This open innovation concept is not new but has received increasing attention in recent years as more companies announce initiatives to open up their methods of generating new products. P&G is viewed as a leader in open innovation, and established its Connect+Develop programme more than a decade ago. In February, 2014. it went a step further, launching a new website designed to make collaboration with inventors outside the company more efficient. Where P&G is, can Unilever be far behind The worlds second-biggest consumer-products maker, also has a website to gather and assess ideas from outside the company as it looks to bolster sales from new products. Some companies even have a designation for the people who run the programme. Roger Leech is Unilevers Open Innovation Scouting director. Since Unilever established its open innovation unit in 2009, the share of external ideas that are adopted by the company has increased from 25% to 60%. For companies, its a way of not just inviting new ideas that they can work on, but also reducing their own R&D bills. In auto companies, for instance, R&D constitutes a major chunk of their expenditure.
One auto company that has moved to open innovation is Toyota. At its headquarters in Nagoya, they have what they call supplier days. They set up a briefing centre, and anyone can knock on the door and come in and pitch an idea for Toyota. GE has been holding similar events in China aimed at creating an architecture of participation, where the outside world can be invited in, and tapped for ideas. One company that has profited from this is Americas Lifetime Brands, a global provider of kitchenware, tableware and household products, many the result of outside inventors. Thaddeus Alemao was one. He invented an odour-absorbing splatter screen for cooking. He had spent five years and $50,000 of his own money developing the screen. Lifetime has, on its website, a section where it invites ideas. He took it to them, and within a year, Lifetime revamped his invention and, has been selling it to major retailers such as Wal-Mart. Lifetime launches as many as 5,000 new items a year, and some of those ideas have sprung from the garages and home workshops of the tinkering masses. In 2012, the company signed 15 inventions that have resulted in more than 30 different products.
In his book, Brick by Brick, on how Lego reinvented itself through open innovation, David Robertson, professor at Wharton, wrote: Getting ideas for new products is a numbers game. The way to have a great idea is to get lots of ideas. The company that virtually has the patent on sourcing ideas, products and innovation from outside is P&G. With information and technology sharing happening at unprecedented speeds, the race to market with exciting ideas and superior products was becoming increasingly more competitive. So P&G made a daring culture shift from P&G made to P&G discovered. That bold initiative, Connect+Develop, receives about 300 idea submissions a month from all over the world. P&G currently has 1,000 active partnerships.
With outside ideas and inventions and P&Gs manufacturing, marketing, and purchasing capabilities, it enables the company to create better and cheaper products, faster. Today, more than 35% of its new products have elements that originated from outside P&G, up from about 15% in 2000. Open innovation was behind the the Apple iPod, which was developed with the aid of a number of outside companies. For corporates, the embracing of open innovation means overcoming the not invented here syndrome, where the company monopolises the source of its innovations, and instead welcomes new external contributions. For Mahindra, it means less R&D costs and a wider net for ideas and innovations. The idea for a driverless car may come from some geek/geeks in Bangalore but by the end, it will be a Mahindra product.
The writer is Group Editor, Special Projects & Features, The Indian Express