Agile has taken over and transformed the software industry — you would be hard pressed in 2017 to find development teams who have not implemented at least some of the concepts. Agile principles have even been successfully adopted outside the development world; Agile methods help National Public Radio put together new programming, Saab to produce new fighter planes... even corporate behemoth General Electric has gotten on board.
The benefits of correctly implemented Agile methods are numerous, well-publicized and striking: employee satisfaction and team productivity increase, customer happiness and engagement increases, waste is minimized, time to market reduced, and management hours are freed up to focus on other priorities. It is clear that Agile goes hand in hand with innovation in software — but can Open Innovation be similarly useful to Agile?
There are many similarities between the two, in mindset if not in exact details. Firstly, it is worth addressing that they share the trait of being trendy buzzwords. Many optimistic executives hear of the results and rush to get on board without a deeper understanding of the underlying principles, ultimately ending in frustration and disillusionment.
Open Innovation, according to the inventor of the term Henry Chesbrough, is “defined as the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively”. This two aspects are referred to as inbound/‘outside-in’ OI or outbound/’inside-out’ OI.
Agile works by breaking down silos within organizations and promoting a multidisciplinary approach — collaborative, communicative teams composed of multiple specialists put out innovative solutions. It also places great importance on communicating directly with the customer and reacting to their needs. Open Innovation builds on this concept and takes this a step further: breaking down the organizational silo itself, promoting collaboration between organizations, organizations and consumers, and other often underutilized sectors such as academia.
Another important aspect of Agile is breaking down large, complex projects into independent tasks that can then be assigned to teams or team members. This same aspect can be seen in Open Innovation, particularly in crowdsourced projects. One such example is Foldit, the protein folding game developed by the University of Washington. Each player sees a tiny snapshot of the whole problem, but nevertheless contributes enormously to the overall research.
Inbound OI is typically the easiest for companies to take on board — what’s not to like about more sources of innovation? — and painlessly complements the Agile process. In fact, some aspects are indistinguishable from current Agile methods. Incorporating external subject matter experts, key customers and even academic researchers into an Agile team is only a small step beyond an intra-organizational team, and these insights, skills and new perspectives are much valued.
The other side of Open Innovation, the outbound side, is generally a harder sell. Letting un- or underutilized ideas and technology out of the organization — even to competitors! — goes against fundamental business principles. But mutually beneficial give and take is a necessary component of successful Open Innovation, and not a reason to panic. In the same way that managers of Agile teams had to learn to let go, step back and trust their teams, those wishing to reap the benefits of Open Innovation need to trust in their collaborative relationships.
The benefits of OI, incidentally, mirror many of the benefits of Agile. Cost reductions, reduced time to market, flexibility and unlocking new revenue streams. By expanding the number of available specialists — first within the wider organization, then to the wider world — there is no need to be jack-of-all-trades. In Chesbrough’s own words, “not all the smart people work for you”. In today’s increasingly specialized environment, focusing on excelling at core competencies is a market differentiator.
And how does this translate to the real world? One obvious example that by necessity blends aspects of Agile and Open Innovation are the myriad startup accelerators and incubators across the world. Small, close-knit teams of entrepreneurs and developers can innovate while benefiting from the business advice, connections and venture capital of established companies.
Software development is the most obvious meeting point of these two methodologies, but the combination has found success in other sectors: GE have launched a microfactory ‘FirstBuild’, as a collaboration between themselves, Local Motors (an open-sourced hardware platform) and the University of Louisville, Kentucky. FirstBuild brings together students, engineers, designers, anyone interested in collaborating to innovate appliances. These teams work in short sprints, producing small batches of prototypes and letting customers get their hands on them as fast as possible. This iterative process brings new products to the mass-production level fast — Open Innovation and Agile working in sync.
Like Agile methods in general, Open Innovation is not necessarily suitable for all projects. Nevertheless, it is worth taking another look to see if letting go, trusting and inviting more collaboration into development processes could spark something new.