There was a time when leaders of most companies thought, Why should we look outside of our own corporate walls for the next big thing when our own corporate R&D teams are more than capable of delivering it themselves?
The times have changed and the need for innovation has increased significantly. The consumer appetite for new and improved products has largely contributed to the need for more innovation. Consumers are no longer satisfied with what they bought before. Rather they want the latest and greatest. And while this is great for consumers, it places a huge burden on manufacturers who have to keep up with demand.
This increase in product development activity has led to the acceptance of open innovation as a new source of ideas. The term “open innovation” was coined by University of California at Berkeley professor Henry Chesbrough, but its foundation dates back to 1714 when the British government established the Longitude Prize, a reward offered to anyone who could come up with a simple and practical method to determine a ship’s location at sea. John Harrison of Foulby in England's Yorkshire county was the winner of this award and received 20,000 pounds for his great idea.
The practice of open innovation really began to flourish in the 1990s under Procter & Gamble CEO A.G. Lafley. He set a goal for P&G to have 50 percent of all new products developed outside the company. This was a disruptive move at one of the largest consumer product companies in the world. The notion that ideas would come from outside the company seemed crazy.
But that move paid off, and today there are hundreds of new products that have launched as part of P&G’s Connect+Develop program, including Febreze, Olay Regenerist and Tide to Go Stain Eraser.
In addition, Clorox and Kraft are openly looking for great ideas from consumers. Walmart draws thousands of entries each year during its Get on the Shelf competition, which is open to all inventors hoping to get their product into Walmart stores. In 2011, Walmart announced it would source $20 billion in products produced by women entrepreneurs and business owners, and this September the company will unveil its “women owned” stamp in stores.
Despite these opportunities, an inventor or the average person with a great idea can still find it difficult to interact with large consumer-products companies. Newell Rubbermaid will only review patented or patent-pending ideas through its Inventor Center. Colgate-Palmolive requires patent protection before an independent inventor can share an idea online with the company. Looking at an idea that's not yet patented could potentially expose companies to risk, and as a result, some may avoid ideas without patents or pending applications.
My company, Edison Nation, partners with companies like Home Shopping Network, Stride Rite and Fisher Price to be a firewall of sorts, thus allowing ideas to be collected by Edison Nation and then bringing the best ideas forward to our corporate partners. Edison Nation is also assisting NASA Langley Research Center in publicizing its discoveries, for example for NASA scientists Alan Pope and Chad Stephens. who created MindShift technology, which helps pilots "use brainwave activity to maintain safer flight during autopilot and other automated aircraft functions."
Consumer-centric innovation turns the process of innovation around and grants the end user the ability to create a solution to the problem. But once that great solution is developed, what’s next? One option would be to start a company and develop the idea, but many inventors prefer to put the ideas in the hands of a company who can commercialize it for them. This is how open innovation becomes an effective means for getting new and novel ideas from consumers to the companies best suited to deliver the innovation.