There was a great article recently in the MIT Sloan Management Review, Using Open Innovation to Identify the Best Ideas by Andrew King and Karim Lakhani, that discusses how to use open innovation, both across your company and with your customers, to find the best ideas. The article describes how companies are opening up innovation (which can be anything from game design to new products to new processes to marketing creative) but also the challenges you face when doing so. As the authors point out, success relies on finding the best ways to organize and manage the process.
Opening the ideation process
The first step in optimizing open innovation is successfully opening the idea-generation process. You need to first decide whom you are opening the process to: your entire team, the company, your key customers, all customers or the world. Once you have selected whom the process is open to, you need to create the optimal way to generate strong ideas.
One suggestion from King and Lakhani is to run a competition. These contests are largely a reverse auction: Offer prizes, and designers or customers bid with possible solutions. The value sponsors receive varies based on the number of participants and the quality of ideas. Although some have reservations about contests, either because they feel they inhibit collaboration or think they only work on narrow technical problems, the data says otherwise. A well-structured contest can actually foster collaboration; if contestants are allowed to collaborate, ones with weaker ideas may get together to create a stronger pitch. The authors also cite multiple examples where open collaboration generated many great high level ideas.
Another key part about having an open idea generation process is to act trustworthy and build a reputation of honesty. Although you will want submitters to sign a release when providing ideas, you want to make sure anyone with an idea that you use is treated as you had promised. Otherwise, future contests will be worthless if contributors do not expect to get their just rewards.
You may also run into is the cost of generating ideas; for example if contributors would need to buy Photoshop to submit art for use in a game. In effect, you are shifting the cost of idea generation onto the submitters. To mitigate this potential issue, you should provide submitters a free way to submit, either by giving them the needed tools (software) or pointing them to an open-source option.
Opening idea selection
The second area that you may want to open to either internal or external contributors is idea selection. Traditionally, companies have relied on experts or internal designers to select the best options. One straightforward approach is to poll your users on which idea(s) they prefer. You can also ask people to “Like” or “Heart” an idea and judge by the relative number of positive affirmations. Finally, you can market minimal versions (MVPs) of the product and see which resonate best with your customers.
One issue you need to be aware of when ceding control of your idea selection is that your interests may not be aligned with your customers. They do not care about your costs, the opportunity for a competitive response, monetization, etc. Thus, the best option is probably a hybrid approach where customers show their preferences and you use that as one (very important) piece of information when selecting ideas.
Using open innovation to gain competitive advantage
Although there are challenges and limitations to open innovation, it can be an important tool in winning your space. First, it epitomizes knowing your customer, as your customer is effectively generating or selecting your roadmap. Second, it leads to better ideas. By definition, more is better (as shown by that annoying series of television commercials), and open innovation generates more ideas. Having more ideas to choose from should lead to better solutions. Finally, it reduces costs. Instead of devoting as many resources to R&D/idea generation, you are harnessing others to do that work, freeing these resources to make your product or game great.
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