Open innovation is a concept that involves the use of external information to fuel the internal development of an organization. While accessing data and expertise has become easier in today's world, encouraging open innovation in a team can be a challenging task. This article provides practical solutions and effective strategies for overcoming barriers to open innovation, allowing businesses to stay competitive in today's fast-changing marketplace.
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Understanding these barriers is the first key to stopping them. Here are some key caveats to keep in mind while encouraging open innovation in your team:
Understanding Barriers to Open Innovation
Before jumping into solutions, it's important to understand the key caveats while encouraging open innovation in your team. These barriers are the primary reason many organizations fail to adopt open innovation practices effectively. The five main barriers are:
1. Overestimating Open Innovation
Organizations tend to rely on what works and untested theories and programs can waste untold resources. Open innovation introduces more unknowns to the equation. The solution is to merge open innovation with internal innovation as part of standard innovation best practices. It is essential to introduce open innovation as a part of standard innovation best practices and merge it with existing methods, leaning on internal innovation while folding in elements of open innovation along the way. Open innovation can’t stray too far from the corporate strategy — at least at first.
2. Cultural Challenges
When it comes to encouraging open innovation, leaders and decision-makers can be met with resistance from people who have a tendency to reject solutions that come from an external source. This is called the "Not Invented Here" (NIH) Syndrome. The solution is to shift the mindset of people from solving problems to finding solutions, incentivizing employees who can drive results, regardless of how they arrive at the conclusion.
3. "That's the Way It's Always Been Done"
People can be resistant to change, based on the belief that traditional methods and processes are the best or only way to do things. The solution is to slowly shift the mindset of people towards driving them toward an outcome that works. There should be incentives for employees who can drive results, regardless of how they arrive at that conclusion. It's a mentality shift that can help people put their egos aside for the sake of productivity.
4. Misusing the Tools
Organizations might not use the tools, data, expertise, or opinions in the correct manner, resulting in failure to achieve the desired outcomes. The solution is to establish clear guidelines and processes for how to use these tools and ensure that employees receive adequate training on how to use them effectively.
5. Lack of Trust
Open innovation requires trust between internal and external teams, and without it, it can be difficult to establish successful collaborations. The solution is to build trust through communication, transparency, and a willingness to collaborate. When Elon Musk revealed his portfolio of patents to the general public, he was confident that he had a better team than any of his competitors. This didn’t just inspire trust in his company, as the engineers’ skills were validated by the move; it inspired trust among stakeholders too.
Strategies for Overcoming Barriers to Open Innovation
Now that we understand the barriers, let's explore some strategies for overcoming them:
1. Foster a Culture of Collaboration
To overcome the siloed mentality that often inhibits open innovation, companies should create a culture that values collaboration and teamwork. This can be achieved through training, leadership modeling, and incentives that reward cross-functional cooperation.
2. Build Trust and Relationships
Open innovation requires trust between partners, which can be built through effective communication, transparency, and mutual understanding. Companies should focus on developing long-term relationships with their partners to build trust and enable effective collaboration.
3. Invest in Training and Development
Investing in training and development can help organizations overcome the cultural challenges associated with open innovation. By providing employees with the tools and knowledge they need to succeed, organizations can shift their mindset towards finding solutions, rather than solving problems.
4. Embrace Failure
Failure is an inevitable part of the innovation process. Organizations that are willing to embrace failure and learn from it are more likely to succeed in the long run. Encouraging experimentation, providing resources for rapid prototyping, and celebrating failures can help organizations overcome the fear of failure and drive
5. Use Technology to Facilitate Collaboration
Technology can play a key role in facilitating open innovation by providing platforms for collaboration and communication. Companies should invest in technology that supports open innovation, such as crowdsourcing platforms, innovation management software, and social networking tools.
6. Manage Intellectual Property (IP) Effectively
The pace of innovation is rapid these days, in part due to a digital world that moves at the speed of light. Your goal is to over-innovate your competitors as opposed to hiding everything from them. Intellectual property is a critical aspect of open innovation, and companies need to develop effective strategies for managing it. The good news is that you can write open innovation briefs that don’t actually reveal the organization that sponsors the campaigns. This may involve sharing IP with partners, licensing IP to others, or creating IP agreements that protect both parties interests. Effective management of IP can help build trust between partners and enable effective collaboration.
HeroX has this covered! Click<here>to view our guide on how to select an Intellectual Property structure from the Legal Agreement section.
Conclusion
Open innovation can be a powerful tool for driving innovation and growth, but it also presents unique challenges and barriers that can make it difficult to implement effectively. By understanding these barriers and adopting practical strategies for overcoming them, organizations can unlock the full potential of open innovation and stay competitive in today's fast-changing marketplace.
Whether it's merging open innovation with internal innovation, shifting the mindset of employees towards finding solutions, challenging traditional ways of doing things, properly using open innovation tools, or managing intellectual property, there are practical solutions and effective strategies that can help overcome these barriers.
By embracing open innovation and working to overcome these barriers, organizations can tap into the creativity and expertise of a wider network of collaborators, driving innovation and growth and staying ahead of the competition.
Real World Examples
A real-world example of overcoming “cultural challenges” is the case of Procter & Gamble's (P&G) Connect + Develop program. P&G, a consumer goods company, struggled to effectively implement open innovation, leading to wasted resources and disappointment in results. The program was initially designed to help P&G's internal R&D teams collaborate with external innovators, but it faced the challenge of not having a structured process for evaluating external technologies and partnerships.
To overcome this barrier, P&G merged open innovation with their internal innovation practices, establishing "Connect and Develop" as a key component of its innovation strategy. P&G established an innovation network to create a structured process for evaluating and selecting external partnerships, created a set of guidelines for the Connect + Develop program to help teams better use the available tools and technologies, and established partnerships with open innovation experts to help train their teams on best practices in open innovation.
These changes allowed P&G to leverage their internal expertise while tapping into external ideas and technologies. This enabled them to better evaluate and select external technologies and partnerships, leading to successful collaborations and product innovations such as Swiffer and Febreze.
One real-world example of overcoming the "not invented here" syndrome in business is the partnership between Apple and Microsoft in the late 1990s. Apple, at the time, was struggling financially and was hesitant to adopt Microsoft's Windows operating system due to its "not invented here" mentality. However, in 1997, Apple's newly-appointed CEO Steve Jobs realized that they needed to change their strategy in order to survive and approached Microsoft's CEO, Bill Gates, for a partnership.
The partnership involved Microsoft investing $150 million in Apple and committing to developing Microsoft Office for the Mac platform. This partnership helped Apple to gain credibility and stability, while Microsoft was able to expand its market share. By putting their differences aside and embracing collaboration, both companies were able to benefit and succeed in their respective industries.
A real-world example of overcoming the "that's the way it's always been done" mentality is the transformation of the American manufacturing company, GE (General Electric) under the leadership of CEO Jack Welch in the 1980s and 1990s.
Welch challenged the traditional culture and mindset of the company, which was steeped in bureaucracy and a slow decision-making process. He introduced a new approach, which focused on speed, efficiency, and innovation.
To achieve this, he implemented a program called "Work-Out," which encouraged open communication, cross-functional collaboration, and a willingness to challenge the status quo. This program allowed employees to voice their opinions and ideas, regardless of their rank or seniority, and empowered them to take ownership of their work and make decisions.
Through this approach, GE was able to cut bureaucracy, reduce costs, and improve efficiency, ultimately transforming the company into a more nimble and innovative organization. Welch's leadership and willingness to challenge the traditional ways of doing things led to GE becoming one of the most successful companies of the 20th century.
One real-world example of overcoming the barrier of “misusing tools” in open innovation is in the case of LEGO. In 2010, LEGO faced declining sales and needed to find new ways to innovate and grow. They launched an open innovation platform called LEGO Ideas, which invited fans to submit their own designs for new LEGO sets. The company then used a crowdsourcing approach to select the most popular ideas and turn them into actual products.
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However, LEGO initially struggled with misusing the open innovation tools they had implemented. They received a flood of submissions but found it difficult to manage and evaluate them effectively. They also struggled to communicate effectively with the community of designers and fans who were participating in the platform.
To overcome these challenges, LEGO made several changes to its approach. They developed clearer guidelines for submissions and created a more structured review process to evaluate ideas. They also improved their communication channels with the community, providing regular updates on the status of submissions and engaging with designers and fans through social media.
These changes helped LEGO to effectively leverage open innovation tools, resulting in the successful launch of numerous new LEGO products based on ideas submitted through LEGO Ideas. The platform has since become a key part of the company's innovation strategy, helping to drive growth and engage with its passionate fanbase.
One real-world example of overcoming the barrier of “Intellectual Property” is the collaboration between BMW and Toyota. The two companies agreed to work together on the development of a new sports car, with each company contributing its expertise in different areas. BMW had expertise in building sports cars, while Toyota had a deep knowledge of hybrid technology.
To overcome concerns about revealing proprietary information, the two companies agreed on specific terms for sharing information and intellectual property. They chose a shared IP model, where both companies have equal ownership of the technology developed during the collaboration. This allowed both companies to benefit from the collaboration while protecting their own intellectual property.
When You Fail to Innovate: Kodak
While we aimed to focus on how to overcome the barriers, here is one real-world example of one company that did not adequately address the challenges of open innovation and ultimately suffered the consequences.
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Kodak, a company that was once a leading player in the photography industry failed to adapt to the digital age. For many years, Kodak's business model was based on selling film and photographic paper, which had been the industry standard for decades. However, with the advent of digital cameras and smartphones, the demand for traditional film declined rapidly, and Kodak was slow to respond to this change.
Despite the emergence of digital photography, Kodak continued to focus on its traditional business model and relied heavily on the revenue generated from selling film and paper. The company was slow to develop its own digital camera technology and instead focused on marketing disposable cameras and inkjet printers.
As a result, Kodak's revenue began to decline, and the company was forced to file for bankruptcy in 2012. The company's failure to adapt to the digital age can be attributed to a culture of complacency and a belief that "That's the way it's always been done." Despite warnings from within the company and the industry at large, Kodak failed to embrace digital photography and continued to rely on its traditional business model until it was too late.
Overcoming the barriers to adopting open innovation is essential for companies that seek to stay competitive and relevant in today's rapidly changing business environment. Embracing open innovation can lead to new ideas, improved products, and increased market share. It enables companies to tap into a broader pool of knowledge, skills, and resources, and encourages collaboration among stakeholders.
By adopting open innovation, companies can unlock new opportunities for growth, innovation, and ultimately, success. Overcoming the challenges of open innovation requires a willingness to embrace change, a commitment to continuous learning and improvement, and a willingness to collaborate with partners, suppliers, customers, and even competitors.
How HeroX Can Help
If you're interested in incorporating open innovation into your organization but don't know where to start, consider reaching out to HeroX for guidance. Their team of experts can help you design and launch a successful open innovation program that meets your specific needs. Contact HeroX today to learn more!
