In this month's Visions Magazine, a publication of the Product Development & Management Association (PDMA), I authored an article "A Primer on Open Innovation". In it, I predict that 'open innovation' models will increasingly be recognized as the next big thing in innovation management practices. Beyond just theory, the article focuses on the importance of successfully implementing the model... including the organizational challenges that this 'outside-in' approach presents.
P&G and other leading companies are proving that it's worth the effort. P&G's much-heralded focus on open innovation, including C.E.O. Lafley's stated goal of capturing 50 percent of their innovation from the outside, has led to double-digit sales growth, while maintaining better than 50 percent gross margins. What's even more impressive about P&G has been their ability to deliver this increased focus on innovation, while decreasing R&D spending as a percentage of sales from 4.8 percent in 2000 to 3.4 percent in 2005.
So, I hope you can find the time to read the article, along with Henry Chesbrough's accompanying article "Open Innovation Myths, Realities and Opportunties" in the same issue. Both present a strong case that if you're not already looking outside for sources of innovation, you'd better start... otherwise, your competitors may beat you to it.