaches to innovation. Depending on the granularity with which single approaches are counted as unique, large German corporates are ending up with 25 to 40 open approaches to innovation. Usually these are taking place in various corners of the firm. Three examples may help to illustrate the point: A cross-industry hub (see here) is one approach, lead user integration a second one and contract research a third one. Currently I have some very interesting discussions about efficiency and effectiveness of the indvidual approaches in the OI portfolio: Does the firm need all of them, which have the biggest impact, which approaches should be intensified / reduced and which new ones added to the firm’s OI portfolio?

Organizing for leap-frog innovation: Some of the leading firms have a clear view that ‘Old School’ innovation management (think: Stage Gates, standard plans for new product development, portfolio management, etc.) produces disappointing results: The number of innovations is too low, most of them are only of an incremental nature and the largest part of product innovations is not successful in the marketplace. Hence specific structures are being built parallel to the ‘bread-and-butter innovation management’ that are suitable for radical innovations. These structures include dedicated office space, specific organization, budget allocation, special HR approaches and in general a much higher degree of entrepreneurial freedom for the innovators.

Cross-Industry and Business Model Innovation: Alongside the discussions about how to organize for breakthrough innovations firms are actively looking for partners from other industries to build up an innovation advantage. Also, Business Model Innovation is on the radar of many firms that are in the driver’s seat of the innovation race.

Proprietary OI solutions / Professionalize work with intermediaries: Nearly all of the largest German firms have worked with OI intermediaries (such as InnoCentive or NineSigma). They now have a clear understanding on where these intermediaries add value and where other open approaches to innovation have a larger impact. Quite a number of firms are looking for alternatives where they are not dependent on third parties. One example that only recently was publicly announced is Beiersdorf’s Pearlfinder. Most of the firms that are looking for proprietary solutions say that only by doing so they can implement (due to the cost position and the process configuration) a ‘running OI business’  – compared to singular OI events done with the intermediaries.

Open Innovation inside the firm: Nearly all of Germany’s largest firms invest heavily in Enterprise 2.0 platforms. Collaboration and Web 2.0 –enabled forms of Knowledge Management are seen as a key driver for innovation productivity. Next stage, and this is already planned in some firms is Linking together internal collaboration platforms and external proprietary OI solutions.

Broadening Open Innovation capabilities: One of the largest firm currently has a corporate program titled ‘OI – From an athlete’s sport to popular sports’. This nails the point for many of the largest German firms: They want to see the open innovation mindset be present in hundreds or thousands of their staff, not just in some technological outposts that are designed to be open. Large change programs set up to make the Top management aware of their role, to win the middle management and to empower the firm’s change agents.