Open Innovation: Business Trend or Wild West?

The fact is, we humans usually think much bigger than we can do. When that happens, collaborating to bring ideas to fruition becomes crucial for success. From that first time a woolly mammoth made a Neanderthal’s mouth water for a big juicy steak, humans have been working together to solve problems they couldn't solve on their own. But, spears were then, this is now, and methods of innovation continue to evolve.

Although necessity may be the mother of all invention, cerebral capital is the engine that drives innovation. In other words—no gray matter equals no innovation. Translating this simple idiom into commerce requires an awareness of the crucial need for creative ideas and talent. The ludicrous pace of change in the modern business world has challenged some industry leaders to rethink standard models for acquiring that talent. Even though the current poaching and counter-poaching of employees between Tesla Motors and Apple has produced amusing headlines, not everyone is wed to the staid idea of sequestering all the best and brightest minds away behind corporate walls. Take Ford Motor Co., Johnson Controls, and NineSigma, for example.

Henry Ford and “innovation” have become virtually synonymous; Henry’s great-great grandson Bill Ford Jr. has led the current Ford team full speed ahead in restructuring, rebuilding, and redefining what an auto manufacturing company is all about. Unlike the sad-old bad-old days of the 1980s, automakers across the globe have raised the quality bar to very respectable heights. Oddly, this has caused a good-news/bad-news scenario for auto manufacturers like Ford. Today’s consumer is hypercritical of poor quality, due in part to the consistently high level of quality featured in most vehicles today, so… innovation has come into focus as a potent differentiator between automakers, a fact that Ford has embraced completely. Ford leaders have also embraced a new method to tap into new reservoirs of creative talent. That method is Open Innovation (OI).

OI is a strategy that large organizations like Ford are using to maintain their market leadership. Through OI, they are accessing complementary technologies from inventors, entrepreneurs, designers, and research labs, and incorporating them into their development processes. These collaborations can help them reduce development time by months or years, and accelerate new products into the market. Relationships can take the form of joint development partnerships, mentoring, licensing arrangements, and more. The strategy not only helps solution seekers go forward without “remaking the wheel,” it often helps these organizations find technologies from completely different industries that lead to significant breakthroughs.

Ford's Silicon Valley OI flagship

At the Consumer Electronics Show 2015, Ford announced its Ford Smart Mobility plan, outlining how Ford is exploring connectivity, mobility, autonomous vehicles, big data, and the customer experience in order to change the way the world moves. At the heart of the plan are 25 experiments—eight in North America, nine in Europe and Africa, seven in Asia, and one in South America. Each experiment is designed to anticipate what customers will want and need in tomorrow’s transportation ecosystem.

“We see a world where vehicles talk to one another, drivers and vehicles communicate with the city infrastructure to relieve congestion, and people routinely share vehicles or multiple forms of transportation for their daily commute,” says Ford president and CEO, Mark Fields. “The experiments we’re undertaking today will lead to an all-new model of transportation and mobility within the next 10 years and beyond.”

Ford Research and Innovation Center

A notable aspect of the experiments is that non-Ford talent was solicited in 2014 in the form of an “Innovate Mobility Series” challenge extended to any interested developers, individuals, and organizations. That challenge culminated in the 25 Experiments of the Smart Mobility Plan—of which 14 are Ford-led research projects, and 11 are direct results of the challenge. January 22, 2015, marked the grand opening of Ford’s all-new Research and Innovation Center in Palo Alto, California, punctuating the automaker’s faith in open innovation.

Ford has even gone so far as to provide developers its OpenXC program, a nonproduction, open-source, software and hardware platform designed to encourage top developers to experiment with projects using real-time vehicle data. Developers can use OpenXC data like any other data source in a smartphone, tablet, or web app. The Innovate Mobility Challenge Series encourages developers to integrate this real-time vehicle information into apps that relate to sustainability and mobility issues, whether by incorporating the data into existing apps or creating new apps from scratch.

“The OpenXC platform gives developers access to more than 15 types of vehicle data, including those related to vehicle speed, engine speed, fuel-level, and things like whether or not the windshield wipers are on or if a door is open,” says K. Venkatesh Prasad, senior technical leader of open innovation at Ford.

Understanding that there are pros and cons to every opportunity, Ford leadership is not blind to the challenges associated with open innovation. “Clearly on the plus side, open innovation opens up a lot of new ideas and a broad ecosystem of developers,” says Raj Nair, Ford chief technical officer and group vice president of global product development. “However, coming back into the vehicles there are going to be some applications that are appropriate and some that are not, so ensuring that any of the applications that we are enabling will be appropriate for the vehicle environment involved is going to be one of the challenges.”

Raj Nair, Ford’s chief technology officer, group vice president of global product development

Johnson Controls reaches out

Another heavy hitter leveraging open innovation is Johnson Controls. Although relatively unknown in the auto consumer market, Johnson Controls is a company that Fortune dubbed one of the “Fortune 500 companies that secretly run your life”—but in a cushy, rather than creepy way. Fortune also asserts that “The company is the world’s largest supplier of [auto] ‘seating solutions,’ a segment that pulled in $15.5 billion in sales for the company in 2012.”

With 240 plants worldwide and 170,000 employees, Johnson Controls states, “We are able to be where our customers need us to be.” It’s safe to say that in the business-to-business world, Johnson Controls is a well-known name. The company’s Automotive Experience division is also very involved in the open innovation arena.

Johnson Controls’ 40% lighter CAMISMA seat

“We have enjoyed numerous successful OI partnerships,” says Michael J. Thomas, manager of technology scouting at Automotive Experience. “Most recently, Johnson Controls won a CLEPA Award for a lightweight multi-material seat structure that we developed with our project partners Evonik Industries, HBW Gubesch, Toho Tenax Europe, and RWTH Aachen University.  Such a successful project required the unique expertise of all of these partners.  In 2012, Johnson Controls was awarded the ÖkoGlobe for our ComfortThin seat, designed in partnership with British luxury mattress manufacturer Harrison Spinks.  In this case, Harrison Spinks was able to provide patented technology that is uniquely theirs.”

However, as with Ford, Johnson Controls also deals with challenges when incorporating OI.

“One of our biggest challenges is making connections with the right partners, especially those who are just starting out and aren’t sure how to find the right manufacturer with whom to industrialize their technology,” explains Thomas. “Since 2009, we have made it easy for new partners to connect with us at johnsoncontrols.com/openinnovation, but new partners must know to contact us in the first place. Johnson Controls is the world’s leading supplier of automotive seat foam, metal structures and mechanisms, trim, fabric, and complete seat systems. We are well positioned to provide the best market opportunity for those with new technology applicable to seating and seating components, but due to our position in the market as a supplier, some partners have difficulty identifying us as the right partner.”

Wrangling the Wild West

So, in addition to its own OI web page, Johnson Controls enlists the help of online collaboration pioneer NineSigma to facilitate a NineSights page featuring Johnson Controls. Through this gallery, Johnson Controls is broadcasting its need for “low index of refraction coatings for transparent polymers, advanced metal forming and joining technology,” and more. Founded in 2000 by Mehran Mehregany, NineSigma is based on the premise that industry needs an effective means for broadcasting corporate needs to potential solution providers to stay ahead of the technology curve, similar to the methods employed by the U.S. government research group, DARPA. NineSigma helped pioneer the strategy of OI before the term was coined by Henry Chesbrough a few years later.

Kevin Andrews, senior program manager for NineSigma

“Simply put, a company can’t hire everyone on the planet or specialize in every area,” says Kevin Andrews, senior program manager for NineSigma. “They may already have a great body of talent, but that’s still a very small percentage of the science and engineering talent across the globe. So open innovation lets them look outside their group for answers that may already exist or may be already developed part way to get them to a solution faster.”

“We use requests for proposals as one way of reaching out to the science and engineering community, and we try to frame the problem in a way that removes some of the industry specific jargon,” he continues. “By posing the problem in fundamental science, chemistry, or physics-type parameters, the request resonates with the potential problem solver, and they don’t get hung up on the particular application. This also allows clients to tap into a commonality across a multitude of disciplines that would have possibly been overlooked otherwise. Another benefit is that our clients can remain anonymous or obfuscate a specific application if they are concerned about strategy. The format has worked well for NineSigma and its clients. NineSigma has also developed a worldwide solution-provider community of about two million experts across various technical disciplines, including Nobel Prize winners.”

NineSigma also facilitates innovation contests much like Ford did in 2014, along with Grand Challenges that address complex problems such as climate change or Internet security issues. With product development cycles becoming shorter the contests have become an attractive tool for aggressive innovators like GE. These contests provide a targeted and transparent catalyst to help companies move forward.

When asked about the biggest rewards of using OI, Johnson Controls’ Thomas answers, “By using OI, we have realized a larger portfolio of high-quality technological innovation opportunities.  For Johnson Controls, OI is not just about finding partners to help us bring our ideas to reality.  It’s increasingly about partners finding us, bringing their ideas and new technologies to us.”

According to NineSigma, companies sometimes use short- and long-term strategies to develop first- and second-generation products without a concrete idea of what will be possible in the near future.

As Ford’s Nair wryly concedes, “Open innovation exposes us to a much larger community of problem solvers, which is great because we don’t have all the answers. In fact, sometimes we don’t even know the questions.”

Which may translate to, “sometimes it’s the Wild West, and sometimes it’s building the next big thing.”

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