Daily Archives: June 15, 2008

Open Innovation: The Value of Non-Confidential Exchange

Nine Sigma, a consultancy that helps clients globally find the best innovators and solutions for their needs through it’s Discover-Connect-Solve service offering, recently release a customer insight paper on the Kellogg Company, titled Open Innovation and the Value of Non-Confidential Exchange (with a companion video), that described how an open process connected Kellogg with novel technologies and new solution providers that were previously outside of Kellogg’s reach.

Open Innovation is a powerful approach for producing innovative new product and business solutions by leveraging cutting-edge technology and expertise from the global innovation community. The rewards from open innovation include:

  • A Robust Product Pipeline
  • Accelerated Speed to Market
  • Significant Cost Savings
  • Access to Global Innovators
  • Innovation Sustainability
  • Risk Reduction

Furthermore, an appropriate process that facilitates the free-flow of non-confidential information to identify, qualify, and ultimately activate new ideas from external sources (for productive, profitable, and innovative R&D solutions) can minimize the risks associated with any IP issues a company may have.

The process employed by NineSigma to help Kellogg build a sustainable Open Innovation program started with a combined cross-functional Kellogg and NineSigma task force that began by:

  • identifying Kellogg’s key technical challenges
  • selecting the projects that could benefit the most from open innovation
  • developing the RFPs
  • inviting solution providers to respond on how they’d address the challenges

Once responses were received, the cross-functional team proceeded to:

  • review the proposals
  • establish non-confidential discussions with potential providers

Then, once potential providers were identified, the team:

  • created business agreements, IP agreements, and NDAs
  • reviewed the technology of the potential providers
  • selected preferred providers
  • undertook negotiations with the preferred providers
  • negotiated final agreements

So what distinguishes this process from a normal supplier selection process? Because Kellogg employed NineSigma as an intermediary, they were able to keep their identify confidential until potential providers were identified and NDAs were signed. Furthermore, they were able to keep the product lines they were interested in innovating confidential until preferred providers were selected. And since they went through an intermediary who helped them sift confidential information from non-confidential information, the possibility of a potential provider guessing which company was on the market, or which product line was up for grabs was minimized, and this prevented competitors from identifying potential weaknesses in Kellogg’s operations. In addition, NineSigma experts, once briefed by Kellogg’s internal experts, could take the place of Kellogg’s experts in the initial discussions, further concealing the client’s identity until all parties were ready to engage in a confidential dialog.

Furthermore, the potential providers could also be confident that their IP was being protected, as NineSigma also helped them sift confidential information from non-confidential information and helped protect their identity as a bidder in the process. This allows each company to compete for business on the merits of its proposal and technology, not on an ill-formed opinion an executive might have based on something he might or might not have read about them a year or so ago.

It’s a great approach for companies that need to be overly protective of their IP, as well as those companies that don’t understand what their IP really is. It allows them to enter the Open Innovation Marketplace and still keep their paranoid legal advisors – who are one of the biggest barriers to innovation – happy.