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The Move from Closed Innovation to Truly Open Innovation in Three Phases

Did you know that the Big Mac sauce recipe was once lost? In the 1980s after McDonalds had reformulated the sauce recipe, an executive wanted to cash in on nostalgia value and bring the original recipe back… except it was gone. Fortunately, the original chef that created Big Mac sauce was still alive and willing to recreate it.

Dozens of brands develop new ideas under such clandestine circumstances that corporate espionage will occur as companies compete for those secrets. Billions of dollars are spent to obtain them, and they help companies keep a competitive edge in the market. There are rumors that when KFC updates its security systems, the handwritten secret recipe is temporarily moved to a secure location in an armored car escorted by a high-security motorcade.

But this sort of closed creation, this attention to trade secrets is not common business practice and most companies have moved beyond it. It’s less and less common to find secret labs with mystery employees in white lab coats. One reporter said that “secret” labs are as much a marketing tactic as they are a R&D method these days.

Some thought leaders say that the real reason for closed innovation management in the beginning of the 20th century was the lack of collaboration between education institutions, the government, and the private sector. This practice of closed innovation lasted into the 1980s until things started to change. 

More and more organizations started seeking information outside of the boundaries of their own walls: they looked to research institutions, partnered with those in their supply chain, started hiring contractors and collaborating with competitors from time to time. With the rise of freely shareable information, this opening of innovation became even more common.

In a recent survey of IdeaScale customers, we found that most organizations still look to their employees for new ideas. 72% of IdeaScale customers are crowdsourcing ideas from their employees. The boldest are collaborating with partners, customers, and the public.

We expect this is because IP concerns haven’t evolved significantly since the era of closed R&D and it is still tidier and requires less legal interference to collaborate with your employees as employers generally own the intellectual property created by its employees in the course of their employment.

However, the opportunity for transformative change is more likely to originate outside of an organization. Clayton Christensen pointed out that disruptive innovations tend to be produced by outsiders and entrepreneurs rather than market leaders, because some of these new ideas don’t prove enough initial value as the sustaining business. However, if organizations start looking for new ideas that are proudly sourced and tested elsewhere, it is likely that they will not only stay competitive and relevant, but also build out a new suite of competencies, advocates, and resources.

It is for this reason that IdeaScale encourages its customers to open up their organizations through this process:

  1. Phase One: Begin with cross-functional innovation. Remove the barriers between different disciplines in an organization and allow a good idea to rise to the top no matter where they come from. Doing this will help create embedded processes, language, and priorities for continuous innovation that can be used in the next phase. 
  2. Phase Two: Test opening up your organization by inviting in trusted partners, vendors, or a select group of advocates or customers. This will help an organization refine their messaging and IP approach
  3. Phase Three: Fully open innovation begins. Gather ideas from anywhere and nurture those ideas internally to help further develop an organization’s competitive advantage.

To learn more about how organizations are moving towards truly open innovation, download the 2019 Crowdsourced Innovation Report.

Rob Hoehn

Rob Hoehn

Rob Hoehn is the co-founder and CEO of IdeaScale: the largest idea management platform in the world with more than 35,000 communities and 4.5 million users. IdeaScale empowers organizations to crowdsource ideas from their employees or customers who then collaborate, evaluate, and further develop those ideas into products, processes, and new initiatives. IdeaScale’s client roster includes industry leaders, such as Citrix, Marriott Vacations Worldwide, NASA, the New York City Police Department, Princess Cruises and many others. Prior to IdeaScale, Hoehn was VP of Client Services at QuestionPro, an insight technology company, where he helped launch the company in its early stages. He also speaks regularly about climate change and lives with his wife, two kids, and husky in Berkeley, CA. He holds a BS in Computer Science from the University of Vermont.

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