A realistic picture of the company’s ability to innovate

The realisation of an innovation ambition level revolves around the ability to translate the desired value proposition in concrete terms for the customer. The success of innovation is not determined by the innovators in the organisation. What matters is the degree to which the customers adopt the new value proposition!

A company’s ability to innovate is divided into four different (innovation) domains. Each domain has specific characteristics and makes its own contribution to the realisation of the innovation. The four domains are:

1. The Corporate strategic ability to innovate: the ability to translate the trends and developments into a new value proposition. This is a matter of signalling trends, building scenarios, gauging customer behaviour and above all translating all of this into product, channel and market features. It is an interaction of detailed knowledge and analysis in combination with the feel for customers and the market. This ability is called the “entrepreneurial gut feeling” of the organisation. Examples of companies that are able to translate trends successfully into new value propositions are the Swedish company IKEA (products), the British supermarket chain Tesco (channels), the Dutch beer brewer Heineken (markets) and the Canadian company Cirque du Soleil (new product, market and channel).
2. The External Network ability: the ability to organise different parties in the environment of the business and to realise common innovations. The external network ability is characterised by the viewing from different perspectives outside the organisation. Innovation is not exclusively an internal matter, intensive cooperation with external parties is crucial too. An example of this is so-called “co-creation” at Lego. Children (customer perspective) are actively involved in the development of new Lego “boxes of building blocks”. The children work with R&D over the internet (technological perspective), Sales & Marketing (market perspective) and Operations (business process perspective). The top three best-selling Lego boxes of building blocks have come about in this way. Successful cooperation requires structures and governance to be set up between the company and the external parties. These new structures are called Eco-systems and are mainly aimed at innovating collectively. Twente Care Services for example, the health care company of the Twente Hospitals Group, is also successful. It focuses on products and services that are closely associated with the key activities of the hospitals. The knowledge and experience deployed medically within the Twente Hospitals Group can be utilised with a consumer orientation through an eco-system of more than 30 different parties.
3. The Integral Governance ability: the ability to adapt the business model (structure and culture) to the development and realisation of the new value proposition. Characteristic is the viewing from different perspectives within the organisation. Involved in an innovation are not just R&D for example, but also other business functions such as Sales & Marketing and Operations. It is necessary for the business model and the governance methodology to support the desired flexibility and integration. Thanks to such a “Business Service Oriented” business model EasyGroup (EasyJet, EasyMobile, etc) has proved able to adapt quickly and easily to the different value propositions in the market, without losing the integral governance.
4. The Operational Acceleration ability: the ability to adapt processes, (technical) resources and competences to the development and realisation of the new value proposition. The concept of “Lean Solutions” shows how processes and technology fit seamlessly together as modules in different assemblies. A business with a huge operational acceleration ability is the American media group CNN.
   
   The current and desired ability to innovate can be determined for each domain for a company.
   

Choosing the ambition level in Business Innovation

Knowing where you are as a company
Companies embark upon innovation initiatives with a great deal of energy and a high ambition level. It is not unusual for the enthusiasm to fade as time goes by. The company is often unaware of the success factors of innovation and of its own ability to define the preconditions for success.

An example from the Utilities sector …
In the Utilities sector in the Netherlands all the major electricity companies had sky-high ambition levels when first exposed to market forces. They thought that they had after all built up a good relationship with several million customers over the years. How easy would it be to offer various new home-related products and services to loyal customers and so develop new business. In practice these companies seem to have their hands full innovating their existing services in a way that is in line with the market. For example, simply being accessible by telephone for queries about the electricity bill. Nearly all the new initiatives directed at consumers have been halted, despite huge investments.
These businesses had too high a Business Innovation ambition level in relation to their ability to innovate. Success is determined by awareness of a realistic ambition level in combination with self-knowledge of your ability to innovate.

A company wants to innovate to bring about a distinctiveness for the customer. Innovation can be translated into the innovation of various factors. The result of an innovation can be a new product or a new channel, a new market or a combination of these factors. The value proposition for the customer increases as a consequence of an innovation in the order of product, channel and market level. The impact will increase exponentially if the innovation is applicable at several levels at the same time. We call this a “Blue Ocean” development.

Methods and tools for determining the correct ambition level
The ambition level of innovation is the framework within which the process of creation and the generation of ideas will take place. This process is directed in part by the outcomes of the impact analysis. The company analyses the different trends and the strategic choices for dealing with this impact.
The trends give an insight into the social developments, into what the customers want in the short and long term and into how this will influence their behaviour. The company needs a method and tool to spot trends and to analyse the impact:

With the Innovation Radar Screen the impact is made business-specific. Trends are related to the estimated change on the measuring instrument. The organisation can use this to manage the results (for example the Balance Scorecard instrument).
With the Strategic Innovation Scenario planning method the impact of the trends can be translated into possibly different innovation scenarios. A trend indicates a likely development. Of course a number of key uncertainties remain in a market, the outcome of which is difficult to gauge. Think of the development of the economic climate (rich years versus lean years). The actual outcome of this key uncertainty will have a major impact on the ultimate development of the innovation. A low price of a new product at a time of lean years for example will be very important. In the rich years on the other hand service and quality have a bigger part to play. An innovation scenario is built up on the basis of possible outcomes of key uncertainties. These uncertainties have a major impact on the operating result of the company. The planning method enables a company to cluster relevant trends for each scenario and to translate them into the behaviour of the consumers. The expected reaction of the businesses in the market sector can be indicated for each scenario. With this insight a company can decide for which scenarios adjustments are needed in the current value proposition. In this way concrete innovation initiatives, such as product, channel and market innovations can be defined. The overall review of the scenarios and the strategic choices of the company determines the ambition level for innovation.

Why are so few companies successful in Business Innovation?

Growing complexity in correlation between trends and developments
So far companies have in particular followed those specific trends and developments that are an extension of their current value proposition. KPN for example has for a very long time concentrated on monitoring and helping to develop above all technological (telephony) developments and translating them for the Dutch market. It is clear that this will no longer be enough for KPN. The new strategy is aimed at the provision of communication, information and entertainment services. For this all the relevant Mega, Consumer and Market trends must be monitored and analysed as they relate to one another. This is also called ‘viewing from different perspectives’. Too often many businesses are still viewing from a single perspective. They have no workable method, tools or the right competences at their disposal to be able to spot these trends as they relate to one another and then to analyse them. Let alone translate them into innovations in their value proposition.

Growing unpredictability in consumer behaviour
If consumers display stable buying behaviour and are easy to classify in customer segments, the company can make a clear delineation at which the innovation is to be aimed. Volvo and Saab for example have succeeded in appealing to a clear target group with a safe, luxury passenger car. Customers have therefore remained loyal to these brands for a very long time.
Capriciousness characterises the behaviour of the consumer of now and the future. Other forms of living together, communicating, consuming and experiencing clearly have their repercussions. The modern consumer wants an appeal to his DNA, the “genetic blueprint” of his behaviour. The company must be capable of understanding this DNA and translating it into a new value proposition. The chances of the company’s survival are determined by two crucial factors: insight into the specific customer and the speed of reaction to the constant changes within the target groups. Capgemini’s research Trends in Retail (2006) shows that only a few companies have proved successful in this.

Obsolete organisational structures and governance models
The growth of companies in recent years has mainly been realised through acquisitions. This has led to a structure of relatively autonomous business units, each with their own Research & Development, marketing, production, etc. The units are aimed at achieving their own result, they are first and foremost product-oriented and there is no flexibility in the cost structure. Growth and expansion are achieved by copying a business unit with a complex, expensive and inflexible structure. From the position of the central company this leads to suboptimisation of the operating result and an uphill struggle to adapt the value proposition quickly.

For these businesses innovating mainly means investing with a high risk factor. Many innovations have been and are still technology (and product) driven. Converting new technology into market products requires research. This research takes place in separate organisational departments such as Research & Development (R&D). Research costs time and money. And research is often driven by budget rather than business cases, in which costs and revenues are related to one another. Improvements of the innovation in R&D environments are often aimed at shortening that lead time, reducing the costs and avoiding the risks. To make the revenues from the innovation understandable there is a need within the business unit to work with other departments such as Sales and Marketing. Differences of insight in the area of control, allocation of costs and income, dealing with risks, etc, do not fit within the existing structures and governance models.

Businesses do not know how they can transform in a controlled manner into new structures and management that do fit in with a flexible manner of innovation. The research “Erasmus Competition and Innovation Monitor 2005” shows that in innovative businesses 25% of the innovation success is determined by R&D investments and 75% by managing cleverly and organising innovatively.


Undeveloped competences in fossilised business culture
Changes in the strategy and structure of a company require changes in the culture of the business. In one organisational structure a specific business culture will have a strengthening effect and in another a paralysing one. Look at a business where technological knowledge of things and 120% quality experience were preconditions for performing (think of the old Utilities businesses). A technocratic organisational culture of hierarchy, protocols, standards, more matter than people-oriented attitude, will have a strengthening effect here. An organisational culture that is characterised by chaotic creativity, scope to keep reinventing the wheel and actually aimed at behaviour of people, has a paralysing effect. A complex change of competences and behaviour of staff is necessary.
A company can develop a new innovation structure (for example strong cooperation between the R&D departments of the business units), but the differences in the organisational cultures often appear to prevent changes. The success of transformation is an interaction between changes in the business strategy, the organisational structure and the organisational culture. This is not an obvious change competence that businesses have in house. Yet the logic of the new innovation structure must be in keeping with the new logic of the feeling.

From Benchmarking to Mashmarking

Published on April 20, 2007 at capgemini.com
Three innovators from Capgemini Netherlands - Ron Tolido, CTO Continental Europe Asia Pacific, Hans van Grieken, business innovation officer, and Koen Klokgieters, business innovation officer Consulting Services - delve into multiple burning questions on business innovation. You can also read Capgemini Netherlands’ transformation process around mobility to safeguard it in the future. We also talk about how Capgemini supports organizations in the transformation required to achieve Corporate Social Responsibility (CSR) to be able to innovate better.
Mashmarking to Innoboxing
Koen Klokgieters, one of the driving forces behind Capgemini’s Innovation Management Consulting Services, says, “Innovation is not a luxury with which thriving companies indulge themselves. It is absolutely essential if you are to remain successful. And because of this, innovation is an integral component of serious transformation. Many recent market research studies underscore this fact. ‘Great Expectations, the changing role of IT in businesses’ from The Economist Intelligence Unit is a good example.”
Ron Tolido defines innovation as, “it means coming up with new ideas, goods, services and processes. It is all about dealing with things in a new, improved way (to the extent that this is possible).” Koen prefers to use the term business innovation as it means developing and implementing unique added value that the customers adopt. “The more unique and the bigger your head start over the competition - at the time of introduction - the better your chance of success with the customers, not to mention your operating results.” Hans van Grieken, involved with Capgemini’s Center for Business Innovation operating worldwide, agrees with Koen and in his view that innovation means ‘doing different things’.
They believe that innovative impulses increasingly come from unexpected directions. For example, Intel, British Petroleum and Wal-Mart adopted an innovative initiative in the American health care sector, for creating integral, electronic patient files. None of these companies are from the health care sector, but they have considerable interests and influence over it. Craig Barrett of Intel says, “I don’t believe the health care sector can update itself, so perhaps we have to do it.”
Ron, Koen, and Hans cite the term ‘mashmark,’ which indicates the level at which an organization is able to integrate with the outside world and quickly arrive at new insights based on continually changing information sources and events.”
They also say that innovation is only about opening up and dissolving formlessly into the ecosystem and then letting everything happen spontaneously, it is about innovating systematically. They refer to the TRIZ method, an innovation approach developed in Russia that builds on the notion that, no matter how diverse, innovations can be traced back to an orderly number of partners. Hans has added TRIZ to Capgemini’s design centers’ work methods with great success: inviting, provocative environments in which teams of clients, partners and consultants come up with innovations, frequently in unconventional ways.
They also agree that innovation requires in-depth changes in the various domains of an organization (business strategy, business model and management, the operational organization, the different stakeholders); ‘Innoboxing’ is how Koen refers to the innovation transformation approach: A question of finding a balance between the proper, rational steps, and creating the emotional experience of the image of the future.

The Great Battle (2): Are organisations ready for the new generation of customers?

In part I of the Great Battle, I discussed the struggle between the Robber Barons and the Knight Innovators, or the struggle between the hedge funds and the organisations of the future. While the Robber Barons see human capital as a cost entry, in the (near) future the difference between consumers, manufacturers, owners, financiers and developers will blur. The new organisational forms are borne up by the concept of Mass Participation: innovation as a social, cumulative and collective process. Linux and Wikipedia are the first examples of these types of ‘new’ organisations. However, things have a way to go yet. But companies are already seeing a change in consumer behaviour. In part II of the Great Battle, I will explain the changing customer, the new relationship between the customer and the organisation and a new form of organising.

A new customer relationship
Different forms of community, communication, consumption and experience have clear repercussions for the customer. The modern customer wants his very DNA to be spoken to, the ‘genetic blueprint’ of his behaviour. An organisation must be capable of understanding this DNA and of translating it into a new value proposition. The survival chances of the organisation will be determined by two crucial factors: insight into the specific customers and the speed of reaction to the continuous changes within the target groups. The survey by Capgemini, Trends in Retail (2006), shows that only a few companies are successful in this.

In their book, ‘Generatie Einstein’ (The Einstein Generation; see http://www.keesie.nl/), Jeroen Boschma and Inez Groen describe a new generation of customers. Where the previous generation focused on the individual – pleasure, convenience and benefit – the new generation acts in a smarter, faster and more social way. For companies, this means a huge change in the relationship with the customer:

Communication changes from one-way traffic to two-way traffic
(Marketing) communication cannot be used as a stopgap for mistakes or shortcomings, but must be based on concrete evidence
Customers are smarter, demand equality and punish arrogance mercilessly
Companies’ conflicting interests and poor reputations must make way for entirely logical and transparent messages.

This new generation of customers wishes to be actively involved in change, renewal and innovation. They will no longer allow an organisation to push new products on the market without their participation. The new generation will confront us with a fresh role distribution among those involved in our society. Differences between consumers, manufacturers, owners, financiers and developers are blurring. In Capgemini terms, for organisations this means that they can no longer choose a role independently (manufacturer, owner) but that they will become part of so-called ‘Mashups’ (see article Visie op Innovatie [Vision on Innovation] at http://www.capgemini.nl/ ).



Difficulty with the changing customer
In general, big companies are relatively slow-changing organisations. These organisations are built up with a number of rigid characteristics:

Certainty obtained via procedures and regulations (standardised and bureaucratic)
Political stability through the establishment of clear tasks, powers and responsibilities (clearly delineated organisational borders, internal ‘silos’)
Strong historical company culture (little room for free thinkers)
Classic (legacy) back-office information systems aimed at productivity.

Innovation within a company requires the organisational capacity for working innovatively across the internal borders (from R&D to Marketing and Customer Service). In view of the large organisation’s rigid characteristics previously mentioned, this is a huge challenge. Not to mention co-operation beyond the company’s borders. Despite all these challenges, ambitions for innovation are being created that require us to work intensively with partners outside of our own organisation, so-called Open Innovation (see http://www.openinnovatie.nl/ ). We see companies busily carrying out window dressing (client-centric front-office, multi-channel contacts, etc.). However, in many cases, feasibility and the ability to keep the promise to the customer defy reality.

But there are companies who have successfully tackled these challenges. Philips is a good Dutch example of how parties outside of the traditional organisation have managed to deliver the first successes. In the beginning, these successes were mainly the result of chain integration (innovating with suppliers). At the moment, within the concept of Open Innovation, Philips has gone a step further and is actively engaged in customer participation (End User Driven Innovation Cycle). An international example is the so-called ‘co-creation’ at Lego. Children (customer perspective) are actively involved in the development of new Lego building blocks. The children work via the Internet together with R&D (technological perspective), Marketing & Sales (market perspective) and Operations (business process perspective). The top three best-selling Lego building blocks were created in this way (see http://www.lego.com/).

Mass Participation
The new generation of customers will force organisations to take part in their adaptive and self-organising communities. In his new book, Charles Leadbeater describes the concept of Mass Participation (see http://www.wethinkthebook.net/). This concept is a way of innovating through active participation by people at extremely low cost and on a global scale. As Henry Ford created a new logic for mass production, so will the new concept create a new logic for business innovation. Organisations will lose part of their control over innovation, but will gain an entire army of strongly motivated innovators in return. Besides Lego, other examples that apply Mass Participation include Wikipedia, Linux, OhMyNews and WaveMarket. Charles Leadbeater mentions a number of basic rules for implementing the new concept:

Create the core of a basic idea: enough to work on, but with enough possibilities for additions.
Motivate and entice participants: treat the participants as ‘peers’ and not as employees or suppliers. Participants see their contribution as representing personal development and status. They are looking for concrete and practical benefits. Besides this, low entry barriers and user-friendly tools are essential.
The need for meeting places: a place where people can work together interactively and where clear rules of ownership (getting, using and returning) are established.
Self-distribution of work: an open working method based on high acceleration of the peer-to-peer review process that quickly identifies the good ideas and that can be elaborated upon.
Think LEGO: innovations are split into a series of modules that fit together and can be integrated. The integration is regulated on the basis of clear, simple and centrally created design rules. These rules and protocols make it possible to allow mass innovation.
A new form of leadership: these are no traditional corporate chief executives, but leaders with characteristics such as modesty, willingness to remain in the background, self-confidence, strong norms and values, passion and attachment. Their specifically top-down style of leadership makes large-scale, decentralised, bottom-up innovation initiatives possible.

The new generation of customers, employees, suppliers, owners, etc., will be in their element in this organisational form. But it is a giant leap from the present situation towards a full Mass Participation form. Possibly too big a leap for many organisations. A company might start with organising its employees along the lines of this new concept. Dutch companies, such as KLM, DSM, Philips, Police (KLPD), Reaal and Achmea are already making great strides in this direction. The next step is to involve various parties outside of the immediate organisation. The question is whether the traditional companies will have time to adapt their organisational form. Organisations that are not able to develop quickly into this new organisational form of Mass Participation will be confronted with very severe continuity issues. For the new generation will create the products and services they want themselves, within their existing communities.

The great Battle (1): Knight Innovators versus Robber Barons

A new force has arisen: the neo-capitalists. These hedge funds and private equities are trading in companies, aiming for short-term financial gains. They are not intending to create sustainable value for the various parties involved. Focusing on fast deals with a lot of borrowed money, they raid the world market looking for financial profit. The process is as simple as it is effective: encouraged by huge rewards for performance, the management aims for a short-term increase in shareholder value. The approach consists of a sharp focus on internal efficiency (cost reduction, reorganisation, disposal) in combination with a hyperactive acquisition policy (take over or be taken over) – anything that will lead to an increase in the company’s share price. As a cherry on the cake, the company is split up and sold off piecemeal. This often gives the shareholder a higher return than if the company is sold as a whole. Clearly, huge amounts of money are involved. In the Netherlands alone, over 25 billion euros’ worth was bought up by the neo-capitalists last year, and this is expected to increase explosively. Among others, Maxeda (Hema), PCM, Corus and ABN AMRO are currently engaged with the hedge funds and private equities.

What are the consequences?
It may be obvious that, in the hunt for short-term profit, long-term investments more or less come to a halt. According to economics professor, A. van Witteloostuijn, the three Os of the Dutch knowledge economy (Onderzoek - research, Ontwikkeling – development and Onderwijs - education) are suffering as a result. The robber barons see human capital as a cost entry. For that reason, employees are exposed to extreme productivity demands and are marginally rewarded in comparison with their management. Room for personal development and job satisfaction disappears. The tightly run reorganisations that follow each other in quick succession cause severe disintegration of the organisation. Scope for innovation is removed, while a lack of innovation will eventually signal the downfall of an organisation.

For a sustainable economy, it is necessary for a new balance to be created between the various interests and values of the parties involved. The Dutch ‘polder model’, in which agreements could be made among the various interested parties via representation, appears no longer to work. People no longer let themselves be represented or have lost faith in those who represent them. It is as though the robber barons are facing no strong opposition and are able to carry out their raiding parties in complete freedom.

Is there a solution to this?
As in many cases, the legislator is looked to for action. But Dutch law, according to Van der Zwam, has gone to great lengths of liberalisation (De Volkskrant, 5 May 2007). Because of this, the legislator no longer creates a balance between the interests of the shareholders and those of the other stakeholders. It is high time for a change in the law that will make it possible to veto a takeover by declaring a company to be of strategic importance to the Netherlands. But changes in legislation take time and sometimes lead to knock-on effects that go beyond the original evil.
If the legislator cannot act adequately and the present cloned senior managers continue to join forces with the robber barons, a new force is called for.

The first impulse of this force is already apparent and will take an entirely new form that the robber barons will be entirely unable to grasp. In his book ‘Liquid life’ Zygmunt Bauman describes a new generation of people who deal differently with the traditional paradox of ‘safety versus freedom’. Previously, people sacrificed their (personal) freedom to organisations, institutions and society in return for safety. They accepted that senior managers, governments, financiers, etc., would take decisions on their behalf and were resigned to the consequences of this. The new generation of people are free thinkers and free doers, and no longer accept boundaries (global players). These are the basic ingredients for innovators! Bauman warns, however, against strong individualisation and with that a lack of social cohesion. In my view, the robber barons belong to this new generation that Bauman so accurately describes.

Where Bauman mainly sees the darker side of developments, in their book, ‘Generatie Einstein: slimmer, sneller en socialer’ (The Einstein Generation: smarter, faster and more social), Jeroen Boschma and Inez Groen describe the positive aspects. The new, innovative generation solves the great complexity of the world by opting for collectivism instead of individualism. They act on a basis of authenticity, integrity, and sincerity. Innovation means nothing new to them. They see it as a natural consequence of the way in which they work together. According to their perspective, the robber barons belong to a previous generation and they feel absolutely no connection with them. Robber barons are concerned with existing organisational forms and institutions. The Einstein generation does not feel itself at all at home in the existing organisational forms and creates its own new way of co-operating.

The Einstein generation will confront us with a new role distribution among those involved in our society. Differences between consumers, manufacturers, owners, financiers and developers will blur. Organisational forms in which managers are appointed to take decisions on behalf of others will be replaced by forms in which people possess knowledge and experience that are required for a specific decision at a specific time. There are already various concrete examples of these new forms. For example, innovation expert Charles Leadbeater in his book ‘We-think’ (Internet: http://www.wethinkthebook.net/) describes new organisational forms that are borne up by the concept of mass participation: innovation as a social, cumulative and collaborative process. The new organisations are characterised by linking habits from a small-scale community on a global scale through ‘low-cost connectivity’. Linux and Wikipedia are only the first examples of this.

It is in this new world that the knight innovators will arise. They are the leaders who self-confidently operate from authentic values and modesty. They are very open to mass participation for the further development of their initial range of ideas. And people will participate, not on the basis of a need for more safety, but on the basis of increasing their self-esteem and peer esteem. The outcomes are based on the contribution from every participant and are also freely accessible to every participant.

Robber barons are being confronted with an entirely new battlefield and a new opponent: the Knight Innovators!

In my following article, I will discuss in more depth the characteristics of the new organisational forms and means whereby innovation takes place.

Innovation is a matter of connecting people, but how do you do that across the various disciplines within organisations?

Companies must innovate continuously in order to survive in an increasingly complex market, and many companies choose to have extremely high innovation ambitions. To be able to meet that ambition, the company will set up a central innovation department, appoint a senior VP Innovation, put aside a budget and set stiff targets. The question that remains is: how do we link up the rest of the organisation? An innovation platform offers the solution.

A reasonably sized organisation is neatly organised into various divisions, sectors, etc. Each part of the company has a management with responsibility for results. Within these parts, various disciplines such as Marketing & Sales, SCM and R&D are engaged in a range of innovation initiatives. Usually, these disciplines have their own focus, based on their own initiative. In practice, it appears to be quite a challenge to have these disciplines work cohesively within one division on the same innovation initiative. They know little about each other’s initiative, they do not speak the same (innovation) language, or there are simply no good support instruments for sharing ideas, knowledge and experience.

The challenge of getting an innovation initiative out beyond the boundaries of a company division is even greater, if anything. The fact that a division is accountable for its own separate profit goals, differences in culture and market-specific features, with its non-integratable information systems, would appear to present impenetrable barriers to the most dedicated knight innovators. Despite all these challenges, innovation ambitions are created that require us to work intensively with partners outside our own organisation (Open Innovation). The walls get higher and thicker: who will become the owner of the innovation? Who is going to make the investment and take the biggest risks?
The trick is to get people to work together on innovation, independent of their role and position in the company. New approaches and instruments are needed for this. Charles Leadbeater (http://www.charlesleadbeater.net/) speaks of mass-participation, whereby everyone can contribute to innovation. The concept that we, as Capgemini, are working on together with customers is the creation of an innovation platform. This platform connects people, and puts innovation in a broader perspective. The platform enables people within an organisation to look beyond the boundaries of their own department, division or even organisation. It is a means for thinking about innovation in a structural, effective and creative way, across the various disciplines. The innovation platform consists of the three following dimensions: Innovation Events (network meetings), a Digital Innovation Portal (marketplace where employees with “low entry barriers” and “easy-to-use technology” are supported) and Innovation Workspace (a place where it is possible to work on innovation projects).
For a platform like this, the organisation first of all needs to arrange regular network meetings, where people from different departments and divisions with varying perspectives come together to deal interactively with an innovation theme. In these themed events, a vision is presented and a case in practice is dealt with. The participants will then translate this into their own specific situation. In organising these events, the company is building a community. People who actively participate in these events eventually become the thought leaders or innovators in their organisation, division and/or department.

A digital innovation portal is then set up. This is a type of digital marketplace that provides access to people who have knowledge of innovation in various areas and who can thus easily exchange expertise. Means of communication include e.g. Skype, chatrooms, best practices, news facts on innovation, etc. Capgemini has an excellent eco-system with over four hundred services and application providers who are capable of setting up such portals.

Finally, an innovative idea – arising from one of the sessions – must be worked out. There should be a place within the organisation where a group can work in a structured and creative fashion on an innovation project. Capgemini offers this place in the form of various Innovation Workspaces, both at Capgemini and on site. When an organisation sets up such an innovation platform internally and has gained experience with it, eventually partners and third parties can also form part of it. This will shape and maintain the Open Innovation concept.

To achieve a successful result, you should not omit any of the above-mentioned parts, as they complement each other strongly. If only one or two of the dimensions are present in the organisation, the result will be significantly poorer.

Reputation extremely important in Open Innovation network

Last Thursday, 29 March, I (Koen Klokgieters) was present as one of three guest speakers at the LogInn Event 2007. This annual conference is organised by and for the MBA students at the Erasmus University in Rotterdam. The theme was SCM and Innovation Management, and I was asked to indicate which issues relate to both SCM and innovation. I thought it would be a good idea to shine a light on the social consequences of Open Innovation Networks.
Following an opening speech by Martijn Lofvers (chief editor of SCM Supply Chain Magazine), Coca-Cola Logistics manager, Jan Broekhuizen, discussed the far-reaching consequences of the new Coca-Cola bottle for the organisation of the supply chain. Director Procurement of ASML, Hans Dijkhuis, then explained how important and complicated it is to involve suppliers in high-tech product development. The subject material of both gentlemen laid an excellent basis for my talk on open innovation networks.
From SCM to Open InnovationIn my speech, I explained that Supply Chain Management in combination with innovation alone is not the optimum co-ordination of business processes in the value chain. There is also the question of how, as a company, you organise your R&D to the best effect and what consequences such a setup will have for your company structure and business model.
A relatively new trend is that R&D and innovation are carried out together with, or outsourced to, suppliers or partners within the existing supply chain and beyond it. Companies that decide to carry out the innovation process on a structural basis with each other, or that choose to have it largely carried out externally, are operating in Open Innovation Networks.
PhilipsOne of the companies leading the field in this is Philips. Philips has outsourced a large part of its R&D and carries out innovation projects with an ecosystem of partners from within and outside of the existing supply chain. The best-known results of this are perhaps Senseo with DE and the Perfect Draft with various breweries. But many components and part-products are developed in this way on behalf of Philips.
If you opt for a sustainable open innovation network with partners, you not only need to adapt your business model, but you should also take account of the social consequences that such a network brings with it. First of all, one way or another, a kind of flexible input of R&D staff will be required. Also, as an organisation you will be dependent on the reputation of your network partners. As soon as one of your partners makes a mistake, this will have consequences for you. There are two developments that raise these modern network issues: Flexecurity and Reputation Management.
FlexecurityThe word ‘flexecurity’ is suggestive of both ‘flexibility’ and ‘security’. The flexible part refers to a flexible input of personnel and a flexible right of dismissal. ‘Security’ gives the employees some guarantee of work and income, despite a relaxation of the right of dismissal. This ‘security task’ must shift from the individual organisation to the network. The government must play a facilitating role in this by making people more widely deployable, by means of retraining and schooling and the encouragement of universities and schools. Motivating people to set up their own companies could also help here.
Reputation ManagementIt used to be that as an organisation you only had to worry about your own reputation and the perception the stakeholders had of you. If you operate in a network, each partner in your ecosystem can influence your reputation positively or negatively. An example of a branch that featured negatively in the news recently was the pension funds sector. An investigation by the VPRO news programme Zembla showed that some of the money in the pension funds was being invested without their knowledge in the manufacture of cluster bombs. If as an organisation you participate in an open (innovation) network, Reputation Management is therefore of vital importance.Together with universities and network organisations, we (Capgemini) carry out research into open innovation networks and the social consequences of these. I believe that we are well on the way to helping customers to solve issues in the area of open innovation, but we definitely need to undergo further development collectively. And as an organisation we are continuously developing an ecosystem (read I-network) of partners. But it will be necessary for us to take on even more responsibility ourselves on behalf of the value chain, the partners and the customer!