Here’s How to Make Open Innovation Work!

The term “open innovation” was coined by University of California, Berkeley, professor Henry Chesbrough when he authored a book with the same title.  According to Professor Chesbrough, “Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectfully. [It] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology”[i]

Open innovation is often a gradual transition

Through my work with Fortune 200 companies, I have observed transitions from closed, tops-down, controlled innovation to open innovation.  The transition is often gradual. They often followed the path of slowly building alliances with more relatively safe external partners, such as key academic researchers or small technology companies. The next step in the transition was usually technology acquisitions (most of which in my experience don’t meet their goals and failed–and also included the occasional sterling success), occasional projects with IDEO, and finally external crowdsourcing, as an attempt to solve a minor technological obstacle or learn more about customer preferences.

This transition often sends their law department’s intellectual property group into an apoplectic fit. I am sympathetic to their plight: “How can we protect the company’s IP when it is on the internet?”

At InnovationOne, we believe in open innovation.

Our research has shown that the most innovative companies create collaborative cultures and the ecosystems to support innovation. While we agree with Professor Chesbrough that companies need to look externally for inspiration, new ideas and solutions, we have found that a company’s own workforce can be a treasure trove of innovation. That is, if you point them in the right strategic direction, invest in their skills, give them challenges to overcome, and most importantly, give them explicit permission to ask questions, make suggestions and, well, be innovative!

Successful innovation, and most certainly open innovation, begins with executives. If executives don’t embrace innovation, talk about it endlessly with passion and enthusiasm, and invest in it, innovation won’t catch fire.

Executives need to create an ecosystem in their companies that invites employees to generate ideas and build upon each other’s ideas. Reaching out to external experts, building alliances, and crowdsourcing are important, as long as innovators work within the limits of protecting their critical IP. Research on external crowdsourcing shows that it often fails, but it can be hugely successful when managed well within a collaborative community or as a contest.[ii]

Customer involvement is essential!

Many of our clients have found that when they listen to and empower their employees, especially the customer-facing ones, they learn to listen and build better relationships with their customers. While customers might not always know the next big innovation, having honest customer involvement accelerates innovation.

What else is needed for open innovation?

The organization’s ecosystem needs a reliable process with clear criteria and decision rights to decide which innovations to move forward. It also needs investment. Finally, the ecosystem must have the organizational alignment necessary to commercialize the innovation.

Organizational alignment can be one of the most difficult and heart breaking elements of innovation. Old habits die hard. It can be incredibly difficult to get the time and attention of departments that are lazar-focused on meeting the goals of current commercial operations. Alignment requires a strong executive champion, and a performance management and rewards system designed to support innovation.

What has been your experience with open innovation? Join the conversation!

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on talent management, leadership development and coaching, innovation, and other strategic initiatives. Please e-mail Victor at victorassad6@gmail.com or visitwww.victorhrconsultant.com. For innovation visit www.InnovationOne.US.

[i] Henry Chesbrough (2006), Open Innovation: Research a New Paradigm, Oxford University Press.

[ii] Kevin J. Boudreau and Karim R. Lakhani (April 2013) “Using the Crowd as an Innovative Partner, Harvard Business Review. Found at https://hbr.org/2013/04/using-the-crowd-as-an-innovation-partner/

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