Friday, April 5, 2013

Indian companies need to embrace open innovation

Companies have a lot to gain from adopting collaborative approach to innovation, which is important for them to remain competitive.
In popular perception, open innovation as an approach has got associated with crowd-sourcing and open challenge contests. But open innovation is much more than that — in its essence, it is an approach that moves away from an inward innovation focus to a more collaborative approach to innovation. The most effective open innovators, like Procter & Gamble (P&G), believe that the best ideas can come from anywhere, and, therefore, make a conscious effort to open their innovation pipelines to a much wider set of sources. About a decade ago, the then P&G Chief Executive officer (CEO) A.G. Lafley set a target of more than half of P&G’s ideas coming from outside the company, and that was achieved a few years later.


Indian organisations can benefit from adopting an open innovation philosophy. At the strategic and system integration level, both Tata Motors and Mahindra have demonstrated its utility. Tata Motors’ entry into the small car market via the Indica, and Mahindra’s ambitious entry into the high-end SUV market through the Scorpio, were both facilitated by an ability to work with a range of technology suppliers and design consultants and integrate their inputs into successful products. This approach was cheaper than taking the vehicle design from a single source, and also allowed the companies to create their own distinctive product and brand identities.
Another company that uses open innovation successfully is Eureka Forbes. India is one of the biggest markets for retail water purification in the world. Eureka Forbes has been one of the pioneers in the water filtration/purification business in India, and its Aqua Guard has tremendous brand recall. With an 8,000-strong direct sales force across 550 cities and towns, about 15,000 dealers across 1,800 towns, and a strong service network of 1,100 service centres, it has a formidable retail presence.

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