Innovation – Open Innovation – Part 2
I am busy discussing open innovation. In the previous article I reviewed the theory behind open innovation and looked at some practical case studies of how well-known organisations have successfully made use of it. Open innovation has been gathering force in recent years, thanks to the emergence of the Internet as a global information-sharing network. However, there are many other ways of getting customer’s input and as with “closed” innovation, there are also challenges and risks involved in making open innovation work.
The challenges of Open Innovation
First, let’s visit prior research done on this issue. In an extensive research project by Atos consulting, they have found that there are four key challenges when implementing open innovation. 1 The mindset challenge: how do you ensure that open innovation wins the hearts and minds of personnel? 2 The intellectual property challenge: how do you make money of intellectual property that your company does not put to commercial use? 3 The tools challenge: how do you make optimal use of tools that support open innovation? 4 The management challenge: how do you ensure that the correct management processes support company staff in their open innovation efforts?
On a more pragmatic note, can you imagine the magnitude of planning, organising and change management efforts that would be required to drive an open innovation initiative? The organisation will have to pitch it with the right message to the customer, making the customer understand that it is a win-win situation and not the case that the organisation is expecting the customer to do its’ work or to solve problems on the business’ behalf. The right tools and processes will be required to manage potentially huge quantities of ideas. It is a known occurrence that with open innovation efforts, especially those that are reward or incentive based, the ratio of really useful ideas to “not so useful” ideas are in the order of 1 to a 1000. There is by far not enough space in this article to touch on the intellectual property rights issues that comes into play with open innovation. This is not a conclusive list, and last but not least, is the possibility of participants taking useful ideas to your competitors or pursuing it themselves.
After this dire picture of open innovation, I want to reaffirm that I believe that open innovation is still a very useful “tool” if applied in the right manner. I share the view of Paul Williams that open innovation should be but one branch of a well-rounded and comprehensive innovation management program. And for open innovation to truly work, you need to have your internal house in order first as it relates to idea and innovation management. You must have a solid and well managed internal innovation capability before seeking ideas from the outside world. That means: Having a strong executive sponsor engaged in the innovation strategy of the organisation; Having a proven set of processes, tools, techniques and training for moving ideas into prototypes and, eventually, products;
Having enough resources (human, financial, time, space and capability) to adequately support the idea and innovation management system you are putting into place; Treating innovation and idea management, not as some singular event, but as a true business discipline and strategy for growth; Developing a list of problems and/or opportunities that the organisation wants to invest money and effort into finding solutions; Developing a strategy for seeking ideas from inside and outside of the organisation; Developing a clear and communicated set of selection and filtering criteria for idea submission and consideration to ensure the idea pool is manageable; Developing a workable system for protecting the intellectual property rights of all parties in the process.
In the next article I want to discuss the issue of national innovation and how countries and nations can boost their economies and solve national challenges through national innovation. I conclude with a quote by Yochai Benkler: “The world is becoming too fast, too complex and too networked for any company to have all the answers inside”.