Tuesday, December 6, 2016

How to reduce cost of Open Innovation

One of the assumptions when firms start open innovation is that it will cost less compare to innovating in-house, and this assumption is mostly true.  The subsequent question however is can Open Innovation itself be cheaper than what it costs today?

The primary cost of Open innovation can be divided into two main buckets.

Cost bucket One – In-house team which takes care of coordination with intermediaries and internal technology team.

Cost bucket Two – Intermediary costs.

For the cost bucket One, 3 key pointers to reduce cost

1) Avoid too many dedicated persons handling Open Innovation, instead time share, say 10% of the time of highly motivated people, who love innovation and would happily give that extra time and energy.

2) Have central budget for Open Innovation; this will offer prioritization decision in the hands of Open innovation team who will take decisions after hearing the ROI pitch from the technology requester team. This is a big cost saver.

3) Define Goals, it is tough to define Goals in innovation, so define goals for processes, for number of interactions, even number of failures. (Must fail 2 more time, nice!)

For the cost bucket Two, 3 key pointers to reduce cost

1) Avoid consulting cost, trust me consulting is overrated and overpriced. You might need consulting in some cases but when you need and how much you need must be scrutinized.

2) Shop around, you might be comfortable with the vendor you are used to work with, but don’t forget open innovation is all about trying out new avenues, apply this logic to vendor selection also. You might be able to see cost reduced to half, while outcome remain comparable. Try ideaken !

3) Make some of your fees to Intermediary linked to shortlisting of the solutions.
Where there any other points which worked for you in reducing the cost of Open Innovation. Do share.

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