More and more technology companies are adopting open innovation initiatives. This is largely due to the realization of the benefits of working with outside experts to gain external perspectives and insights. This situation wherein an organization thinks beyond its internal resources for innovation and collaborates with external resources is known as open innovation. Open innovation is an opportunity for the company to utilize those external ideas and use them to develop innovative products and services. It may seem simple, but there is more to the collaboration process than just brainstorming.
Open innovation is not easy, but the benefits are well worth the effort. Large technology organizations can establish a competitive advantage by partnering with promising startups. The startups benefit from this partnership by gaining access to venture capital resources, networking opportunities and the opportunity to reach a broader customer base, typically tied to a large company.
Larger companies that typically change at a glacial pace can learn from their small yet evolving partners. Startup founders who are new to an industry can form valuable relationships and gain mentors with seasoned veterans.
Technology organizations, large and small, should be prepared to make some changes in order to benefit from an open innovation environment. Indoctrinating an attitude of information sharing can be difficult in companies that have historically kept their intellectual property under wraps, and in many companies, even developing a collaborative environment across various departments can be an uphill battle.
Breaking down barriers and overcoming this predisposition toward secrets is the only way to cultivate a collaborative environment. Ultimately, this effort begins in the boardroom. Once a large company has executive buy-in, the idea will begin to trickle from the top down, and over time it will take hold.
The following steps will serve as important guidelines to tackle obstacles and sustain this synergy.
Create Ecosystems Around Intellectual Property
It is common for both parties to feel the need to protect their intellectual property, but that closed mindset defeats the purpose of an open innovation initiative. To overcome this obstacle, it is critical to emphasize the greater value and benefits that come from an open innovation ecosystem. All parties must realize that sharing their intellectual property into the ecosystem can accelerate the pace of innovation.
Several companies have demonstrated the value of this approach. Tesla, for instance, made the decision to open source its patents a few years ago, recognizing that the company couldn’t make electric cars fast enough to slow the global carbon crisis. Elon Musk also pointed out that patents represented a small protection indeed against a determined competitor, and he thought the decision to open source would strengthen the company’s position.
Assess Your Partners
Adding a collaborator to your open network should not be a decision that is made lightly. The organization should be patient and cautious when selecting a potential partner. Weigh each company’s skills and capabilities and consider any disadvantages as well. Just because a partner is not perfect does not mean it is not the best choice, but knowing its weaknesses will help you address them before they become a problem.
An organization should be assessing several prospective partners. Establish processes that ensure each potential collaborator is examined fairly, but critically so that the end goal to identify the companies that will not be a good fit is achieved. This practice is not just for your benefit alone—an unproductive collaboration can incur in heavy costs and wasted time to all parties involved.
Adjust Business Models as Necessary
Business models are designed to maximize benefits and minimize risks, but they should allow for some flexibility. In the real world, changes arise frequently, and business models must adapt. For instance, many partnerships established around open innovation initially began between two companies. Over time, it is a reasonable expectation to anticipate other players be added to the mix.
A multi-dimensional ecosystem demands a different business model than a version that is two-dimensional because it may involve a different set of risks. It also has a more complex intellectual property pipeline where contributions and evolutions are more difficult to track and manage. As long as each partner is prepared to adjust business models, these changes can be effectively addressed.
Foster a Collaborative Culture
For the vast majority of companies, open innovation is not an organic process. Even within an organization, some departments tend to be closed off about their projects or even sharing information outside the company. An attitude of open innovation comes from internal change, and people are naturally resistant to change. To encourage a culture-shift, start from the top down.
Support from leadership is critical for developing a culture that is compatible with open innovation. It is also important to identify the soft skills that a team needs to accomplish its goals. Open innovation itself is a skill that can be taught—problems arise when company executives expect it to be a trait that employees are inherently born with.
There are numerous benefits of open innovation. Technology companies can produce more ideas in a shorter span of time mutually benefiting all businesses involved. There is an opportunity to create markets that did not exist prior to the development of the initiative.
Of course, obstacles are also inevitable and more so because sharing valuable intellectual property outside the confines of a research and development department is always looked down upon. People, and business models, are naturally resistant to the significant change that comes with the open innovation approach. Whether a company can overcome these obstacles and see the many advantages is a matter of determination and a desire to adopt company-wide changes so that there is innovation across the organization.