Open Innovation Results: Going Beyond the Hype and Getting Down to Business (Strategyzer Webinar)

More than 20 years ago, Clay and I were both professors at Harvard Business School in the Technology and Organization Management unit. His book the Innovator's Dilemma, had just come out and was on its way to becoming just a rocket. And I was starting some empirical research at Xerox park, the Palo Alto Research center. And I didn't intend to write a book at the outset. I was simply doing some case studies of companies like Xerox, but also Lucent, Xerox, some pharmaceutical companies. And I started to see a pattern where some of the largest and most successful companies from the earlier era that had built out these big internal R and D laboratories had extensive processes to take these technologies from the laboratory all the way through to the market in their own four walls. Some of these players were starting to lose ground to younger players who weren't trying to do the whole internally. Instead, they opened up their innovation processes and collaborated and partnered with others along the way. And surprisingly, were often able to be more effective in innovation than the incumbent firm, even though the incumbent had a much bigger brand, investing much more resources, much stronger patent portfolio, and so on. So this anomaly is what really motivated the eventual emergence of Open Innovation. The book, which came out in 2003. And then, as you say, Alex, I've been continuing to work in this area ever since.

Now, you've been working on this for quite some time, and you've seen so many stories. You observed how some companies have been doing this at the beginning, and then you started other companies to understand how to do this themselves and to a certain extent, weave into their DNA. So if we fast forward, and I know you've published this in your new book, let's look at some of the stories. What would you say are the key successes and the key failures that you would want to point out? Maybe with a story of some of the cases you looked at. And maybe we can start with the failures in the sense that failures are not a bad thing. They're absolutely brilliant to learn from. So why don't we kind of fast forward forward and look at some of those failures that you think can really teach us how not to do it, and maybe even how those companies have turned this around and turned it into success.

Sure. So one of the stories that I discuss toward the end of the book in chapter eight is the experience of Procter and Gamble. P and G was one of our exemplary demonstrators of open innovation in the 2000s through their program they called Connect and Develop. And myself and many others took note of this. And we wrote cases about it we taught about it in our business school classrooms. And P and G was considered to be one of the best practitioners of open innovation. The CEO of the company, a man named A.G. lafley, even wrote a book in 2008 called Game Changer. And in that book he talks about how he led the transformation of P&G's innovation process to become much more open. So, so far, so good. We have this great success story. And indeed, if you look at the revenues of the company in the 2000s, Procter & Gamble revenues grew very nicely year over year for most of the decade. Then we had the financial crisis, which hit everybody hard and hit consumer products particularly hard. And so this created a big problem for P and G. And Lafley retired from the company in 2008, just as the financial crisis was gathering momentum. So for the next few years, the company really had a downturn in revenues. In the 2010-2020 decades, the picture of the company's revenues was much, much more mixed. And indeed they had many more years of revenue declines than they did of revenue growth. So the company that we thought really was one of the best in practicing open innovation somehow seemed to lose the formula in the last 10 years. So this is, I think, something that is quite revealing because we often think if you get these practices installed, you get the support of the CEO, you've got the right tools in hand to do it. We think this is going to continue indefinitely. And the P and G story shows that actually when the people retire, when the CEO retires, when the leadership changes, there are new priorities. Now there's actually activist investors circling the company and pushing them to do more short term investments and curtail their longer term spending. All of these things, I think, have caused P and G to lose some of their innovation capability.

So that's interesting. Right? So it sounds like the capability of doing this really depended on one leadership and the other one, you know, at the very top, but also the people who didn't run this inside of the company. So is it as simple as that to kind of boil it down to, okay, they did this, it really depended on people, and once the people left retired, that this didn't work anymore because the processes were not designed into the DNA. I mean, this sounds very simplistic, but could we boil it down to that or is the story more complicated?

Where I ended up on it was to say there's a mindset that one needs to practice open innovation effectively. And from that mindset you can build a number of processes and tools, but if you lose the mindset. The processes alone can be distorted or can be honored on paper, but don't really work the way you intended. So it's important to have the right principles and the right mindset. And I think those are a better true north for organizations trying to get results from innovation than just the processes themselves.

Right. So that it became more like a checkbox approach. Right. So the process not sufficient. We need the mindset, we need the culture. So let's quickly. One question before I get back to this. You know, somebody was asking here, give us a, give us an example of a product that, that Procter and Gamble used to use, the open innovation process, maybe just to make it very tangible, very concrete for people. Can you mention one of the products that they came up with with this process?

Absolutely. There's a skincare product from their brand Olay called Regenerist. And Regenerist has a very nice technology that they got from a French company. So the technology did not originate inside of Procter and Gamble's labs, but they found a collaboration with this laboratory in France, brought in this agent to put into the Olay Regenerist product that actually helps to rejuvenate facial skin tissue. And it's a billion dollar brand in the hands of Procter and Gamble, but built off of the science that they brought in from an outside party.

Excellent. So Shiv Patel was actually asking that question. Let's get back to, you know, the thread that we were, you know, digging into a little bit. So how do we avoid, have you seen any companies that were able to avoid this kind of falling into the checkbox approach? And maybe some of the companies never even got beyond the checkbox approach and said, yeah, we introduced open innovation, but it remained maybe innovation theater. Can you tell us a little bit about maybe what have you seen are the things a team needs to do, leadership needs to do, to really change the mindset, to weave this into the DNA so we don't fall into that checkbox approach.

One example that I talk about in the book is from Italy, the Italian energy company Enel enel. And what their leadership is doing is they're linking their objectives in innovation to larger questions for society and in particular the sustainability development goals that come out of the United Nations. And when you're going after bigger objectives, this is something that's very inspiring to your own people and it also is something that inspires others to want to collaborate with you on the journey. So one thing NL did back in the 2000s is they spun out a unit called NL Green Power that was intended to really go after green and renewable energy technologies in a very focused way. And that unit performed so well that in 2014 they brought the unit back in and reacquired it. And the guy that was leading this spin out is now the CEO of the whole company. And so he has brought a mindset about renewable energy, about moving away from fossil fuels, about building a sustainable future. And so when you link open innovation to something like sustainability, you really, I think, get out of the checkboxes and you get back into the spirit of, of moving forward, of innovation, of really positive outcomes for the company and for the larger society.

That's a wonderful example. And I'm happy we jumped also to Europe to show some European examples because we have a very global audience. Let me jump onto one of the topics. There is something that you and I have discussed also in another context. You were talking about this spin out, right? So this inside out almost approach to a certain extent where they didn't want to do this inside. So the company decided to spin this out, but then bring it back in. And you know, Cisco's has been known for doing this kind of stuff for a pretty long time. So what I'm curious about is, you know, here we're talking also about incentive systems and strategy. You know, how do we get innovators to get excited about this and maybe pursue something outside and actually benefit from the reward of building a new growth engine as well. So what did you see in terms of incentives changes that have to be done or have to be put in place to boost open innovation outside, in, inside out. On the incentive side, are there some recipes there, are there a couple of pointers that can help practitioners address that, to also weave it into the DNA more from the very down to earth operational perspective of formal and informal incentives.

One area for incentives to be stronger, I think is when you are exploring alternative business models. It's one thing to try to add new technologies to your existing business with its existing business model. That's important work. But the risks are primarily technical in nature. And so through the stage gate processes, we have methods to actually quantify and measure and manage the technical risks. But when you move into new possible business models like the NL Green Power spinout, many of those activities were behind the meter at local commercial or residential establishments. And it took a different business model to figure out how to monetize that. So you're taking a lot more risk and so you need stronger incentives to reward that. But in any large company, the other kind of Incentive that I think could get much more attention is the incentive of recognition. And when you do something that is more risky and it does deliver results, it's a very good idea to celebrate and recognize that. And then ironically, for the people who led that effort, my advice to them is give as much credit as you can away to others who helped you along the way so that you have a stronger sense that it was the whole company that made this possible, not just one intrepid team of people, because that way you really help to inspire the culture of the whole organization and hopefully can do it again in another area.

Oh, this is wonderful, right, because you're addressing some of the really big hairy problems in the space of innovation. Right. You know, can we do business, small innovation inside a company? Well, there are, you know, incentives that can kind of boost that, and sometimes it's just, you know, down to recognition. Right. Let's, you know, taking. You took one big challenge, which is business model, model innovation. So Daniel Santa Cruz was asking, well, what about doing open innovation with competitors, starting to work with competitors, which I think is also something that many, many companies, for obvious reasons, shy away from. But some have actually done that pretty successfully to create new markets or to work in sports spaces that, you know, where they're not directly competing. Do you have any examples there where open innovation has been very, very powerful way of looking at things, you know, working with competitors sometimes.

So, yes. I actually was reading an article today about Unilever. Unilever working with competitors to create standards for digital advertising to make sure that no harmful content is appearing next to a Unilever ad or another ad from another advertiser. And Unilever realized this is something that's important to us in our brand. But we cannot do this alone. It takes a larger effort. If we're really going to change the practices of the digital marketing firms, we actually have to do it together to remove harmful content next to our ads. So that's an example I just saw today where a very successful large and European company is choosing to work collaboratively with competitors to try to fight against this.

One of the things I always enjoy when we talk together is like, for me, you're the dictionary of the best cases around the planet. You just, you know it. All right? You've done a lot of research in this space. I've worked with a lot of companies. But you just can give these very, very good examples. Now let me ask a question. Maybe you need to think about a second. Maybe it comes immediately, but if you'd point out the biggest success you've seen in terms of a company that put in place open innovation, what comes to mind? Would it be Procter and Gamble or have you seen others that maybe not so familiar with, maybe from Asia, maybe from a completely different place? What would you say today is the go to example that people should study if they should look at a very successful case? And it doesn't need to be the size, maybe it's just the way the company implemented it.

Okay, well, you put a little twist in there at the end, at the very end.

Right.

So maybe I'll give you too, because I was thinking of how do you actually make this scale? How can you really do this in a way that really makes a recognizable positive business result? And the thought that I had was linking the open innovation concepts to platforms. Because when you build and manage platforms, you really create the ability to do these things at scale. And not just collaborating with one or two external parties, but really bringing in entire legions of these outsiders and harnessing and mobilizing their talents and contributions in ways that deliver better experiences for your customers. This, I think is the way to really do it at scale. And so companies that I think are really making a great contribution this way, one that's a very obvious one would be Google and Apple with their Android and iOS platforms. I would say Salesforce more recently has been very successful at this. And I just read today that SAP is starting to resume its growth again after some pretty rough periods and they're doing this again with a lot of partners. So this idea of using platforms to get scale I think is one part of your answer, then the other part of your answer of who's doing this in a very nice way. You're in Switzerland, Alex, and I've been following with great interest some of the technologies coming out of CERN in Lausanne. And it's too soon to claim great success, but I'm seeing very hopeful signs that some of the brilliant scientific work that has been done in the Large Hadron Collider to chase down high energy physics results like the Higgs boson, some of this now is starting to turn into new ventures and new technologies in areas like imaging and software and data analysis, data analytics, there's an immense pool of know how and technology there that was all done for open science. We're now starting to see some of this become building blocks for new companies and that's very exciting as well. So I would say that's a nice kind of interesting form because when you leave the domain of open science at cern, you're going to have to find a business model to carry this forward. And I bet we have quite a few strategizer canvases being used to test out some of these things. And I know for a fact that at ASADE in Barcelona, which is one of the collaborators with cern, they are definitely using strategizer canvases to try to test and evaluate different business models for some of the technologies out of cern.

I like speaking with you when you do the marketing for us. That's awesome. What you just said about platforms strikes me. We don't necessarily see if we take the App Store, we take the Google Play. We don't necessarily see them as open innovation, but that's what they actually are because they're creating the platform for others to create value, to innovate with content with apps. So that's a very interesting perspective because once you start to do that and you become the platform of reference, it's very hard to get disrupted. One of the reasons why we have Android and iOS dominating the space of mobile is exactly because of that, because they get others to create value for their platforms. Now, those are the very big ones. Sometimes our audience asks, well, this sounds like it's just for the big ones. And I'm pretty sure you've seen wonderful cases, not just of the corporate giants, that they are inspirational, they're aspirational, but they seem sometimes inaccessible. So how have you seen open innovation outside in and inside out, maybe being applied in smaller organizations, SMEs and maybe even in a startup context?

So, in the spirit of open innovation, one of my academic colleagues, a person named Wim van Haverbecke, who's a Belgian, has written a book with the title open innovation in SMEs. And it is all about exactly what you said, Alex, that open innovation is not simply for the very, very big companies, but it actually works in these small and medium enterprises as well. But the book goes on to observe that there's some differences in how it works in the SMEs compared to the large companies. The good news is there's much less internal politics, silos and barriers that have to be overcome. The bad news is you are much more exposed and vulnerable. If a partner you're collaborating with does not perform the way you expected them to, you don't have as much resilience to be able to go forward. And it can actually, if it's not handled well, it can actually block you. So you're more vulnerable on the negative side, but you're Much less political on the positive side. And that his book has several examples of SMEs who were really struggling to do things when they were trying to do it all themselves, who then became much more successful when they opened up for others and brought in technology from others in the support of their business.

So in the spirit, and you know, I might be pushing the limits here a little bit, but you know, one of the participants, Javier Bernavides from Peru, is asking, well, you know, America, Asia, Europe, what about Latin America? So sorry if I'm being very specific now, but maybe, you know, you have some examples from Latin America. We haven't talked about Asia yet. You know, just to show that this has really, really become, and that's what I find so fascinating about your impact. This has become a really, truly global phenomenon.

Well, first, it's great to have someone from Peru here on the webinar. So good morning to you. And yes, there are examples from latam. The ones that I know best are the companies that are very active in Latam but are themselves international companies. So one that comes to mind is bbva, the Spanish bank. But when they go to Latam, they are actually a challenger bank, meaning there are some large incumbent banks in Latin America. And BBVA is trying to break in and grow its business and they're using open innovation as one of the tools to try to do that. We all know about the fintech and these new startups that are creating branchless banking capabilities and various apps that allow you to manage various parts of your banking experience. Well, BBDA has created a program called Open Talent where they literally go around the world with a particular focus on latam, to seek out startups that are building new capabilities in fintech and then they will curate and evaluate those technologies and then help take what they think are the best of those and make that part of their offering when they go into markets in Latam. So that's an interesting example where open innovation is allowing a Spanish bank to become more successful in Latam.

I always find it fascinating. I could throw any question at you and you would always find great examples and great stories. I love it. Henry. Now in this answer, you know you're talking about finance, right? So let me see who came up with this question. Patricia Frank talked about highly regulated environments and we're just talking about finance and fintech when it comes to open innovation. And I know you talk a lot about pharma examples as well. You have a couple in your books. Is there anything specific you know that we need to pay attention to when we are doing open innovation in highly regulated environments, what are the things you would recommend that we pay attention to first when it comes to regulated environments?

Yes, I'm going to talk both about regulation in banking and then regulation in pharma. And I have two different points to make because they're different for reasons that will become clear. In the financial technology area, one of the things that Standard Chartered bank has done with some success, they've created a design studio here in San Francisco and they have brought regulators from Singapore to the design studio to show them facilities that are emerging in the banking industry with a goal of trying to inform the regulators and work with the regulators to say, so what are the right ways to approach this? And one of the constructs that came out of this was the idea of a sandbox where you create a space where you have a lot of freedom to experiment, but it's managed as a sandbox. So there are careful boundaries around it. And the industry agrees to remain in the sandbox for the current period of time so that they and the regulators can explore this together before taking it out to the wider society. So that's something I think that many would do well to replicate. Don't treat the regulators as the enemy, but try to inform the regulators and show, don't tell, but show them what you're seeing and together figure out how you might respond. In the pharma area, I think there's an even better opportunity, and that is start with the patients. There is a lot of unmet medical need that is driving pharmaceutical drug development. And if you can bring the patients into the conversation with the regulators, I think you get a very different response than if you set up an us versus them dynamic. And so in the area of epilepsy, where I have a family member who has epilepsy, I have personally been involved conversations with the FDA and with pharmaceutical companies and with academic clinicians who are doing both research and prescribing drugs for people with epilepsy. But having this organized with epilepsy patients and their families as part of the discussion really focuses first and foremost on what are we trying to achieve. We're trying to reduce the devastation resulting from epilepsy and we're trying to come up with better therapeutic answers that have fewer side effects, more efficacy in treating epilepsy. And that's what everybody around the table wants.

Those are amazing examples. And I think it's important when we look at these highly regulated environments like pharma, like banking, sometimes these companies have assumptions about what can be Done and what can't be done. And I'll just mention an example and then I'm curious about your experience. I remember working years ago with one of the big Swiss pharma companies and there was an assumption that they couldn't go to the regulator with rough concepts that weren't completely thought through just to get a first feel if they're on the right track because they were assuming pure assumption that the regulator will look at them in a different way because they're not coming with a complete polished solution. Well, it turns out when they started the conversation, this one in a specific country in France, the regulator says, well finally you're coming to us to start the conversation early. So this whole assumption that we can't start with rough concepts and iterate from there in highly regulated environments because they immediately think, oh finance, we need to make transaction platforms that are foolproof. Yeah, of course, when you're going to production, but in the early stages, rough concepts can be a very valuable way to not waste energy on building stuff or refining stuff that the regulator is going to reject later on. Have you seen those kind of assumptions as well? When it comes to open innovation, what can be done and what can't be done, or what should be done in the context maybe of regulation, but or in general assumptions that turned about to be completely wrong, that once the companies learned about how wrong they were, they changed their behavior regarding open innovation in.

In general, one of the things I'm seeing out here in California relates to how to regulate autonomous driving. This is something that has tremendous potential, but people are rightly deeply concerned about the harm that could result if it's not done right. And the California regulators, because there's a strong industry to enable autonomous driving here in Silicon Valley, the California regulators have decided they can actually be part of the solution rather than the restriction. And so they are creating test areas and they are creating joint projects with people working on autonomous vehicles and autonomous driving to try to help them be able better to characterize it, to analyze it, create data sets that can.

Studied.

And so through this they are actually, it's a very pro innovative stance that they've taken. So the assumption that the regulator is anti innovative in this instance is really not true. And anybody anywhere in the world that is working on autonomous driving would do well to get connected to the California regulators because they are actually going to help educate regulation in other parts of the world as well.

So I want to go to move towards a different topic that we, you know, we talked about it a little bit but it's a big one. And Kim Sienkiewicz brought it up. You know, the whole, the whole topic of innovation culture, something that's not easy, you know, to create in an organization in addition to the execution culture. It doesn't mean everybody has to be an innovator and everybody has to go out there and do crazy stuff. Right. It's an additional culture in a specific space. Now, what have you seen as the kind of very concrete steps that leaders can take to create an innovation culture, to start to create an open mindset? Right. So Microsoft has gone through an amazing transition from a closed to more open mindset. And you could argue they're really moving into open innovation and big time under Satya Nadella. So what would be the advice, the steps, the practical things you would advise leaders to do to move from a closed innovation culture to an open innovation culture?

So I have a wonderful story about this that I think then points the way to answering the question. The story comes from NASA and the use of a crowdsourcing campaign to come up with new solutions for problems that they were struggling to solve internally and really not having great success. So it begins as an open innovation story. Well, this call for ideas goes out. Some new proposed solutions come in. Lo and behold, one of these solutions for predicting the incidence of solar flares turns out to be very useful and is embraced. The person who contributed it is celebrated. There's a lot of publicity. And all this comes from the research of Hila Lifshitz Asaf at nyu, a student of Karim Lakhani's when she was studying at Harvard Business Business School. But Hela kept going to NASA after the awards were made, after the publicity. And back at the Johnson Space Control center, instead of people being excited and happy about the great result, she found that they were literally in an identity crisis. They were depressed. And the source of this was we were the ones that went to NASA to solve these really difficult problems. And instead we have somebody from outside who never even studied aeronautical engineering or astrophysics the way we did. They are the ones creating the solutions that we're now celebrating to the world. So what's our role inside of NASA if that's what they're doing? So this has really got to the essence of the culture of the company. And so what NASA leadership had to do with is reframe why the technical staff of NASA is there. And instead of the framing being around solving all of the hardest problems in space, the framing became we are the ones seeking the solutions to the hardest problems in space. And we still need lots of technical depth and expertise to evaluate and implement these solutions. But in this new framing, we don't have to develop every single solution internally ourselves. So that was a very important cultural moment for the organization, that reframing. And so what companies can do in general, I think one, is to acknowledge your failures more explicitly and openly. Our friends at nl, that Italian energy company, have a program called My Greatest Failure. And they actually each year nominate something that they did in the last year that was a failure. And they organized an internal event to recognize and talk about these failures. And even the CEO contributed a failure of his own to the first instance of this. So that's one thing you can do, is to be clearer about your failures. And the second thing I think you can do is when you do have success with something like open innovation, be very generous with the credit and don't try to take all the credit for yourself, but share the credit with many others and try to convert people who might be skeptical about whether this innovation process works. Try to, by giving them recognition and appreciation, try to turn them into allies that will support what you're trying to do.

I'm really happy you mentioned the failure aspect, because a lot of people, you know, when I talk about failure and how important it is to embrace it, they say, but Alex, no, it's not about failure, it's about learning. Well, it's not about learning either, right? Nobody wants to fail. It's painful, but nobody wants to learn per se either. It's at the end of the day about, you know, learning so you can move forwards and ultimately create. Create enough failures so the success kind of emerges. And Jeff Bezos is very famous for saying, the thousands of failures at Amazon will pay for the. Will create the big successes, right? So failure is important. And if we don't embrace it, people are not going to take any risk, right? So let's call it what it is. It's failure. And it's okay, at least in some of the space of the organization, right? But I want to go back quickly to your NASA story because I think it's important. You know, I'm just listening to a book at the moment called Range by David AT Epstein, why Generalists Triumph in a Specialized World. So we are in a world where we have more and more experts and specialists and topics are getting very complicated, but at the same time, you're telling me a story here, a wonderful story about how somebody from a different area came up with the solution. Is this a big theme in Open Innovation? This new Perspective, you know, generalists who can bring a new angle to the experts who are already very good at this. Is this an important topic that we need to maybe embrace more, that we mix the specialists and the generalists to actually create breakthrough innovation?

I think so. One of the reasons open innovation often works, and it's the reason it worked in this NASA example, is that the structure of problems have underlying patterns, and the pattern that you see in one area might actually be relevant to addressing a different problem in a different area. So the solution that was offered for NASA came from a weather forecaster and what he saw in predicting weather here on Earth, the data structures that NASA shared about the solar flares, he saw some of the same patterns in the solar flare data. And somebody who's deeply specialized in solar flares and astrophysics, etcetera, Would not know to check weather forecasting on Earth to see how that might relate. But it turns out it was helpful. And this is why exposing and opening up your problems and issues to others can sometimes yield very good results, because there are deeper patterns that overcome the specialization and can inform new ways of thinking in spreading solutions from one domain to other domains.

So another question I know you wrote a lot about is intellectual property, right? So Chris Mason is asking. Well, you know, there's this dilemma between protecting intellectual property and the openness and trust required for open innovation. So maybe you can tell us a little bit about the practical approach there, because when we talk about testing business ideas, same thing often comes up. But what about intellectual property protection?

Yeah, this is a big topic area. I guess the starting point I would have is that make sure you've got something to protect before you impose lots and lots of protection upon it. So an example would be an innovation collaboratory. AT&T has this process they call Foundry, where they put out a call for submissions and individual entrepreneurs can propose collaborations they want to do with AT&T. And if they're selected, they're invited into this collaboration space that AT&T maintains. So they're on AT&T property, and they assign an AT&T employee to the project. So that person is on AT&T's payroll. And they work with the entrepreneur for 90 days to create a proof of concept. But all through that period, AT&T consciously eschews any intellectual property. All the work done during that period with the entrepreneur remains the property of the entrepreneur. And then when you've got a proof of concept, you've got something more tangible to share with the internal businesses of AT&T. And they can Decide if they want to adopt and embrace this or not. And if they do want to adopt it, then you go into the normal IP protection processes that you would do. But 80 or 90% of the time, when you do the proof of concept, there is no further development inside of AT&T. There is no further connection. And so why invest all this time up front before you have the collaboration potential? Focus the collaboration first, make sure there's some value there to be developed, and then, and only then, focus on the protection of it.

So we could probably do a whole day workshop on the topic. And it's a very philosophical question, but open innovation kind of opens up that box. So you're talking about the intellectual property of others, putting it out there for others to use. So Daniel Santa Cruz is asking, will open innovation reframe capitalism? The reason why I'm asking is I know you had a couple of thoughts on the topic of, you know, how open innovation actually does change some of the, you know, way we think about intellectual property, you know, not as something that is today, maybe underused and could be used more efficiently across an economy or a society.

I actually opened the book with something I call the exponential paradox. And that is, on the one hand, technology is advancing and at an accelerating rate, which should be able to lead us to an era of abundance. On the other hand, productivity growth is slowing down and wages are stagnant in most of the Western countries around the world, Japan as well. And so this is the paradox. Technology is accelerating, but productivity growth and wages are not. And what explains this? And I think this gets to the question about capitalism. We have, in many of the Western countries, we have been coasting on the infrastructure investments we made a generation or two generations ago. And we're not reinvesting in the infrastructure. We need to not only create new ideas, but disseminate them and absorb them. And capitalism and innovation are going to slow down and fail if we don't reinvest and rejuvenate our infrastructure. And then within individual organizations, there's a parallel issue. During the financial crisis, a lot of companies really cut back on their innovation activities and their innovation spending, with the result that when the markets did resume growth after the financial crisis, some of these companies had damaged their internal innovation infrastructure, their innovation capability, and they too need to reinvest and rejuvenate their infrastructure if they're going to be able to regrow in a healthy way.

That's fascinating, right? And what comes to mind for me immediately is, you know, some of the thinkers who call the Share buybacks rather than reinvesting into innovation, a criminal act that should be punished by law. So that might be a bit extreme. Right. But we're probably not investing enough into the innovation infrastructure in many of the organizations and some of it. Steve Blank likes to call this innovation Theater. Now we're coming to an end. It's always fascinating how time flies. Talking to you is always amazing. Great learning experience. I want to ask you about your new book. When you were working on it, you were thinking about all of the work you've done and really talking about the results. Let me ask you, what did you find over the last two decades working on this? The most surprising thing that you didn't expect. What kind of jumps out as wow, this turned out very differently. I didn't expect, you know, when you started working on open innovation or companies, you work with some of the big surprises that probably from a common sense perspective you thought, oh, turn out like this and it turned out to be completely different.

Yes, you're right that when I first was getting started and really when we first met each other, I really had the sense that this open innovation stuff was real, it was exciting and if I could do a good job of capturing it, documenting it, explaining it, giving good examples, it would be pretty straightforward for companies to take it and run with it and get successful results. And the biggest surprise to me since those early days is just how hard it is to change organizations. And we talked earlier about the importance of organizational culture, these cultures and soft skills and soft issues. I truly underestimated just how hard it would be to get real results from this. And in a way, this is what motivated me to write this book, is the sense that by reading this book we do talk much more about the infrastructure inside organizations, connecting the back end businesses to the front end innovation processes. These are the things that are really going to generate the results as opposed to having figured out your strategy for the next bright shiny object, whether that's AI or blockchain or big data or whatever's coming on the horizon next month.

So I want to the last couple of minutes maybe get back to some of the learnings and insights and you know, the failure aspect is always a very fun one. What would you say was the biggest failure that companies should avoid, that leaders should avoid? This is a no go, right? That you've seen companies do this wrong and you know you can already from the learnings, from the work you've done, say you do this, it's guaranteed you're going to fail. You know, 5 10, 20 companies have done this, don't do this. What are the big insights in terms of failures that our audience can learn from so they don't have to do the same kind of failure and sometimes you just have to fail to learn it, you know, head on. The startup world is definitely one. But you know, hearing from you, having worked on this for, for such a long time, having so many insights, what would you say can be avoided as a failure that people really shouldn't do? Because enough companies have done that.

So I guess I would pick crowdsourcing. If you are looking to share problems externally and get lots of external contributions to solving your problem, be prepared for a lot of crap, come back and you will need to respond to all of will take a lot of time and a lot of resources. And most companies, when they do the crowdsourcing, they don't put extra resources in place to go through the evaluation and follow up and feedback. But all that is part of the process. So if you're not willing to put in those extra resources, don't do it.

That's excellent. And it makes me think of some of the, you know, crowdsourcing we've done, you know, in some of the content we created, not to, you know, dis people who participated. But you know, there's just a lot of ideas out there and some of them relevant, some of them less and you need to deal with all of them. Right. Because you don't want to kill the energy of people participating. Right. So that's, that's the aspect we underestimate. I love it. I love it. What would you say? So we took the failure angle. What would you say is on the success, success side, something you've seen, you know, so many companies succeed with like this is a must have. This worked well in all of the companies I've seen. You know, this is something maybe a starting point, maybe one of the ways to scale it. You know, one of the big successes that you would give people as an advice, look at the failure part, what would be, you know, the other side of the coin.

I think one of the things that I've seen work well is in working with universities, companies, sharing with some of the leading academic researchers in relevant disciplines their internal roadmaps. Here's where we're going, here's where we see the opportunities, here's what we're excited about. And then the academic scholars who have their own networks and their own research knowledge can really make very interesting contributions and validate certain parts of that roadmap and say, yeah, we see that too. I think you're on a good path or say, did you know that there's something even better coming from this other place? Or there's something coming up that says this really isn't the way the world is going to work going forward. I think finding ways to engage academics, not in the short term, but next six months kinds of stuff. But in the three, five, ten year horizons, I think that's something that has been very successful for lots of companies.

Wonderful. So we're really coming to an end. You know, we're going to put your book back up so people can find it somewhere. We're asking. We published the link again also in the chat window. But while we're switching, first I want to thank Holger for capturing this in a visual. So this is wonderful and we're going to share it with everybody together with the recording on the Strategizer blog. But while we switch to the COVID of your book again, Henry, I'd like you to ask what's the thing I haven't asked, you know, what did I not address that I should have asked, you know, what would be your closing thought from your perspective?

Let's see. I think the closing thought I would like to leave with what I understand to be the strategizers who are here with us is a hopeful one. There actually is a lot of evidence that open innovation works and you'll find lots of documentation in my book about that. But it is a subtle idea and it is a mindset. As Alex was saying earlier, it's not simply a checklist of practices. It is a way of thinking that is fundamentally open ended and realizing that we don't have all the answers and we don't have to have all the answers to be successful and get results. With innovation. If we approach it with the right mindset, we can get amazing things to happen. So I guess with all the failures and all the rest said, this is the message I would like to leave the Strategizer webinar with wonderful, excellent closing thought.

And I can only recommend Henry's work in general. In particular the newest book, which it's the second day out on the US Market, right?

That's right.

Wonderful. So to close again, Henry, a huge thank you. Time flies every time we chat and there's so much I learn every time we have a conversation reminding everybody, you know, on our blog blog.stragizer.com we are going to publish the webinar and the links again and Holger's drawings and a little bit of advertising also for the Invincible Company. Just to reflect on Henry's words. Again, we don't need to have all of the answers. We need to create the structure and the culture for organizations to constantly reinvent themselves. There is no such thing as the invincible Company, but there is such a thing as an innovation culture. And as Henry pointed out couple of times, there's still a huge opportunity to invest more in innovation, innovation culture. And sometimes, you know, when there's a downturn, it's the first thing we cut wrongfully so because we'll pay the price a bit later on. So thank you everybody for joining in the spirit of Swiss timing. We will end maybe 30 seconds early. Thank you very, very, very much, Henry, for being part of this. Thank you, Holger. Thank you, Matt, for setting it up. And in particular, thank you to all, all of the participants for investing an hour into a joint learning session. Have a good day, evening, night, wherever you are in the world. Thank you very much.

Thank you.