Assessing Your Company’s Open Innovation Capabilities

Open innovation is an approach to developing new products, services, processes and innovation capabilities by leveraging input, ideas and expertise from outside the organization as well as from within. Open innovation can provide a company with many advantages including:

• Accelerating time-to-market
• Reducing risk in the innovation process
• Lowering R&D and operating costs
• Supplementing internal R&D capabilities

Even though open innovation has permanently changed the innovation landscape, in NineSigma’s 2009 benchmark study on open innovation practices, we discovered something interesting. Of the more than 100 companies polled, nearly 50% identified themselves as being in the “early stages” of open innovation. This was more than six years after Henry Chesbrough coined the term “Open Innovation” and the practice began to achieve widespread adoption.

In our work with companies at all stages of open innovation, we have found that many of them have a difficult time assessing their own capabilities. That is probably because there are no common definitions of early stage, optimizing, advanced, etc. So we set out to define the different stages of open innovation in terms of a company’s ability to collaborate with internal and external partners and extract value from those collaborations. The result was the NineSigma OI Scorecard assessment tool.

The OI Scorecard is for organizations that want to measure their ability to collaborate on innovation in three tiers: within and across the company; with the company’s existing external network; and with the global innovation community. What’s different about this tool is that it not only provides a snapshot of the company’s current status, it offers concrete recommendations for how to address the gaps identified while building on the company’s strengths.

For example, a company may have a variety of external collaborative partnerships with suppliers, university partners, or customers, but they may not be capturing the full value from that network. The OI Scorecard would rank them as Engaged but not Enabled, meaning they are connected but not able to convert the knowledge and capabilities that exist in the network to enhance their innovation process. In this case, the OI Scorecard would offer suggestions such as:

Make information more accessible. Think about how to make your network accessible and how it will provide the greatest value. Central repositories of information with easy access and updating generate high, broad usage throughout organizations.

Expand your network with new partnerships. If adding new partners to your network is difficult, it will lack the dynamic quality that makes it valuable. Work towards a streamlined partnership process to eliminate potential barriers, and ensure that current and new partners can be easily added to the central repository of information.

Leverage current technology. A robust knowledge management system is a valuable tool for capturing both internal and external information and ideas. If the system is widely used and aligned with the innovation process, the investment truly pays off.

We expect to see a broad range of “scores” come out of the OI Scorecard assessment tool because no two companies practice open innovation the exact same way. It is our hope that this preliminary assessment starts a conversation within companies about their strengths and opportunities for improvement. With so much potential value to be found in open innovation, it is important to understand the organization’s starting point before charting a successful path forward.

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