Open Innovation and the Association Community

The second meeting of the WSAE Innovation Task Force was held on March 19, 2010. For those of you new to this conversation, I'm heading up an effort for my state society to define an evidence-based model of innovation for the association community. Inspired by the dedicated, defined and resourced “innovation function” that exists in many for-profit companies, we are examining a series of case studies that profile these processes. I'm also blogging about it here. By examining the principles of innovation successfully employed by the organizations profiled we hope to identify practical strategies for applying those principles to the association environment.

We focused on two case studies during our March 19 meeting:

1. “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation,” a March 2006 Harvard Business Review article by Larry Huston and Nabil Sakkab

2. The website, http://mystarbucksidea.force.com/

Both case studies presented examples of what we chose to call “open innovation”—a process of leveraging knowledge and expertise from outside an organization to drive innovation within the organization. Each case study offered a different methodology.

We found Procter & Gamble’s model for open innovation—an initiative they called “Connect and Develop”—to be an organized and disciplined one. It core characteristics appeared to be:

1. Leadership from the top. Connect and Develop was more than just another program within P&G. The CEO was a vocal champion for it and for innovation in general. He set the expectation that 50% of the company’s new products were to come through partnerships with outside entities.

2. Driving cultural change. For Connect and Develop to work, traditional views about what was “inside” and what was “outside” the company had to change. An innovation model based on in-house idea generation and invention had to give way to one based on leveraging the expertise of external stakeholders. Rewards were provided for the free exchange of ideas within the company to better support innovation and information sharing as core company principles. Employees had to learn their jobs were not in jeopardy if they leveraged the ideas of others.

3. Commitment of resources. A senior vice president was put in charge of the initiative and real resources were committed for its execution and sustainability. External networks of researchers, laboratories, suppliers, and ancillary services—some of them proprietary to P&G—had to be organized and maintained.

4. Clear focus on the problems that need addressing. P&G spent a lot of time defining the specific areas in which innovation was sought. Before turning the external networks on to a problem, they wanted to make sure it was a problem they felt was worth solving. Information about their top ten consumer needs was regularly refreshed and inserted into this decision process. They also carefully looked to leverage existing solutions in the marketplace.

In contrast, the Starbucks model appeared much less centrally-planned and hierarchical. We saw “My Starbucks Idea” as essentially a crowdsourcing website, with the following core characteristics:

1. User-driven. The website allows a community of Starbucks customers to submit, share and vote on ideas for improvements to Starbucks products and services. Login is required, but the site allows and contains both positive and negative feedback.

2. Crowdsourced. Voting on the ideas of others is a big part of the site. The most popular ideas are indexed on the home page, as well a leaderboard of the most frequent commenters.

3. Follow through. Several Starbucks representatives regularly interact with people in the community. They keep things organized, and report back to the community on the status of the most popular ideas (i.e., is Starbucks reviewing them and will they be launched?).

In discussing how to apply these open innovation principles to the association community, we made the following observations:

1. Associations may be uniquely positioned to incorporate open innovation techniques into their operations due to their inherent connections to various stakeholder networks. Staff members, Board members, association volunteers, association members, and suppliers can all form ready-made networks to suggest, test or promote innovative products and services. The boundary between which of these networks are “inside” and which are “outside” the organization are likely to be different for each association.

2. A cultural shift was seen as a common prerequisite for associations to adopt the open innovation principles described in the case studies. It was perceived that the culture of many, if not most, associations would be at least suspicious and at most hostile to the principles of open innovation described here. Support of the staff and the Board, with the CEO and CGO serving as vocal champions of these efforts was seen as essential. For associations with members already familiar with and perhaps practicing open innovation in their own organizations, this constituency could form an essential demographic for engagement and possible leadership development.

3. Different associations will have different perspectives on how much to “control” their open innovation practices. Some may wish to be like P&G—very targeted with regard to the subjects to be addressed and the constituencies to include. Others may wish to be more like Starbucks—open to suggestions from anyone on any subject. Each association should decide their own best placement on this continuum.

4. Social media technology may assist some associations in organizing open innovation initiatives, but it should not be viewed as the required mechanism. The communities an association wishes to engage in an open innovation initiative should be the driving force behind selecting the right mechanism to get them engaged. Too much reliance on social media for an audience not accustomed to it will likely result in failure of the initiative.

5. Adding an open innovation component to an association’s conference may provide an ideal mechanism for engagement with traditional and non-traditional stakeholders. Many associations are already using new education modalities to help their members connect with their peers and collectively derive innovative solutions to common problems in their industry or profession. Association leaders could leverage these positive experiences to champion a similar approach on issues of importance to association service and operation. Additionally, a national convention or similar association event could serve as a catalyst to bring local thought leaders from a variety of backgrounds together to add new perspectives and ideas to these discussions.

Our next meeting has been scheduled for May 14, where we will continue to examine case studies of innovation practices in the for-profit community and discuss ways to translate those principles to the association environment. I encourage all interested readers of The Hourglass Blog to participate in this process with us. Your thoughts and comments are welcome, as well as any suggestions you might have for additional case studies for us to review.