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Open Innovators Outperform the Market by 16.9%

At the Open Innovation Summit last week in Orlando, there were a number of companies there discussing their various initiatives for open innovation. What is open innovation? UC Berkeley professor Henry Chesbrough, perhaps the father of the movement, formulated this definition several years ago:

Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.

At the Summit, several companies expressed their growth related to and/or impact of open innovation:

Cisco: Cisco’s internally generated growth is at 5%. Its partner-based growth is 10%. #ois09

Clorox: Clorox target for growth from innovation is 4%. Last few years around 2.5% to 3.5% = significant portion of growth. #ois09

Royal Dutch Shell: Conser: About 40% of projects in Shell’s R&D program come from GameChanger. #ois09 [GameChanger is its open innovation program]

Rockwell Collins: Aggarwal: 75% of firms expect 40% of innovation to come from external sources by 2012. #ois09

Hewlett Packard: McKinney: 60% of ideas generated internally. Via HP Garage. Use employee crowdsourcing to filter and refine these. #ois09

Given the way these companies described their open innovation efforts, I decided to check out their stock performance. Hat tip to Jackie Hutter for suggesting this idea.

The table below compares the 5-year performance of the companies presenting at the Open Innovation Summit against the S&P 500:

It’s not a clean sweep, but most of the companies have outperformed the S&P 500 handily the past five years. While it’s not all due to initiating open innovation, it appears that you can’t rule out its influence on company performance.

Here’s how industry consultant Stefan Lindegaard describes the open innovation landscape:

I also argued that only about 10% of all companies are adept enough at open innovation to get significant benefits today. Another 30% have seen the light and are scrambling to make open innovation work and provide results that are worth the bother. I call them contenders.

The other 60% are pretenders—companies that don’t really know what open innovation is and why or how it could be relevant for them.

Looking for growth ideas? See what the firms in this open innovators stock index are doing right.

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My Ten Favorite Tweets – Week Ending 120409

From the home office in the middle of the road by my smashed up SUV with a nine-iron imprint on my face…

#1: RT @parkerlsmith Foursquare: Democratizing the Loyalty Program http://post.ly/Dpfx > SMBs can use @fourquare as a loyalty program

#2: FT.com – We’re all selling now: the evolution of online reputations http://ow.ly/Izba #socialmedia #e20 #reputation

#3: What can email interfaces learn from Twitter clients (e.g. Tweetdeck) to manage the overload? http://post.ly/Dlww

#4: Collaboration Is Hot: Why Now? > Forrester survey shows idea mgt tools are a top 2 #e20 priority http://post.ly/DuBB

#5: IT@Intel Blog: All I Want For Christmas is my #E20 > ideation was the one measurable ROI #innovation http://post.ly/E8Nt

#6: Fox: Cisco has a product ideas wiki for employees. Dedicated VC funding for ideas. Similar to what AT&T is doing w/ Spigit. #ois09

#7: Lasher: Innovation lever = do small thing w/ big result. Avoid going right for big bang. Otherwise corp antibodies kill you #ois09

#8: McKinney: 60% of ideas generated internally. Via HP Garage. Use employee crowdsourcing to filter and refine these. #ois09

#9: RT @AndreaMeyer: HP Labs saved $2 bln $ from its supply chain through internal innovations #ois09

#10: Just started a posterous account: http://bhc3.posterous.com/ Collect stuff I find along the way. FriendFeed meets Evernote meets blogging.

My Ten Favorite Tweets – Week Ending 103009

From the home office, waiting for the Great Pumpkin in the pumpkin patch…

#1: NIH grants $12mm to create a national, Facebook-like social network for scientists http://ow.ly/xtAD Goal? Find collaborators

#2: RT @jowyang Ritz Carlton’s mktg chief says hotel mgt at each property spends 1 hour reviewing online convos each am –even tweets #forbescmo

#3: The Time I was Written Up for Blogging http://ow.ly/x3ph by @tacanderson Lesson on employees and social media

#4: Skating to where the puck will be – Apple & advertising http://ow.ly/xnXJ Apple has offered to rebuild a Chicago mass transit stop?

#5: Very cool: Los Angeles adopts Google e-mail system for 30,000 city employees http://ow.ly/x3hP Cloud makes inroads #saas

#6: 84% of firms say #innovation is important to firm success. 51% of firms do not have anyone who is steering the innovation ship. #iai09inno

#7: 10 examples of minimum viable products http://ow.ly/xbi1 Cool list of minimalist approaches to engage customers & build product

#8: Stuck trying to write that next blog post? 100 Ways to Find Ideas for Your Blog Posts http://ow.ly/wA1T from the LifeSnips blog

#9: Geek alert! RT @PaulSloane: @DougCornelius RT Awesome T-Shirts for twins: http://bit.ly/14LYeI

#10: OK, figure this one out. @gaberivera created a tweet that links to itself. See for yourself: http://bit.ly/2IIkJG

Bonus just for this week…

#11: Small change to my Twitter bio…I’m now VP of Product at Spigit. Carry on…

My Ten Favorite Tweets – Week Ending 060509

From the home office in Cairo, Egypt…

#1: Could Google Wave be the holy grail for internal integration of enterprise apps, with two-way real-time updating?

#2: @calmo Yes, that’s a great way to frame it! Yes, Google Wave as an enterprise collaboration SOA protocol.

#3: The enterprise implications of Google Wave http://bit.ly/53tvI by @dhinchcliffe #e20

#4: ReadWriteWeb: Drinking From The Firehose With InnovationSpigit 2.0 http://bit.ly/103rZX #innovation

#5: The Atlantic magazine: Mitt Romney Should Run GM http://bit.ly/BkagH

#6: @jmcdermott2 A pared-down GM, that can cut the cord with its past legacy of dominance, would be an interesting opportunity for a CEO.

#7: BusinessWeek bloggers are being evaluated by how many comments they elicit: http://bit.ly/ee5UU

#8: RT @futurescape The Essential DNA of a Chief Marketing Officer http://tinyurl.com/dzeucu

#9: Just executed my first-ever “reply-DM” to an auto-DM from someone I just followed. As I said I would: http://bit.ly/d6Tn1

#10: Getting ready to head down to Maker Faire with my 5 y.o. boy. http://bit.ly/110Pwc An HP CTO, @philmckinney is speaking there.

My Ten Favorite Tweets – Week Ending 041709

From the home office at Twitter headquarters in San Francisco…

#1: Our long national nightmare is over… @aplusk is the first to hit 1 million Twitter followers http://bit.ly/qMUDN

#2: Watching Larry King show about Twitter. Sean Puffy Combs stresses that if you want followers, you have to have something to say.

#3: My co-worker just noted that @oprah ‘s first tweet was all CAPS. No need to shout!

#4: One thought about the celebrity attention Twitter is now getting. Watch for increased spammers creating accounts to @reply us to death.

#5: Reading: Purpose-Driven Social Media is Key to Elusive ROI http://bit.ly/18voKY by @MiaD

#6: New Spigit blog post: Corporate Innovation Is Not a Popularity Contest http://bit.ly/27omc7

#7: http://twitpic.com/3c9y9 – Noting this for posterity…my blog hit top 10K in Technorati. Even got a little badge.

#8: My son Harrison turns 5 tomorrow. I’m making a card for him with PowerPoint, iPhone pix, Google images and my HP color printer.

#9: The marshmallow Easter peeps…I find myself not sure I’m really loving them as I eat one, but then I strangely crave another right after.

#10: When you hear Journey’s “Don’t Stop Believin'”, do you think of The Sopranos, or the Facebook crew’s video in Cyprus?

My Ten Favorite Tweets – Week Ending 112108

From the home office in Manila, Philippines…

#1: “If a mind is always open, it never finishes anything. If it’s always closed, it never starts.” – Scott Berkun, The Myths of Innovation

#2: @pico On FriendFeed? Attention on FriendFeed (for non A-Listers) is driven by: being interactive + decent-to-great content.

#3: Observation: E2.0 crowd is much more active on Twitter than FriendFeed: (1) established connections, (2) conversations, (3) broadcast.

#4: @pico It’s kind of a parallel to enterprise 2.0 in general. E2.0 tracks what happens in Web 2.0, with a 2 year delay. Web 2.0 is the filter.

#5: Just showed my colleague how I’ve got my FriendFeed Enterprise 2.0 List up on my monitor via real-time. His reaction? “Gotta show me how!”

#6: Reading: Why doesn’t anyone care about HP? http://bit.ly/16dEB

#7: @jeffmann The Gartner MQ for social software available in full without registration here: http://bit.ly/gs6dH

#8: Preso best practice = mostly pix, few words. Great for in-person presentations. But Slideshare versions lose context w/ single word slides.

#9: Wow, now my LinkedIn profile is pimped out with my blog posts and Slideshare. Really, really cool what LinkedIn is doing.

#10: RT @THE_REAL_SHAQ Sittin next to steve nash, tryna get hi to join twitter >> Twitter’s viral nature is everywhere…

*****

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