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Enhancing traditional R&D with open innovation can yield new products, new processes, and a new mind-set.
By Tiziano Toschi, Senior Vice President, Global R&D Food Preparation, Electrolux
At Milan’s EuroCucina 2014, an international kitchen furniture exhibition, Electrolux received positive reviews for its kitchen-of-the-future showroom. Among the innovative prototypes on display: a dishwasher with a bottom rack that swings up to waist level, a gas cooktop with movable burners and reconfigurable flames, and a built-in kitchen garden — this last one a pride-and-joy of mine, as the head of global R&D for our food preparation division.
Early this year we launched our Herb Garden product in Europe. It looks like a small kitchen cooler that can be installed in the wall or under a counter, and it uses a combination of climate control and lighting to support seed cultivation. It’s great for city dwellers who don’t have an outdoor area where they can grow fresh basil or other herbs they use for cooking.
The idea for the Herb Garden, I am happy to say, did not originate at Electrolux but at a small Canadian company. Why, you might wonder, would I boast about this? I am proud because the concept came to our attention through the open innovation network that I founded and have been overseeing at Electrolux for the past several years.
Open innovation recognizes that the knowledge a company needs does not always reside within its four walls, so to speak. An open innovation model facilitates the flow of ideas from external sources into a company for evaluation and, potentially, for development. While widely adopted in the dot-com industry, open innovation’s real potential for success is within the “old economy,” at companies like Electrolux.
Open innovation has been for 15 years or so, but it first grabbed my attention about six years ago while I was on holiday. In the book I brought along with me, A.G. Lafley, then the CEO at Procter & Gamble, describes how he turned P&G around at the beginning of the last decade by adopting an open innovation approach. The book, called The Game-Changer, was an eye-opener for me. I was confident that Electrolux could benefit from the same kind of approach, so I committed to working toward that as soon as I returned from holiday.
I knew that was going to be easier said than done, of course. Changing a corporate mind-set can be quite difficult, and I did indeed face some tough challenges when I introduced the concept at Electrolux. Fortunately, I had the backing of the chief technology officer, to whom I report directly, from day one.
Executive sponsorship is critically important, because you cannot achieve pervasive change without it — especially when you’re asking your colleagues to put aside lifelong biases and invest in a new, unproven way of conducting business. Adopting a new approach can be especially difficult for business executives operating at companies with tight profit margins like we see in the household and professional appliance industry. In the first two to three years, we met with a lot of skepticism that the investment in open innovation would be worth the risk — but those days are behind us.
Two Streams of Ideas
The ideas coming into the company through the open innovation effort are of two sorts. The first is a stream of ideas the open innovation team solicits because the company has a problem or an issue it hasn’t been able to solve or a customer request it hasn’t been able to fulfill. The second is a stream of unsolicited ideas — we open the doors and in they come. In either case, the starting point is a network of trusted individuals, startups, small companies, and other idea generators that the open innovation team has built up over the years. This network includes longtime Electrolux partners like suppliers and universities, but the point is to break away from the traditional sources.
My team’s earliest focus was on building the network. In doing so, we tapped a variety of resources. Banks — because they’re naturally in contact with spinoffs, startups, and entrepreneurs looking for funding — were quite helpful. We also spoke with consultants expressly working to facilitate innovation connections between smaller and larger organizations. Over the years, we’ve seen more and more of these types of consulting companies spring up to address the growing market need — we’re not the first doing open innovation, and we’re certainly not going to be the last. As for the individuals and small companies that want to participate in the open innovation network—well, sometimes they want to sell an idea or a patent while other times they want to sell a product or even the company itself.
The trick is finding just the right idea in the flood that began once we “opened our doors” — because, quite honestly, 90 percent of what we get is junk. But that’s OK; it’s part of the game. The point is that we are able to identify the 10 percent that make sense and assess those as fast as possible. As we like to say, “If we are going to fail, we need to fail quickly.”
The Ideation Process
Here’s how we do it at Electrolux: My open innovation team (initially three members and now up to about 10) does an initial pass on all ideas in order to filter out the crazy ones. This first level of filtering is unstructured and informal. If an idea makes it through that round, the team will then meet with whoever in the company might be interested in it, no matter the division or the factory. Depending on the fit, the team and interested parties will continue discussing and analyzing the ideas and, ultimately, decide which ones to keep pursuing and which ones to throw away. In secondary assessments the team will request additional checks and analysis from a technical standpoint and on the financials. Should an idea survive all this filtering and the scrutiny, it then becomes a part of our normal processes. In other words, open innovation enhances the ideation phase, but the execution phase remains unchanged.
I want to be clear that our open innovation approach hasn’t changed the way we do R&D. We have ideas or we look for ideas, and then we execute on them — that’s the same as always, but supplemented by additional sources. Truth be told, Electrolux’s open innovation initiative resides in R&D only because it’s my pet project; I brought the concept to the company and carried it through to fruition. Bringing ideas into a company and soliciting proposals — those don’t have to be R&D jobs. Open innovation can just as easily be an independent office. More important than where open innovation resides is that it’s not perceived as a replacement for any function. Sometimes you find ideas and sometimes you don’t. You can’t take the risk of having the network be your only effort in support of ideation.
Helping Both Product and Process Innovation
With a lot of hard work and a lot of long days in the office, my team has been successful in building our open innovation network, filtering the ideas that come through it, feeding only the best ones into the company for development, and communicating our successes. I cannot stress this last point enough: To usher in this kind of transformation, you have to share your success stories and grow internal support little by little.
We can count our successes not only in products, such as the Herb Garden, but also in process improvements that reduce manufacturing costs and improve quality. Thanks to the invention of a small company in our network, for example, we have drastically reduced the number of defective parts resulting from the enameling process we use on our cooking appliances. The improvement in the enameling process isn’t something the consumer can see, of course, but it’s extremely beneficial, because reducing waste decreases our raw materials requirements and our energy costs.
A Company-Wide Success Story
In the early days, the three initial people on the team spent 100 percent of their time building the network and getting the word out about Electrolux’s strategy of openness. Today, several years in and an established network in place, the focus is on expansion beyond the network’s roots in Europe and North America. The next step is Asia, for obvious reasons given its size and the speed of change on the continent.
With all of our efforts, I now can confidently say that everybody in the company is aware of, and most are happy to work with, the open innovation team. When you get a call from a floor care manager in Brazil asking if any of the ideas coming in through the open innovation network could help him out with an issue, you understand that something has changed. And that’s definitely where we are now, at the point where people throughout the company are calling and asking for our help in solving problems or searching for ideas.
Originally published in CTO Straight talk #1 (August 2014)
These days, the best product and process innovations can pop up anywhere. Open innovation facilitates the flow of ideas from external sources into a company for evaluation and development. While widely adopted in the dot-com industry, open innovation has the potential to succeed in traditional companies.
Embracing an open innovation model requires a new corporate mind-set, which must be championed at the highest levels. It also requires a network that goes beyond traditional sources of new ideas, such as suppliers and universities, to include individuals, startups, small companies, and others.
Open innovation can result in a torrent of solicited and unsolicited ideas. The trick is to develop a process for filtering out the few really good ones and feeding them to the company for development.