Open innovation is all the hype nowadays. But what is open innovation?
Let’s start with a quick primer.
Open innovation has been practiced by numerous companies for decades, even before it was identified as such. The concept was coined by UC Berkeley Professor Henry Chesbrough in his seminal book “Open Innovation” published in 2003. This book is the result of extensive research on the Xerox PARC, a research center long held as the hallmark of innovation. The book also features Bell Labs, and IBM, among others.
In a nutshell, the book shows that relevant knowledge, the source of innovation, is today dispersed. Now, more than ever, companies need partners, or nodes of exchange, such as universities, customers, suppliers, or even competitors, to innovate.
Open innovation, as defined by Chesbrough, is “the use of inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation”.
In other words open innovation is a more distributed, more participatory, more decentralized approach to innovation. Open innovation is about breaking down the barriers between your organization and its ecosystem in a structured way, creating permeability where you want it, in order to accelerate innovation.
In recent years, the use of competitions, community suggestions, user-designed products, and other open innovation strategies by Fortune 500 companies has risen, but outcomes are a mixed bag at best. Why? Is it an unavoidable function of the riskiness of innovation or are these results due to poor implementation?
Here are three elements of a successful open innovation initiatives:
1 — Culture
Open innovation can be a task which strikes fear into traditional companies, which are unused to opening a firm — or even internal departments — to members outside their company or groups. Time and commitment are required to take the crucial steps towards changing the organizational mindset to a more open and collaborative one. However, actionable steps can be taken to create an environment in which open innovation can thrive. Companies can begin by designing processes that provide opportunities for employees in different departments to collaborate and exchange, thus reducing internal silos. Processes for internal and external interaction, can influence employees’ and stakeholders’ behavior, and in time, organizational culture.
2 — Strategy
Before taking action, clear goals need to be established. An open innovation strategy should not be an ad hoc exploration. Whether you choose to implement one or not, the consideration is a core part of your innovation strategy. Too often, companies run open innovation initiatives completely separately from their innovation strategy, out of their communications department for instance. This is not to say that a streamlined public image is not an important part of open innovation strategies, but a clear strategic direction must be established prior to breaking down the operational aspects of exchange with the outside world. Open innovation should be at the core of your innovation strategy and should complement your internal innovation projects. Making a high-level strategic decision to invest in open innovation is vital to achieving results. Although open innovation can lead to faster, more accurate, and more elegant results, like in research and development, open innovation sometimes takes longer periods of time to yield substantial results. Therefore, it’s important that the resources you commit to open innovation initiatives are secured for the long term.
3 — Ecosystem
Identifying the relevant actors and building good relationships with key stakeholders in your ecosystem requires a wide and deep research effort as well as long-term commitment. Finding complementary actors with the technology or solutions relevant to your offering, means testing numerous partners before selecting The One. Fruitful relationships take time to develop. They are the result of extensive exchanges between teams of both organizations.
To learn more on the three core elements of a successful open innovation initiative go here.
