Late last month I had the opportunity to attend “CoDev 2010,” the ninth annual international congress on Open Innovation and Co-Development organized by The Management Roundtable and the Product Development Management Association (www.codevpd.org).

And you may be thinking: “Ninth International Congress. . .snooze.”

Which was far from the case.  In fact, it couldn’t be much further.

Because in point of fact, the whole concept of Open Innovation is one that any company in any industry needs to be not merely thinking about but pursuing with the sort of zeal that is ordinarily done only if there are big rewards involved—and there are big rewards involved, both in a positive sense (as in making more money) and a negative one (losing less).

For example, take General Mills, the sixth largest food company in the world.  You might think that when it comes to product development (1) how could a company that size not have all of the resources it needs and/or (2) how hard is it to create a different flavor of Cheerios, anyway?

Well, as it turns out, (1) even a General Mills R&D staff doesn’t have all the ideas and (2) there is a whole lot more involved in its portfolio than cereal.

Peter Erickson, senior vp at the firm, pointed out that in 2004 it was a banner year for General Mills: they introduced more new products that year than any in the company’s history—and the history goes back to 1866, so there were a lot of years and a lot of products.  However, they discovered that “more wasn’t better.”  In fact, more than two-thirds of those new products fell below the break-even line.  They discovered, he said, “It wasn’t about how many new items, but the quality of those new products.”

So they did a rethink of the way things would be developed, and reoriented the focus from variety to quality.  And they set up teams so that they could (1) develop bigger ideas; (2) achieve faster consumer feedback and learnings; (3) leverage the know-how of suppliers and other people outside the walls of General Mills.

And they made it real, not just organizational lip service.  He said that there used to be “Policy 16,” which was essentially an edict carved in stone which said, in effect, that General Mills wouldn’t review, accept, fund, or otherwise be involved in any outside ideas.  Which is a CYA approach to protect IP.

Now they have launched G-WIN, the General Mills Worldwide Innovation Network, and they are actively soliciting things from the outside.  People on the “X-Squad,” which work to find new and different ideas and approaches, actually pass out business cards that actually ask for ideas, as in (and this is real, so if you have an idea, you might go to  www.generalmills.com/win  with it):

SEEKING: Ability to use post-consumer material in packaging for food.

Problem: Recycled content can greatly reduce the energy needed to make a packaging material, but can cause product quality and packaging performance issues.

Our Needs: Ability to increase post-consumer recycled (PCR) content in flexible films, plastic cups, steel cans, cartons, corrugated.

Possible Plays:

• Process development for clean, high performance PCR
• Materials development to create more resilient material that can be recycled without performance reduction
• Novel partnerships for the collection and use of PCR

That’s a long way from Policy 16.

There were plenty of steps to get from the status quo to a G-WIN culture.  They garnered the support of the CEO, which is, of course critical.  And in order to do that, they had to show that this was going to be beneficial from a financial point of view.  For one thing, they’ve shifted the focus from not how many new products they generate to how many incremental purchases consumers make of their products.  Historically, people in R&D were rewarded for their inventions; now they’re being rewarded for their connections.  They’ve established the ways and means to share ideas both within and without General Mills.  They’ve clarified the way they work with the suppliers who provide the ideas that they go with so that the supplier benefits as General Mills does: Erickson said they know that suppliers talk with one another, so they want to make sure that the word on the street about working with General Mills is a positive one: “We want each experience for a supplier to be one that they’d come back and do it again.”

So what’s Open Innovation doing for them?  Well, he estimates that they’re probably going from idea to launch in half the time that it took them before embracing it.

And General Mills is but one company that is on this path.  Alberto Culver, Procter & Gamble, Whirlpool, Unilever. . .even Los Alamos National Labs.

Near the end of the conference I happened to sit next to Gene Slowinski, managing partner of Alliance Management Group and director of Strategic Alliance and Open Innovation at the Rutgers Business School.  He mentioned that in previous years there had been a greater number of people from pharmaceutical companies attending, and that at this event there were more from the consumer goods industry.  He suggested that the pharma people—the good ones, anyway—have really embraced Open Innovation, and that he could see the same thing happening as regards the consumer products companies.

But then I began to wonder about all the other industries. . . .