Although born in the world of consumer packaged goods (CPG) — and most often employed within the area of B2C — innovation is becoming increasingly more recognized (and essential) in the B2B world. What are some innovation techniques that B2B can borrow from the B2C world? One of the most promising techniques is a twist on open innovation.
Open innovation in the B2C world consists of companies asking lead users or other customers for suggestions for new products and services. Prominent among these is Procter & Gamble, which launched its open innovation “Connect + Develop” program more than a decade ago. Innovators can submit ideas through the Connect+Develop website, which they do at a rate of 4,000 submissions per year, putting the program “at the heart of how P&G innovates,” according to P&G’s Chairman and CEO, Bob McDonald.
The twist that B2B companies can add to this open innovation strategy is to engage their suppliers in open innovation efforts. Here are some guidelines about how to do this.
Step 1: Establish a Clear “What’s in it for Me?” (WIIFM).
When asking external partners for help, ensure that partners will gain some benefit from their efforts. In the B2C world, companies offer cash awards for innovative solutions. Similarly, in the B2B arena, companies can let their suppliers know that they will be able to commercialize the innovative solutions they suggest.
Step 2: Identify the Problem.
Innovation efforts need to be focused, especially when working with an outside partner. For example, EnterpriseWorks framed a clear problem statement in its open innovation solicitation: “EnterpriseWorks is seeking design ideas for a low-cost, rain-water storage system that can be installed in households in developing countries. The solution is expected to facilitate access to clean water at the household level, addressing a problem that affects millions of people worldwide who are living in impoverished communities or rural areas where access to clean water is limited.”
Step 3: Be Clear About Intellectual Property (IP) Rights.
This step is related to the previous step and can occur simultaneously. Upfront clarity about who will own the intellectual property rights saves time and misunderstandings later. In the B2C world, the company typically buys the IP rights. In B2B, when a company works with one of its suppliers, the two companies may enter into a joint venture or a joint development agreement.
Step 4: Set a Development and Commercialization Process.
Developing an idea into a viable product or service takes many iterations. Communicate and gain agreement with the supplier on who will be playing what role in the successive rounds of development, commercialization and marketing. In B2C, the company soliciting ideas typically takes over once the ideas have been received. In B2B, the tasks may be divided between supplier and customer to take advantage of the core competencies of each partner.