Although there is no one single definition for Open Innovation, one of the most accepted ones is “the art of developing innovation capabilities beyond internal R&D, through (open) market interactions, and particularly with the Startup ecosystem”. (Prof. Herry Chesbrough. UC Berkeley).
The pace at which new technologies emerge has accelerated integration processes between large Corporations and Startups, to the point that in some areas like Siliicon Valley, this is a continuum and part of their DNA. What used to be a trend is now a discipline and organisational culture.
Innovation is no longer exclusive for some departments (R&D + i); it is imperative to prosper. Open innovation moves one step forward and implies collaboration and co-opetition (collaborate + compete), which enhances the overall result and empowers teams to give their best, thus raising the quality of deliverables; at the same time, favors a customer centric approach that attempts to solve real needs or pain points.
The speed of transformation processes and the level of maturity is not the same for all organizations, but disruption is a reality. How to handle this undergoing situation? A positive attitude towards change (cultural transformation) and a strategy to monetize opportunities for short term Profit enhancement (Data Monetization). This entails new ways of measuring and managing data and indicators in an intelligent way in order to face increased decentralization and Service atomization.
Since Digitalization, new technologies and innovation become relevant or nearly a mandate, it is observed that companies’ goals and key performance indicators (KPIs) have evolved over time, evidence a shift in focus and priorities:
- Innovate and launch initatives. The Marketing Era – Focus on quantity “the more, the better”: the main goa lof companies was to be visible and launch initiatives to the market. Success was measured based on KPIs such as number of initiatives launched, number of contacts and PR, number of events, etc.
- Show action. The Age of Collaboration and Open Innovation – Focus on differentiation and gain reputation, Brand image: companies’ shift their goals to execution, show that they are hands on action but from an innovation perspective, open to collaborate with others. Proofs of Concept (POCs) emerge as a trending topic jointly with alliances or agreements between different parties to launch projects that attempt to make things in a different way. In this context, most relevant KPIs shift from simple indicators of quantity (number) to more selective ones involving commitment (number of POCs, investment)
- Results. The Era of Return – Focus on profitablity and profit enhacement. Resources are scarce and economic momentum leads companies to set tight objetives and increasingly ambitious to grow revenues and reduce costs. Main KPIs are those related to increasing revenues from new products/ services, OPEX reduction, exits.
Therefore, innovating is no longer enough; nor just collaborate or invest large amounts of financial and human resources in digital transformation. It is time to prove results and every effort must have returns associated.
Setting up objectives, metrics and control mechanisms to follow-up whether expected results are being attained is key. A systematic where the priority is a rational strategy, oriented towards simplicity, achievable and timely milestones, together with monitorization and supervisión of indicators and returns promotes sustainability. Not only of companies’ performance in their specific sector, but also this can be extended to the individual level or, what is more to the social impact dimension.
This type of dual models that combine Macro-micro levels, plus quantitative and qualitative KPIs turn more sophisticated and are drawing the new borderline between those that will prosper in a sustainable way and enhace their margins, from those that will loose competitive advantage by not capitalizing opportunities to monetize their high value data and KPIs.