Start Innovating Already: 13 Poisons to Open Innovation

Lisa Thorell Rutgers University PDS - Keynote Address, June 7, 2011

Start Innovating Already.

A Punk View of 13 Poisons to Open Innovation& Building Engaged Communities

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Build It All Yourself

Slow time to market High Fixed Costs Closed Pool of Talent

POISON

1

Source: © Henry Chesbrough, 2006

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That model arose in the early 1900s.

Economies of scale – Coordinating large numbers of people – Limit Liability

Concerns of the day were…

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Today we buy in more quickly…

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Months from purchase to discard of a cell phone for a person living in the US or UK.

Months from purchase to discard for a cell phone user in Japan.

The number of iPods you would own if you upgraded to every new iPod that had come onto the market from 2001 to 2009.

We throw out more quickly…

18

Source: Rachel Botsman & Roo Rogers book ‘What’s Mine Is Yours: How collaborative consumption is changing the way we live (2011)

1812

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Creating 100 gigapascals of pressure

Source: http://www.mckinseyquarterly.com/The_challenges_ahead_for_supply_chains_McKinsey_Global_Survey_results_2706Nov 2010

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Also rocking our world…

Source: McKinsey Quarterly Riding Asia’s Digital Tigers

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Rocking it still more: Hyper Innovation

Source: Adrian Ott, The 24-Hour Customer: New Rules for Winning in a Time-Starved Always-Connected Economy

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What’s a way to go faster?

Take in more ideas from outside?

Spin out ideas for others to use?

Solution: Punch more holes in the funnel.

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Open Innovation

Source: © Henry Chesbrough, 2006

ANTIDOTE

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Get to Market Faster

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Break into Partner Markets

Off the Grid PRTransfer risk to someone else

Off the Grid PR…If they can’t get your product.

Make your customers crazy-scream with rage…

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Employees as Lifeblood2

Expensive fixed assets

Salary independent of performance

POISON

• As Bill Joy said,•

“There are always more smart people outside your company than inside it.”

Bill Joy, Founder, Sun

Microsystems Partner, Kleiner Perkins

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Crowdsourcing:Lifeblood on steroids

Example: Netflix $1 Million Challenge

Pay only on Performance

ANTIDOTE

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Crowdsourcing:Netflix $1 M Challenge

Netflix $1 Million Challenge

55,000 Engineers Enter

A huge virtual workforce Decrease HR costs: Talent finds you!

ANTIDOTE

Crowdsourcing:Netflix $1 M Challenge

Movie Recommendation Engine Improved 10%

Problem Solved: 5 2 years

Decrease Time to Market

ANTIDOTE

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The Human Resources Department3

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Hire People HR would Never HireANTIDOTE

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ANTIDOTE

People HR would Never Hire

1760 A self-educated clock maker invents longitude

1990’s Design firm Ideo creates up the best-selling kid’s toothbrush by working with anthropologists

2006 A home-schooled coder invents WikiLeaks

2007 An oil-industry outsider provides the solution for cleaning up oil spills borrowing from the concrete industry

.

.

Diversity + Will-to-Win Trump Superstars

ANTIDOTE

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Trad Market Research

Great…brilliant clarity on the past Usually company internalBudget-constrained sample size

4

SecondaryResearch

Interviews

SurveysFocus

Groups

Roundtables

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Customer Crowdsourcing

MyStarbucksidea

Build it? No!

Up-to-minute 24 x 7 customer feedback

Community vetted

Social Proof of Open Brand

ANTIDOTE

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Customer Crowdsourcing

MyStarbucksidea

Build it? No!

• Over 100,000 ideas

• 100 ideas launched

• Note Starbucks did not build this. They license

the platform from SalesForce.com

ANTIDOTE

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Profitability

• Limits Shape-Shifting

• Makes C-levels risk-averse

Animate with Annual Report, Investors, SEC sliding up under NI.You own a company that

sells a product, like tee-shirts5

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You run a community thathappens to sell tee-shirts

DecreaseTime to Market

Source: http://www.ithnk.com/category/co-creation/

ANTIDOTE

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Share Community II(The Sequel)

Play your community forward (new markets)

Dell laptops – Havaianas flipflops– Griffin iPhone accessories

ANTIDOTE

Advertise

Advertise

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Your BalkanizedWeb 1.0 Website 1.0)6

You control. You make your customers come to you.

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Source: http://www.slideshare.net/davewrightjr/redesigning-nprorg

Problem: In 2008 the average public radio station listener visited their local radio station website only 2x per month.

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Different NPR Customers needed Different news formats

Different platforms

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GiveItAway GiveItAwayGiveItAway Now

• 400,000 new stories

• 500,000 audio files

• 30,000 blog posts

• Content from dozens of NPR station affiliates

NPR Content For Free

ANTIDOTE

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An Open API for Developers to Access

Result: more formats, more platforms

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Source: http://www.npr.org/templates/archives/archive.php?thingId=125099093

Business as Usual

Own the facilityBuild out a kitchenOperate set hoursServe familiar foodCharge as much as the

market will bear.Advertise in newspapers

and radio

7

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7

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Business Unusual: LudoBites

Restaurant/ Kitchen

Operate StdBusiness Hrs.

ChargeMarket Prices

Serve Familiar

FoodAdvertise

Borrow Someone

Else’sKitchen

Announce by Surprise +

Limited opening

Pay ForwardSavings

Serve One-of-a-Kind

Food

UseSocial Media

Chef Ludo’s famousCheese CupCake

“The main reason to thinkoutside the box

is there is no more oxygen leftinside the box.”.

Lisa Thorell

The Econolapse

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You need to own it to sell it.8

Under-utilized assets Sitting inventory

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The The New Share Economy

You broker others’ owned spaces.

ANTIDOTE

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Better than Zipcar…

Example companies how they do it.

You can broker others’ under-used cars.

ANTIDOTE

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Example companies how they do it.

Saatchi & Saatchi showed you can even broker ad space in Out-of-the-Office email auto-replies.

ANTIDOTE

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Example companies how they do it.

To cost-share its rent fees, Best Buy is offering shelf space to other retailers.

ANTIDOTE

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IP Control & Lawyers

9

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Strategically Mine Knowledge

Source: http://blogs.hbr.org/cs/2011/05/stop_obsessing_with_ip_rights-.html

ANTIDOTE

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Netflix again…ANTIDOTE

Database Shared

SolutionGained

Solution Shared

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ToToxic Boxes

Regarding your industry cost structure as immutable & unassailable.

10

Taxes

Net Income

Operating

Expenses

Cost of Sales

SalesRevenue

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The monsters who guard the Net Income box

Annual ReportSEC Investor

s

Net Income

It’s not that I’m against fiduciary responsibility. It’s the fear of shape-shifting and risk aversion that the monsters can engender.

Net income can beIncreased by payingattention to other boxes…

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Exploring NonToxic Boxes: Service Blueprinting

http://priyankashetye.com/html/medsystem.html

ANTIDOTE

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Business is serious stuff…11

Use of leaderboards to inspire frequent use & competence-by-competition.

Reward points that can be converted to product upgrades or discounts .

Badges for frequent contributions, levels achieved, other milestones.

ANTIDOTE

Gartner Forecasts 50% of Businesses will Gamify by 2015

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How Many Prizes did Netflix Give away?

http://offthegrid-pr.com/socially-responsible-pr/2009/9/28/six-marketing-lessons-of-the-netflix-crowdsourcing-experimen.html

ANTIDOTE

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The Excruciating Politeness of Poser Innovation

Observation: OI consultants tend to PR their best client case studies.

OpenInnovationWhitewashing ->

12

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A Wikileaks for Open InnovationCase Studies?

How can we learn if we can’t see the parallel universe of failures?

ANTIDOTE

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Open Innovation as a “Try on”

No. Do or do not. There is no try.

13

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Open Innovation as a Necessity

If they didn’t...LudoBites

P+G Connect+ develop

NPR

Threadless

Another high-overhead restaurant in arecessionary economy.

More small agile CPG competitors

96% of listeners would not access online.

Another commodity tee-shirt company

ANTIDOTE

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Customers saying “Meh…”

Find New Markets

DecreaseFixed Costs

Whose products/tech can you build

on?

How do you get closer to your community?

What assets doyou have to

barter?

What can you build for others?

Whose products/tech/space/people

can you partner with?

How do you motivate them

to become addicted to your

product?

Transformers ask…

DecreaseTime to Market

What can you give away for others to

build on?

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Moral of the story:

Stomp on poisonous snakes.

Transform. Start Innovating Already…

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