Open Innovation Models

I’m thrilled to share that our paper, "Opening Up Military Innovation: Causal Effects of Reforms to US Defense Research," co-authored with the brilliant Sabrina Howell, John Van Reenen, and Jun Wong, has been officially published in the Journal of Political Economy. For decades, the conventional wisdom in government R&D procurement has been for the government to tightly specify the products it wants. Think of the Henry Ford quote: "If I had asked people what they wanted, they would have said faster horses". Our research explores what happens when the government stops asking for "faster horses" and instead opens the door for industry to propose the "automobile." We studied the US Air Force Small Business Innovative Research (SBIR) program (e.g., R&D for small businesses) where two approaches were run simultaneously: a conventional model with highly specific topics and a new open model where firms could propose any technology they thought the Air Force might need. Using a sharp regression discontinuity design, we uncovered striking causal effects for companies that won an open topic award. These companies saw significant, tangible economic benefits: * 📈 A 12 point increase in the probability of receiving subsequent Venture Capital investment * 🚀 An 11.4 point increase in winning larger, non-SBIR Department of Defense (DoD) contracts, a key measure of military adoption and scale. * 💡 An 8.9 point increase in securing a patent and a 7 point increase in securing a high-originality patent, signaling novel innovation. In stark contrast, winning a conventional award had no positive effects on commercial innovation or military adoption. In fact, its main effect was increasing the chances of winning another small SBIR award, a form of program "lock-in”. Our research demonstrates that the open approach doesn't just work by attracting different firms; the open incentive structure itself drives greater innovation. It provides an avenue for firms to identify technological opportunities the government isn't yet aware of, creating an entry point to much larger public sector contracts and private investment. This work has powerful implications for how we procure innovation across the public sector. I'm incredibly proud of what our team accomplished and hope it contributes to building a more dynamic and innovative industrial base. You can read the full paper here: [https://lnkd.in/eV7uEqeH] #Innovation #Economics #NationalSecurity #DefenseTech #SBIR #VentureCapital #DualUse #AirForce #JPE

Before I sold Quest for $1,000,000,000, I wasted millions trusting the wrong thing: My own ideas. Here's the AI validation framework I wish I had when building Quest Nutrition: Most entrepreneurs fail in the same boring way: 1. Have an idea 2. Fall in love with it 3. Build it for months 4. Launch 5. Discover nobody wants it 6. Repeat This is "build and pray" physics. It's suicide. But there's a better way. One that uses AI to kill bad ideas in 72 hours, not 12 months. My 5-step AI validation framework that has saved millions in wasted effort: 1. Problem Verification Your idea isn't special. Period. The only thing that matters is: are people actively suffering from the problem you claim to solve? Feed Perplexity and ChatGPT with Reddit threads, forum posts, and review sites. Let AI extract patterns of pain. No real pain = dead idea. 2. Market Size Analysis Even if the pain is real, is it widespread enough? Let AI analyze Google Trends, search volumes, and TAM data. Create detailed spreadsheets of potential users. Too small = dead idea. Goals make demands. If the goal is to build a substantial business, the market has to be big enough. 3. Competitor Assessment Feed AI your top 5 competitors' websites, pricing pages, and customer reviews. Have it identify gaps and oversaturation. Create a map of what's missing. No clear advantage = dead idea. Build from physics, not analogy. That's the only way to find a real competitive edge. 4. Zero-Cost MVP Design Most founders build full products before validation. That's the most expensive way to learn. With AI, create "fake door" tests instead: • Landing page that looks real • AI-generated mockups • $50 of ads to see if people try to buy No buyers = dead idea. The market doesn't care how hard you worked. It only cares if you solved a real problem. 5. Early Adopter Interviews For ideas that survive steps 1-4, use AI to: • Draft perfect outreach messages • Generate interview questions that reveal buying intent • Analyze interview transcripts for patterns No enthusiasm = dead idea. This is Physics of Progress in action. Test hypotheses. Follow the data. Kill your darlings fast. The hard truth about entrepreneurship is that 90% of ideas SHOULD die. Your job isn't to build - it's to kill bad ideas quickly. Most entrepreneurs think failure is the worst thing that can happen. It's not. The worst thing is wasting years on something nobody wants. Let AI be your reality check. It's ruthlessly honest in a way your friends, your team, and even you can't be. Ideas are worthless. Validation is everything. PS: I’ve trained an entire GPT to track down the root cause of your next revenue plateau - and help you break through it. It’s built based on 100,000s of data points from my group coaching sessions. Grab it for free here: https://buff.ly/nUri82k

Part 2: 𝗕𝗲𝘆𝗼𝗻𝗱 𝗣𝗼𝗿𝘁𝗲𝗿’𝘀 𝗙𝗶𝘃𝗲 𝗙𝗼𝗿𝗰𝗲𝘀: 𝗧𝘂𝗿𝗻𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗲𝘁𝗶𝘁𝗶𝗼𝗻 𝗶𝗻𝘁𝗼 𝗖𝗼𝗹𝗹𝗮𝗯𝗼𝗿𝗮𝘁𝗶𝗼𝗻 (Part 1: see https://lnkd.in/eNP8ih5Y) (Part 3: see https://lnkd.in/eYAnkeVS) Michael Porter’s Five Forces framework has shaped how managers and academics analyze industries. It remains an elegant way to map the external environment at the industry level. Porter’s view of strategy, however, was forged in an era when industries were stable, boundaries were clear, and competitive advantage was largely internal. The external environment was portrayed as hostile: every force around the firm—suppliers, buyers, new entrants, rivals, and substitutes—was a potential threat to profitability. Strategy was about defending margins, erecting barriers, and capturing value. But today’s reality is far more fluid. Industries blend into one another, technologies converge, and value is co-created across networks. The same actors that once appeared only as adversaries have become indispensable partners for innovation, agility, and growth. Competitors may share platforms; suppliers co-develop technologies; customers co-create solutions; and substitutes may reveal entirely new markets. If we look at the business world through this new lens, Porter’s five “forces” can also be five “sources” of advantage. Collaboration doesn’t replace competition—it complements it. The real challenge for managers is to find the balance point along a continuum that runs from pure competition to deep collaboration. * Competitors remain rivals, but also potential partners in standard-setting, data sharing, or open-source development. * New entrants are disruptors, but also agile innovators with whom incumbents can partner, invest, or co-develop. * Suppliers can squeeze margins—but when engaged early in design, they become co-innovators. Toyota’s keiretsu model and Unilever’s annual innovation summits with strategic suppliers both show how collaboration can yield efficiency and renewal. * Customers may demand more, but their insights and data now drive innovation. Co-creation platforms—from LEGO Ideas to Tesla’s user forums—turn buyers into creative partners. * Substitutes, once seen only as threats, can signal new opportunities. Netflix, for instance, transformed from a DVD substitute to a platform that redefined how entertainment is consumed. The comparative table below contrasts Porter’s competitive interpretation of each force with a collaborative perspective—a framework better suited when success depends as much on connection as on protection. #Strategy #Innovation #Ecosystems #Collaboration #OpenInnovation #DigitalTransformation #Leadership #BusinessStrategy #MichaelPorter #BlueOceanStrategy #Coopetition #Agility #ValueCreation #Management

I'm delighted to be a co-author of this research, conducted in collaboration with professors from Harvard, MIT, and Wharton, that explores what actually happens when humans and GenAI work together. As a Partner at Seven2 where I focus extensively on AI transformation, this work is at the heart of the questions we tackle daily with our portfolio companies. Our new study reveals three distinct types of interaction: "Cyborgs, Centaurs and Self-Automators: Human-GenAI Fused, Directed and Abdicated Knowledge Co-Creation Processes and Their Implications for Skilling" 📄 🔗 Paper: https://lnkd.in/eHfq2yRZ 🎥 Short Video: https://lnkd.in/eDN8arH7 Drawing on a field study of 244 global management consultants at BCG, we identify three distinct modes of human–AI interaction that unfold across real workflows: Cyborgs (Fused Knowledge Co-Creation) – human and GenAI continuously shape one another in a tightly fused decision process Centaurs (Directed Knowledge Co-Creation) – human steers the process while leveraging AI capabilities Self-Automators (Abdicated Knowledge Co-Creation) – delegation of both task and decision to AI We show how these modes differ in who drives the work and what skills are cultivated, with implications for: ✔ How professionals develop domain and AI expertise ✔ Organizational strategy for upskilling ✔ The broader future of work in GenAI-augmented environments Check out the short video for an overview, and dive into the full paper via the link above! Whether you're interested in AI adoption, workforce transformation, or productive human–machine collaboration, I'd love to hear your thoughts and feedback! 📘 Full paper: https://lnkd.in/eHfq2yRZ 🎥 Video: https://lnkd.in/eDN8arH7 #AI #GenerativeAI #FutureOfWork #KnowledgeWork #Research #Management #Innovation

In many nonprofits, innovation often mirrors privilege. Who gets to dream up solutions? Whose ideas are embraced as “bold” or “innovative”? Too often, decision-making is concentrated in leadership or external consultants, leaving grassroots, community-driven insights underutilized. This perpetuates inequity and stifles transformative potential within our own organizations. Here’s the truth: Privilege shapes perceptions of innovation: Ideas from leadership or external experts are often prioritized, while community-driven ideas are dismissed as “too risky” or “impractical.” Communities with lived experience are sidelined: Those who deeply understand systemic challenges are excluded from shaping the solutions meant to address them. The result? Nonprofits risk replicating the same inequities they aim to dismantle by ignoring the imaginative potential of those closest to the issues. When imagination is confined to decision-makers in positions of power, we limit our ability to create truly transformative solutions. As nonprofit practitioners, we can start shifting this dynamic by fostering equity within our organizations: * Redistribute decision-making power: Engage community members and frontline staff in brainstorming and strategic discussions. Elevate their voices in decision-making processes. * Value lived experience as expertise: Treat the insights of those who experience systemic challenges as central to innovation, not secondary. * Create space for experimentation: Advocate for internal processes that allow for piloting bold, community-driven ideas, even if they challenge traditional approaches. * Focus on capacity-mobilisation: Invest in staff and community partners through training, mentorship, and resources that empower them to lead imaginative projects. * Rethink impact metrics: Develop evaluation systems that prioritize community-defined success over traditional donor-centric metrics. What practices has your organization used to centre community-driven ideas? Share your insights—I’d love to learn from you! Want to hear more: https://lnkd.in/gXp76ssF

While national agencies play a vital role, the true strength of disaster management often lies at the grassroots. Community-Based Disaster Management (CBDM) empowers local populations to become their own first responders, transforming vulnerability into collective resilience. When a disaster hits, local communities are the first on the scene, often before external aid can arrive. By equipping them with knowledge, skills, and resources, we foster self-reliance and accelerate effective response. This approach focuses on local risk assessment, tailored preparedness plans, and empowering community leaders who can coordinate efforts and disseminate information effectively. According to a systematic review of disaster management approaches, communities with CBDM plans experience up to 50% fewer casualties in disasters. This is a testament to the power of local knowledge and collective action. From remote villages in Pakistan organizing local flood watch groups, to Indigenous communities in Australia revitalizing traditional fire management techniques, CBDM leverages intimate local knowledge for powerful results. It's about collective ownership and shared safety that builds strength from the ground up. Is your community empowered to respond? Support community-based disaster management for a stronger, more resilient future. #CommunityResilience #CBDM #LocalAction #UNICEF

Playing it safe is the riskiest move in FMCG today. That’s why industry giants are de-risking innovation by partnering with agile startups.               The FMCG landscape is evolving rapidly as consumers demand instant deliveries, eco-friendly products, and personalized experiences.  While traditional brands have the scale and resources, they often struggle to keep up with these fast-changing expectations. In contrast, startups built on agility and innovation, are seizing the opportunity to bridge this gap—reshaping the industry in the process. That’s why instead of resisting change, companies like Nestlé, Marico, and P&G are embracing it—by partnering with startups to drive innovation. To give you an example: 📍 Godrej Consumer Products Limited, Dabur, and Nestlé are rethinking supply chains to match the rise of quick commerce. 📍 Procter & Gamble launched a ₹300 Cr fund to co-develop cutting-edge supply chain solutions with startups.(Indianstartupnews) 📍 Eco-friendly brands like Bare Necessities Zero Waste Solutions , Beco and ORGANIC INDIA are finding a place in mainstream FMCG through strategic tie-ups. It’s the smartest strategy for one reason: survival. 📍 FMCG brands thrive on mass production and distribution, but they often move too slowly to adapt to emerging consumer demands.  📍 Startups, on the other hand, bring speed, fresh ideas, and niche expertise. By partnering instead of competing, legacy brands gain agility without the trial-and-error risks of building from scratch. This approach doesn’t just drive innovation—it de-risks it. Instead of making costly bets on untested trends, FMCG giants can leverage startups’ real-time consumer insights, experiment faster, and scale successful ideas seamlessly. In an era where consumer preferences shift overnight, playing it safe is the riskiest move. Have you seen any interesting FMCG-startup partnerships lately? #Innovation #Agility #FMCG

🎯 Product Innovation Secret: Your Users Are Already Building Your Next Big Feature Dream11 SVP of Product Vaibhav Kokal revealed how their most successful feature came from an unexpected place: their users were already building it on Telegram. Their popular "Guru" feature wasn't conceived in a boardroom or through complex market research. The inspiration? Their own users... on Telegram! 🤯 Here's why this is brilliant: 1.Dream11's users were creating informal prediction communities on Telegram 2.Instead of fighting this behavior, they turned it into their "Guru" feature 3.Result: Massive engagement boost and organic user acquisition 🎯 Key Takeaways: • Your best product ideas might be hiding in plain sight • Innovation often means observing and adapting, not inventing • Users will find ways to fulfill their needs - your job is to make it easier 🔍 Real-World Application: → Check your app's Reddit/Discord/Telegram communities → List the top 3 unofficial workarounds users have created → Evaluate which one could become your next native feature 💡 This reminds me of how Instagram stories came from observing how people were using Snapchat, or how Twitter's hashtags emerged from user behavior. 👉 Watch the full breakdown on my Behind The Featuren YouTube Channel: Link in comments #ProductInnovation #UserBehavior #ProductStrategy #FeatureDiscovery #ProductGrowth #GameDesign #GrowthStrategy

Modern corporations are creating innovation ecosystems where internal teams work directly with portfolio companies, sharing resources, expertise, and market access. This integration goes far beyond traditional corporate-startup partnerships: ➡️ Shared Technology Platforms: Portfolio companies gain access to proprietary corporate platforms and APIs, while corporations benefit from rapid external innovation cycles. ➡️ Cross-Pollination of Talent: Employees move between corporate R&D teams and portfolio companies, creating knowledge transfer and cultural bridges. ➡️ Collaborative Product Development: Joint development projects between corporate teams and startups are becoming more common, leading to products that neither could create independently.

Standing in a bustling Seoul street last year, I watched something remarkable unfold. What started as a typical city block transformed into a canvas for environmental change, vibrant artwork surrounding drains, turning potential litter spots into visual reminders of our shared responsibility. This wasn't just street art. It was community engagement in action. In #SouthKorea 🇰🇷, our Philip Morris International Korea team partnered with local government, the Korea Green Foundation, and local artists to tackle cigarette butt litter differently. Instead of just organizing clean-ups, they created an ecosystem of change: 400+ volunteers collecting 300 bags of waste, students creating anti-littering artwork, and entire neighborhoods becoming part of the solution. What struck me most was the ripple effect. One clean-up event in Yangsan evolved into a year-round sustainability hub. By September, 666 volunteers had collected over 18,000 cigarette butts, but more importantly, sparked conversations that are changing behaviors. Meanwhile in #Tunisia 🇹🇳, a different challenge led to equally innovative collaboration. Young entrepreneurs at startup Wayout developed "Zigofiltres"—simple cages for drains that prevent flooding by capturing cigarette butt litter before it blocks waterways. 246 of these devices now protect one of Tunisia's most flood-prone municipalities. Two countries. Two different ways of addressing a same challenge. One powerful lesson: when business, government, local innovators, and communities work together, environmental problems become opportunities for creative solutions. #Sustainability isn't just about corporate initiatives—it's about creating platforms where local ingenuity can flourish. 🌱 ♥️ Link to full case study here ➡️ https://lnkd.in/ePU_Bwkt #CommunityEngagement Cc: Borhann Rachdi, Abla Benslimane, Hannah Yun, Miguel Coleta, Maria V Agelvis, Kelly Lavender, Euigyum Hong