Differences, Similarities in Open Innovation for Small and Large Companies

This is another post in my focus on smaller companies and open innovation. The first post, Why Smaller Companies Should Embrace Open Innovation, generated many comments so check it out if you missed it.

In this post, I argue that small and medium-sized enterprises often have to approach open innovation differently. Here are some key reasons why:

•  Control or contribution? Big corporations can split their open innovation efforts on projects in which they are either are in control or just contribute with IPR or other resources. Smaller companies should only get involved in projects where they are in control or more likely, where their contribution is truly important and valued. The project should also fit the overall strategy of the smaller company.

• Big corporations can drain a smaller company. Signs of this include long planning periods, difficulties in identifying and working with the right people and too much time spent on patent lawyers too early in the process. If these tell-tale signs appear, a smaller company need to evaluate whether this will become a drain of valuable resources that could be better spend elsewhere.

• Smaller companies need to be more active looking around whereas big corporation can focus more on being found and becoming a preferred partner of choice. Companies can look for projects and partners in their own networks (such as customers, suppliers and partners) or in external networks (such as universities, intermediaries and consultants).

On similarities regarding open innovation in big and small entities, I would like to emphasize that…

• Companies of all sizes must decide in advance whether they are ready for open innovation. Any company must ask themselves why open innovation is relevant to them, how it should be defined to their situation, how it links with the overall strategy and how it can be implemented.

All companies must also prepare the organization for a cultural change, develop and implement a networking strategy and train their employees on innovation, stakeholder management and how to work with external partners.

• Open innovation is about communication. Companies must understand the importance of communicating internally as well as externally. New social media tools such as Twitter (search and share information) and LinkedIn (identify the right people, search and share information) must be understood and leveraged.

Please feel free to share your views on this topic.