Open innovation is a decentralized, participatory approach to innovation, based on the premise that innovation is more effective when multiple partners work together. Open innovation, when handled aptly, can be profitable, reducing costs, shortening time to market and opening up new streams of revenue. Open innovation is a two-way knowledge exchange dealing with both inflow and outflow of knowledge. It can be the perfect solution to supplement a constrained internal R&D department that is slowing down product development. For it to work, however, certain cultural elements have to be in place for a dependable open innovation structure to be built upon.
We explore some of the Elements of an Open Innovation Culture here:
Accepting that Not All Smart People Work in Your Circle
For open innovation to succeed, the first cultural premise is acceptance of the idea that there are many smart and exceptionally talented people in the world; even outside of one’s department or your inner circle. An organization with a closed structure, where people do not collaborate across departments, will lose out on the benefits that come from cross-pollination. Job rotations or other similar initiatives can help expand employees mindset and sensitize them to other business functions.
Being willing to seek out external ideas – not just passively consider accepting them when they come along – is an important prerequisite to a successful open innovation operation. An organization that can leverage a vast pool of smart minds to approach the issue at hand with different strategies, can open whole new world of possibilities.
Dismissing the “Not Invented Here” Syndrome
The “Not Invented Here” (NIH) syndrome is often a common barrier to open innovation initiatives that many organizations face. By nature, people are predisposed rather unfavorably towards external ideas. They attach more weight to ideas and initiatives from trusted sources. Reasons for this response could range from job insecurity to fear of the unknown; from previous negative experience to an unfair incentive system. Often, the NIH syndrome is unjustified and can result in the potential advantages of an open innovation initiative not being given reasonable consideration. This closed way of thinking has to be addressed for an organization to realize the true benefits of open innovation. Making the most of both internal and external ideas must become part of the company mindset.
Striving for Balance between Internal and External R&D
Integrating external research and development into your own knowledge base are instrumental for open innovation. But not at the cost of internal innovation. Organizations should balance the benefits of open innovation against the dilution of company-specific resources, the high demands it places on management attention and other challenges. Whether an intellectual property is developed internally or acquired via partnerships and open innovation, it must ultimately benefit the company’s bottom line.
Constructively Handling Intellectual Property Issues
Intellectual Property issues in an open innovation environment need to be addressed with care, especially when there are multiple partners. While intellectual property can offer strategic advantages to the controllers of the information, it can also hinder collaboration, innovation, and access to knowledge. Utilize a carefully crafted non-disclosure agreement so that both parties are able to openly in sharing their ideas and approaches. Creating a trust-based environment help avoid intellectual property and confidentiality issues that could negatively impact the engagement.
Building Trust Through Open Communication
Open and clear communication lays the foundation for the trust that is essential to the open innovation culture. Open communication is not limited to external interactions with other firms, but also within the organization. Employees need to know what the company is doing and why; otherwise, it can give rise to mistrust, fear, and uncertainty. A top down, clear and transparent communication strategy helps the organization adopt an open approach to bringing in external partners for what was traditionally deem an internal activity.
Before embarking on an open innovation initiative, the decision makers should evaluate how their organization holds up against these necessary cultural elements required not just to fully realize the rewards of open innovation, but for the effort to have any impact at all. If the organizational culture does not lean towards the open spectrum, it may be worthwhile to first spend the time and energy required to build an open culture more attuned to open innovation.