Feb 27

10 common Open Innovation mistakes

For many years innovative organisations have been trying to resolve the conundrum of how to get to bigger impact innovation more quickly and with less investment. In answer to this, the practice of Open Innovation is increasingly being adopted as the normal mode of operation for leading innovative companies. Open Innovation, applied correctly, offers the opportunity to access leading capabilities from around the world, exploiting complementary technologies and partnerships to short-cut the need for expensive internal activity and to realise innovation strategies faster. Some companies have adapted to this new way of working quickly and relatively painlessly but many organisations have had teething problems, to say the least. We have identified 10 common mistakes which can stop organisations from benefiting from the Open Innovation way of working.

1. Engaging externally without a clear innovation strategy

With all the talk about Open Innovation, it’s tempting to just give it a quick go. Just because Open Innovation is current flavour of the month and you’re just trying it out doesn’t mean that you should avoid linking it to your strategic objectives. In this respect, it’s just like any other type of innovation – if it’s not linked to strategy, you’re unlikely to be able to implement it and you’ll end up burning money.

2. Poor definition of the requirement or need

A poorly defined initial brief can make the crucial difference between success and failure to connect with potentially relevant partners. One aspect of poor definition which I see time and time again in Open Innovation is requirement definitions which focus on pre-conceived solutions rather than focusing on functions and parameters to be delivered. This kind of thinking really narrows down the solution space at a point when the process should really be divergent and it can seriously obstruct cross-industry engagement. A key area where Open Innovation can really score is in bringing in cross industry connections. These are great because you’re less likely to have competitive issues and if you’re clever about connecting with the right industry, their technology can be more advanced than yours. If your brief stops you making cross industry connections you’re going to miss out on big opportunities for faster, lower cost and bigger impact innovation.

3. Failing to get sufficient internal business or brand team engagement

Using Open Innovation, you can connect with great partners, but if you can’t get the attention of your internal business or brand teams then all you effort can be wasted. Clearly, having a shared innovation strategy will help a lot but sometimes you also need to find ways to engage your internal customers in the possibilities that the world outside the business can offer. Creating an engagement strategy upfront linked to organisation and processes to deal with this new form of innovation can be critical in getting buy-in and “pull” for your externally sourced ideas and technologies.

4. Not having a clear, aligned internal view about how to handle IP

This may seem obvious, but Open Innovation projects can stall not only as a result of failure to agree external terms around IP licensing or sharing but also through internal misalignment with regard to IP. I remember a meeting amongst IP professionals where Open Innovation was discussed where two whole flip charts of IP issues were raised before a single positive aspect of Open Innovation was mentioned. The IP team needs to be actively engaged in your Open Innovation strategy, with a mindset based on finding ways to make it happen.

5. Ruling out radical or unexpected options too quickly

One interesting factor with broad based Open Innovation is that potential solutions can come from anywhere. This can sometimes make it difficult to understand the value of solutions which are really different. If the requirement has been set poorly, it can be all too easy to miss the option which might give you a real innovation edge.

6. Lack of variety in Open Innovation approach

The Open Innovation area has evolved significantly since its inception some year ago. This means that there are many options which can help you to connect with potentially valuable partners. Many companies still fail to exploit the richness that is on offer and stay with one supplier. This can seriously jeopardise the chances of finding the right partner. For example, the average success rate achieved through idea market places such as Nine Sigma or Innocentive is around 40%. That means that 6 times out of every 10 you will fail to get the result you want. The best option is use a combined approach of two or more Open Innovation service providers.

7. Not understanding the attitude as well as capabilities of potential partners

A potential partner might have the right technology to satisfy your needs but do they have the right internal motivations, attitudes and behaviours to become a long term, trusted partner? Many of the on-line Open Innovation tools fail to give you a flavour of this important part of your potential partner’s profile. You need to make sure your evaluation tools and review processes specifically probe this area.

8. Not respecting the needs of potential partners

In any innovation process, lack of feedback can quickly kill interest from the solution provider end. At the least, the solution provider deserves a rapid and detailed response so that they can stay engaged with the process and feel better equipped to answer the next challenge. The decision making processes in large organisations can be long and drawn out and without any interim feedback or indication of good faith the solution provider can become suspicious even before a direct contact has been made. This really isn’t a good way to start a new long term relationship.

9. Looking at potential partners in isolation

Modern innovation often requires complex combinations of capabilities to be brought together, creating unique and sustainable value to the end customer. A step that is commonly missed is to try to “join the dots” and consider interesting combinations of capabilities. An even more sophisticated route which is often overlooked is to creating additional value by bringing together disparate network contacts to solve problems which are mutually important to you and your partners.

10. Last but not least…failure to build trust

If you were asked by a mysterious company to share your deepest technology secrets in an open “non-confidential” way with only the vaguest chance of any reward at the end, would you do it? The only reason that solution providers do just this is because they have some (possibly unwarranted) trust in the Open Innovation process and some belief that they may have just the right solution for the client. Going into Open Innovation without a win-win approach and behaviours which deliberately build trust will quickly kill your chances of getting anything meaningful and long term from it.

6 comments

6 Comments so far

  1. Maxine J Horn March 14th, 2009 12:10 pm

    Hi, I think the 10 points you have made are very valid. There are reasons why problems have arisen with the open innovation model.

    Open Innovation, in recent years, has been ambushed by those who view it as a purely customer-led feedback and ideas resource feeding into corporate R&D departments, an approach that is only a more informed consumer research platform.
    True Open Innovation is played out between Thinkers and Linkers operating in the professional innovation space.
    The professional front-end led Open Innovation model operated by ‘paid to think’ problem-solvers requires tighter IP terms and a more equitable division of the profit pie.

    Companies who seek to supplement their internal R&D innovation with external innovation are currently less comfortable with this shared-risk-and-reward model.

    However this is a crucial issue if strategic innovation decision-makers are to understand the critical role user-centered strategic designers (and scientists) play in the professional open innovation model.

    It’s a bit dated (early 2008) but here’s a link to an article I wrote on that subject.

    http://www.britishdesigninnovation.org/index.php?page=newsservice/view&news_id=5409

    The strategic innovation model is now moving on. The new model is one that acknowledges ‘division of labour’ – is fast gaining acceptance as the new innovation model in the USA. It concurs with the BDI operating principles that no product, service, process or business proposition ever came to market without the core expertise of several key parties.
    Furthermore, it supports the division of labour between the ‘Thinkers and Linkers’.
    Strategic designers and scientists alike are, generally speaking, the problem-solving creative Thinkers. They have little appetite for the processes and responsibilities of exploitation, preferring to leave that to the Linkers skilled in the business-driven disciplines: finance, IP valuation, deal negotiation and so forth. Engineers and technologists often bridge the Thinkers and Linkers.

  2. john March 14th, 2009 1:29 pm

    Hi Maxine, thank you very much for your comments. I really like the way you describe the Open Landscape with “thinkers and linkers” vs “we think”. I think you’ve also put your finger on a key challenge with Breakthrough Open Innovation – how do the thinkers get a just reward for their input. Go beneath the surface and talk to people seeking to act as “thinkers” and you qucikly encouter a real issue around trust in much of today’s Open Innovation. A real challenge in Open Innovation of the future is how to establish a real principle of Mutuality. John

  3. Maxine J Horn March 14th, 2009 2:13 pm

    Hi John
    Yes I agree with you – sharing the risk appeals to brand owners and VC’s – sharing the profits they are less comfortable with.
    We run Open Innovation Challenges (OIC) – which is designed with IP protection for both parties (corporates and originators) built in. This worked well for P & G when we ran one for them last year (smiley face) until it became obvious (Originators owned IP until a deal was negotiated), that some of the exceptionally good and potentially highly lucrative innovation breakthrough that emerged would result in P & G having to share a bit of their profit(less smiley face).

    Real principles of mutuality exist in written format and in our (and others I am sure)OIC process and its terms and conditions – it is a question of acceptance of those terms of mutuality by the corporates and VC’s – that is the real challenge

    Maxine

    PS: Just got your linked in invite so I’ll see you in there

  4. Maxine J Horn March 31st, 2009 12:28 am

    Hello John – just me and you in our mutual fan club then?

    I have just published the report I mentioned in a previous email – its called Delivering the Innovation Dream and is concerned with increasing competition between funded UK Universities and the private sector.

    I’d be interested in your feedback on it?

    http://www.britishdesigninnovation.org/index.php?page=newlook/research

  5. lavanya June 17th, 2009 11:51 am

    i really liked your blog. first time visitor, corporate slave trying to stop myself from turning into a middle mgmt soul sucker from idea-death-land.
    will be coming back for more. simple style, real depth, broad insights. good work!

  6. Efried November 24th, 2009 6:36 pm

    Hi,
    I wonder how the economic crisis influences those innovation models.There should be now much more focus on avoiding formation of economic bubbles. Incentives for sustainable innovation may be that the external innovators are working on a royalty free basis- and there should be copyleft on innovation which benefits society. may be the state should own strategic patents?
    What do you think?
    cheers

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