The Failures of Open Innovation
Many companies set up open innovation initiatives and we are starting to see positive cases that justify these actions. This is great as we can all learn from successful initiatives. However, I believe we can learn even more from failures…
So let us start a discussion here on the failures of open innovation. Why do open innovation initiatives fail? What can we learn from this? Which cases are already public on this?
A few conversation starters:
Companies have difficulties making innovation happen internally. Now they hear about open innovation and think of this as an approach that will make everything better. Not true. If you cannot make innovation happen internally, you will have even more difficulties doing this with external partners. Can you share cases on this issue? How can companies better integrate internal and external contributions?
The supply chain is a great source for open innovation. Boeing and Airbus outsourced massively as they began building new airplanes creating a need for co-creation with their suppliers. It did not work. Why not? Perhaps you also know of other cases on supply-chain driven open innovation that went wrong.
Many companies start off with idea generation platforms hoping that external contributors will contribute with great ideas and/or technologies. Most do not deliver on the expectations as they get more trash than gold. Why do such initiatives fail? How can this be done better?
Open innovation initiatives are often killed by corporate antibodies resisting the changes such openness towards external partners brings along. Can you share cases on this? What can be done to overcome this?
I am really looking forward to your contributions on this : – )
Stefan this is a great topic. I've had lots of experience with your third point, where companies try to start with idea generation platforms. When they fail to deliver on expectations I usually find the same root cause. They start generating new ideas in a random fashion without first taking the time to define, in market terms, the criteria for a successful idea. They then become overwhelmed with a large number of irrelevant ideas, and then resort to choosing the ones that they know can be implemented.
I also agree with your first point, and find that this issue often has similar roots. There is usually no shortage of ideas in a company, the problem is knowing how to discern which ideas are good. Collecting ideas from the outside will not make the root problem go away.
Hello guys,
Open innovation does not fit every organization. One should keep in mind that innovation is always a risky business internally or open space. More often if you do it internally there are great chances that the organization as put a system that manages theses risks. This helps a lot to overcome failure. Our experience shows that to get the full leverage and impact of open innovation it takes a good understanding of the function of innovation (culture, business model, strategic management, etc.). Therefore, before launching the process of innovation an audit based on at least 3 criterias (creation, diffusion, transformation) should take place to understand where the risks of failure lie and therefore the means and tools necessary to overcome them.
Innovation is a complex matter for any organization and needs to be managed appropriately. It remains in todays economy a powerful tool to help organizations get over the hill and learn more rapidly instead of waiting without appropriate knowledge and support to compete in the market place.
In any case fast learning and adaption are key elements to success moving innovationfoward if you do it internally or open space.
François
Some reasons for open innovation 'failures' are
- management – trying to 'manage' the process vs. 'moderating' the process – while well-intended and rationalized, many open innovation ventures are not done on a level playing field – if it's a large company starting it, they tend to be condescending or paternalistic instead of viewing the other 'innovators' as equals and this sets a very strong tone
- trust – somewhat related to above, but there is a fear of losing control over Intellectual Property (and hence money), and I've even had clients mention losing people – that the open innovation forum becomes a means of recruiting away their best talent (which in and of itself is a symptom of bigger issues)
There are obviously others. One way, perhaps, to take 'baby' steps before going into an external open innovation approach is to do it internally. This is good for larger corporations with many business units or subsidiaries. They can try an 'internal' open innovation program which may help with trust and other issues – in some cases, other divisions or units are more threatening than the outside. Just a thought – i've seen it work a little, hasn't played out long enough to know if it will work on a broad basis.
Stefan this is a great topic!
This is a great topic! In Brazil we are having some experiences with enterprises looking forward to implement open innovation strategies. What we do often see is:
1. Lack of criterias for selection, implementing and defining what the enterprise wants from outside world. What do we want to harvest? Which kind of ideas or projects? In which stage of development? We want ideas? Projects? Patents? Small Businesses?
2. Lack of support strategies and structures for internal development of outside generated ideas, project or initiatives. Once defined what do we want, how can we collect the value? Is there any budget set for buying outside technologies, competences, know-how or enterprises? Are we prepared to internalize something? Or how we can help to develop something externally and capture value with it?
3. Short-term results expectations. If we are dealing with “ideas”, there is a long journey between them and a final product. Do we know how to deal with this? Our bonuses are linked, also, to long term results?
4. No portfolio balance vision. Enterprises practicing open innovation must see their portfolio of projects in different perspectives. Ideas, short- or long-term projects, M&A, and many other kinds of initiatives need to be seen and evaluated by different perspectives. Do we have different ways of evaluating such different things?
Well, besides these 4, there’s a lot of other things we need to look up before starting a campaign for harvesting outside ideas. What do you guys think?
Good set of questions Stefan. I've run across a few organisations that have the problem you outline with idea generation. In general, it seems like they have problems in getting value out of the ideas because they lack a link between idea generation & strategy. There is no clearly articulated way to assess ideas relative to where they want to go, which makes it impossible then to judge which ideas are worthwhile.
"Open innovation initiatives are often killed by corporate antibodies resisting the changes such openness towards external partners brings along."
As a platform doing OI in form of problem-solving competitions for companies, hypios.com indeed faces this difficulty. Here's what we believe is essential as seen from our "outside of the company perspective"
0. Identify a company that has enough internal resources for formalization and implementation of an OI challenge
1. Identify someone who already believes in OI within the company
2. Organize a meeting with him/her and make sure (s)he invites other people from his/her department (or on whatever level it is that problems that can be solved through OI occur) to explain what you offer. Explain why it's not a menace for internal R&D resources. Try to identify several test cases for OI with the people at the meeting.
3. Get the test problems solved
4. Build on the success story
5. help the company's internal communications explain your OI initiative and write the success story.
Great comments – highly appreciated…
As companies begin the open innovation process, have them understand how to define their criteria for success and what other benefits they can gather from engaging with collaborators. Encourage them to analyze and capitalize upon each opportunity they foresee, and each solution provider they work with, etc. Understanding and building upon past successes will help them to reduce risks while providing intelligence, connections and resources to ensure a continuous flow of new and successful innovations.
What an interesting thread. I am mining all the info I can on OI successes and failures, so thank you all for the food for thought.
A couple of comments from the company persepctive. I have actually found that external collaborative innvoation can encourage a more open approach internally, rather than necessarily vice versa. I guess which way round this falls depends on company culture.
Starting with small specific 'open' projects – rather than going straight to a more generic 'platform' – can demonstrate the potential of the approach, and provides the 'green light' for exploring scale up.
Look forward enjoying more discussion on these pages!
Good topic lead in and interesting comments. Playing off what some of the other commentors mentioned, it seems like the first question is what kind of innovation are you trying to make happen?
If you are trying to do more incremental or product innovation, it seems like it is hard to find people on the outside that will understand your products, your culture and your markets well enough to really provide great ideas unless they are already competitors. So you end up getting a lot of the same ideas for new features or line extensions that don't add a lot of value. We have been most successful getting our internal people to look at other industries and other products for ideas and approaches that we can adapt to our products and markets. I think that is a form of open innovation (looking out from within), but others might not agree. I have not seen a lot of internal resistance to ideas that come in this way.
If you are trying to do business model innovation or are trying to look for the "blue ocean" opportunities, I think outside partners have a lot more to offer. It seems to me that it is hard for the average person inside a company to "forget" enough about the company does today to do a good job of business model innovation or new/adjacent market creation without more direct help from the outside (looking in from outside). There are obviously exceptions to that statement, but on average that has been my experience. I think this is where corporate anitbodies get in the way the most. I am still trying to figure out how to get better at this.
I am trying to facilitate this type of process on two fronts right now: partnerships with "sister" companies that are part of our parent company, and partnerships with outside companies. I am having some success with the "sister" companies, less with the outside companies. My approach with the "sister" companies is to nurture the concepts under the radar long enough to make them compelling enough for the right people to get excited. Some parts of the executive team is open to partnering with "sister" companies, other parts are more reluctant. My approach is to win over the ones that are open to it to reach critical mass. I think that will lay the ground work for working with outside companies next. I am just starting to incubate some of the outside company opportunities, and I believe it will be a natural evolution from partnering with "sister" companies to partnering with thrid parties. At least that is my theory.
@Mark. I like your observations on the kind of innovation that works best with external partners. There is not much potential in and thus reason to engage with open innovation when it comes to incremental goals. Companies should also be able to do this themselves.
@mark and Stefan,
I suggest you take a look at this: http://frontendofinnovation.blogspot.com/2009/05/…
General Mills as a good graps on setting up open innovation that works through their 5 steps program. Again open innovation needs to be focused and organized. Failure deals with the understanding of the risks you are taking…and how you manage it…due diligence is of the essence in any type of innovation process…
«To make open innovation a reality, General Mills took a hard look at intellectual property issues. After setting up processes to address them, they got comfortable with the risk vs benefit calculation and moved forward.
General Mills' G-WIN is now an industry model of leveraging partners for open innovation. The company is highly engaged with its supplier partner network, with a very good feel for issues and opportunities. As Jim Collins discussed yesterday, they are a company with a culture of constant choice.»
Is there anybody with insight cases of success while implementing open innovation… this could be very interesting to understand what worked and did not worked in the process!!… and why…
Hi everyone. I would have the same question than François : do you have examples of failures in open innovation and/or co-creation ? I mean those who fail certainly withdraw their engagement platforms from the web and don't communicate around this failure !
I would suggest another reason for failure : the lack of targetting of the contributors. It's like going on facebook and waiting for 'fans' and 'likes' ; it won't work ! I think successful communities like Innocentive or eYeka do have success because their gather the solvers, the creatives. What do you think ?