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Five Barriers to Adopting Open Innovation and How to Overcome Them

BY EUGENE IVANOV | 4 min read

A friend of mine, an innovation consultant, likes to joke: “Innovation is simple...but not easy.” The same can be said about open innovation. Henry Chesbrough, who introduced the concept of open innovation in his classic 2003 book defined it as using external sources of knowledge and expertise to advance internal R&D. What can be simpler than that? 

And yet, the adoption of open innovation has been far from seamless. Open innovation might look simple...but it’s not easy. Organizations attempting to create formal open innovation programs face numerous barriers. And although many of these barriers are specific for each organization (remember Leo Tolstoy’s “Happy families are all alike; every unhappy family is unhappy in its own way”?), some barriers are quite ubiquitous. In this article, I review five such “popular” barriers to the adoption of open innovation and suggest approaches to overcoming them.

 

Treating open innovation as a “special” type of innovation

There is a reason why innovation isn’t easy. Modern organizations, especially corporations, are obsessed with execution. Predictability of outcomes and the precise match between planned and achieved results are the metrics against which organizations measure their performance and performance of their leaders. 

Innovation is different. By its very nature, innovation is highly unpredictable and relies on constant experimentation with a majority of experiments ending up in failures. This lack of the predictability of outcomes outcomes makes innovation difficult to implement, especially when organizations try to move their innovation goalposts beyond the incremental improvement of existing products.

Open innovation adds an additional twist to this complexity by increasing the level of uncertainty: now, one needs to innovate with “strangers.” This fear of losing control over the innovation process forces organizations to slow the adoption of bona fide open innovation tools like crowdsourcing and rely on occasional surveys of their suppliers and business partners.

To overcome this barrier, open innovation must be closely aligned with the corporate strategy. The simplest way to achieve that is to consider open innovation part of the whole innovation process. Open innovation should become part of a single “innovation body.” One side if this body would represent tools utilizing the innovation potential of the company’s employees (internal innovation). The other side of this body, open innovation, extends behind the corporate walls trying to reach out to the diverse pools of external talent.

In practical terms, in organizations that just start using open innovation approaches, the open innovation team should reside within a larger corporate innovation team or unit. Sure, as the open innovation program matures, the team will grow and at some point become separate. But starting with a separate open innovation team from the get-go is likely to set it up for failure. 

 

Overcoming Not Invented Here Syndrome

As happens with the adoption of any new paradigm, successful adoption of open innovation requires cultural change - and cultural change is something that almost every organization has a difficulty dealing with.

A cultural problem most often associated with the adoption of open innovation is so-called Not Invented Here Syndrome (NIH), a rejection by internal teams of ideas and solutions that did not originate within the organization. (Not everyone realizes that the NIH Syndrome affects internal innovation as well, but this is a topic for a separate conversation.)  

There are no simple ways to overcome NIH, and this definitely takes time. Organizations should promote a cultural shift from “problem-solving” to “solution-finding.” This approach postulates that people within organizations are ultimately responsible for the project outcome. How this outcome will be achieved - by solving the problem internally or finding a suitable solution elsewhere - is of secondary consideration. What is important is how fast the outcome has been achieved and at which cost.  

I strongly recommend reading the excellent article by Hila Lifshitz-Assaf, “Dismantling Knowledge Boundaries at NASA,” describing how NIH Syndrome was dealt with at the Space Life Science Directorate at NASA.

 

Mishandling Open Innovation Tools

Adding to the adoption problems is widespread confusion over open innovation tools. Sure, some open innovation techniques, such as crowdsourcing, are not intuitive and need training and experience to use. But others, such as working with customers, suppliers, and partners, and running innovation competitions is something that many organizations are very familiar with.

Unfortunately, what is missing is a clear understanding that each specific open innovation tool is only good when it’s applied to a matching innovation task. Some tasks are better performed using tools from a “co-creation” basket, others require crowdsourcing, and some may be achieved only with engaging startups

It falls on academics, business writers, and innovation practitioners to educate innovation teams on the classification of open innovation tools and good practices of using them.

 

Fair of Revealing “Secrets”

A surprisingly common and persistent fair of adopting open innovation is the possibility of revealing proprietary information to competitors. One can often hear: “If we launch this open innovation initiative, our competitors will immediately know our direction and our strategy.” Well, don’t they know your direction and strategy already?

In this era of digital transformation, the pace of innovation is increasing, and going “open” helps organizations to sustain this pace by shortening time to market and reducing R&D costs. These days, competition is won or lost on being able to “over-innovate” your competitors, not trying to keep them in the dark. A good example of this approach was demonstrated by Tesla that in 2014 announced that it was opening up to anyone its portfolio of patents related to electric car technology. Explaining the move, Tesla Motors’ Elon Musk wrote that Tesla would compete and win relying on the talent of its engineers. 

 

IP Concerns

Close to the fair of revealing proprietary information to competitors are concerns around confidentiality and Intellectual Property (IP) rights. Now, those are real concerns: confidentiality and IP still matter for many organizations, especially tech companies. “What will happen if we include some sensitive data into our open innovation brief? We cannot control who will read it.”, you can often hear.

These concerns, while real, are overblown. Techniques exist to write open innovation briefs, such as, for example, crowdsourcing problem statements, in such a way that the identity of the organization that sponsors this crowdsourcing campaign will be hidden. Moreover, very often, it’s possible to write a problem statement without even revealing the technical application behind the problem. 

Another concern is the so-called “IP contamination,” a concern that solutions coming from outside will “contaminate” IP generated within the organization. This is a real concern, too. But again, techniques exist (the “need-to-know” distribution of external information, using “IP-buffer” intermediaries, etc.) that can deal with this issue.

Yes, open innovation isn’t easy. But it can be learned, and a good way to begin this journey is to work with a company, such as HeroX, that has experience with open innovation tools. Reach out to the HeroX’s possibilities team (possibilities@herox.com) to learn how HeroX can help your organization to start building open innovation programs.

 

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