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Article | June 5, 2009
Open Innovation for packaging: A must do
Do you think you’re smart enough to go it alone?
Think again. In a global economy, you need all the help you can get to stay ahead of the competition. We’ve all heard that 80 to 85% of new products fail, so it should be pretty obvious that new and improved methods are needed to enhance our success rate. How are leading organizations like Procter & Gamble and Kraft improving the odds? Both organizations have created new innovation models. At P&G it’s called “Connect and Develop,” and at Kraft it’s “Innovate with Kraft.” In both cases, the goal is collaboration with outside entities. Neither organization has lost focus on consumer behavior. And both firms continue to emphasize a holistic product-development plan and brand strategy linking all consumer connection points—even packaging. What’s new is that now, on top of these bedrock principles of innovation, both firms have come to embrace a philosophy known as Open Innovation.Open Innovation has been around since the 1980s. Initiatives started at the Xerox Palo Alto Research Center, with leadership provided by Henry Chesbrough. Chesbrough went on to popularize the concept in 2003 in his book Open Business Models—How to Thrive in the New Innovation Landscape. Simply put, Open Innovation is a means to develop new growth opportunities by leveraging knowledge and tapping into technologies from external resources. It all sounds simple enough, but extracting value from Open Innovation requires strategic thinking, long-range planning, and alignment with existing innovation platforms. Focusing on platforms as opposed to individual projects permits repeatability across product lines, improves speed to market, and increases your chance of success. The innovation rules are changing as organizations look for partnerships, collaborations, and the development of new relationships to create new consumer-centric solutions leveraging tools like Open Innovation. One possible barrier keeping an organization from embracing Open Innovation is that the very idea of being “open” about business practices or strategic initiatives runs counter to traditional wisdom, especially when there are concerns about intellectual property (IP) rights. But if progressive firms like P&G, whose goal is to obtain 50% of its innovations from outside the company, are scoring successes by being more open, perhaps your firm should give it a try, too. Keep in mind that P&G’s success rate for new-product introductions is higher than 50%. They must be doing something right.
In this economy you need all the tools you can get, and Open Innovation is one you should take a close look at. Getting started takes some effort, but a good place to begin is with this check list:
• Have we assessed the organization’s readiness?
• Can we ensure cross-functional team involvement?
• Have we defined what Open Innovation will be in our particular case?
• How will we measure success?
• Are we assured of senior leadership support and sponsorship?
• Have we thought through issues revolving around Intellectual Property?
• Do we have dedicated funding?
• Are we factoring in the voice of the customer, the consumer, the shopper, the retailer?
• Have we analyzed hurdles that may stand in the way and can we recommend how to get past them?
• Do we have a Stage-Gate process in place? • Are innovation platforms identified, defined, and staffed?
• Have we identified tools, processes, and external resources we’ll be relying on, including identification of innovation intermediaries (networks, industry mavens, organizations, and individuals)?
• How will we communicate and celebrate success?
Having a plan is critical to ensuring that your investment in time, resources, and dollars pays off with commercial successes. Open innovation is much more than posing a question and assessing the feedback. By having laser focus on consumer insights, drawing meaningful connections to your products and technologies, and being open to creating non-traditional collaborations, you can significantly increase the quality and quantity of new ideas with fewer resources and lower overall costs.
This plan needs to include identifying where to look for open innovation and how to get there. The opportunity is real and significant. Putting in the time to develop the plan and the process is critical to delivering open innovation. Don’t wait—it’s time to get started!
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