The Dark Side of Open Innovation
What are the most significant negative side effects of open innovation? A BusinessWeek editor made me ponder on this and I must admit I have some difficulties finding many negative side effects.
One reason is that I am a very positive advocate of open innovation. This makes it harder to see the bigger picture including the negative issues related to open innovation. However, I try to stay open minded and I do have a few negative things in mind.
One thing is that the level of complexity in the innovation process will increase due to the many stakeholders. How will this affect the innovation process as well as the organizational setup?
Another thing is that many executives will have trouble developing a clear strategy resulting in employees that do not fully understand what is expected from them.
This leads to frustration and a prolonged period of frustration can hamper organizational effectiveness and even result in the flight of smart and creative people.
No doubt, there are other negative side effects. What can you add?
First, I suggest in this article, be clear with the concept "open innovation".
Second, I think this is a good question, I never have thought about the "dark side" of innovation. I see the innovation process as a wrong process improvement (having an approaching into the process).
May be, some people can think in the risk as a "dark side" of innovation, but, there are too many methodologies and best practices to work with the risk.
Personally, I think, innovation is a way to work with mistakes to improve anything. Of course, you will find some barriers to get a success implementing.
Ing. Raúl Gtez.
raul_gutierrez_cruz@hotmail.com
Master in Innovation and business development
I think that one definite threat is that you can become too reliant on ideas coming from outside and lose your ability to generate good ideas internally. This is particularly an issue if management looks at open innovation as a way to reduce innovation costs.
Before we will talk about “dark side” of Open Innovation, it will be good to highlight the “dark side” of innovation itself. Today we have ratio 3000 ideas to 1 commertioal success. How the Open Innovation influence on this?
I second Raúl Gutiérrez suggestion to be clear with the use of "Open Innovation". Many initiatives claim Open Innovation, but really remain a closed effort by a group with a narrow set of interests. The closed group justifies the boundary for economic reasons, but long term economics favors the truly open innovation process, because profits from leveraging ideas with external/open input far outweighs the potential economic burden.
The risk of becoming too reliant on external ideas through Open Innovation is not really an Open Innovation issue. By choosing closed innovation, a company is at risk if it relies on solutions generated entirely within its resources. By choosing truly Open Innovation, the risk is limited because the innovative solution is available to all, even if they do not materially participate in the open innovation initiative.
Disappointment felt by potential contributors, colleagues, and consumers that are barred from the innovative process could be considered a negative aspect of falsely labeling a closed innovation initiative as "Open Innovation". The disappointed may also assist competition or help evolve the competition..
In my view, it would depend on the question of exactly what is open about innovation?
E.g
1) If it is in the way we source new technologies, external sourcing could leave firms open to rapid retaliation from competitors who would have access to the same technology sources. In the same line, co-creation of new technologies may present a source of risk for competing players, unless the collaboration is carefully managed.
2) If it is in the way we source finance, the dark side would pertain to the types of ideas being financed. Different ideas would need different funding mechanisms.
3) If it is in the way we source new ideas, I believe that internal and external ideas should go through the same screening processes, therefore allowing the best ideas whether internally or externally sourced, to emerge.
Loss of total control of technology in some scenarios but not all. Impacts value and investment.
Dilution of proprietary position on technology so loss of technological independence. Can be mitigated if you go for control OI i.e. exclusivity on sourcing external solutions.
Loss of technological identity. Brand impact.
More complexity in the management of innovation.
Lack of standards in OI. We all know how closed innovation works and what is expected but the complexity of for example the legal frameworks for OI are daunting and a cost.
Greater uncertainty can be higher risk. Technology solution provider is external and if they go bust or are acquired could be a problem.
If everyone goes heavily into OI who is going to do the innovating (related to Tim's comment)?
We play on the edges of organizational innovation and collaboration by using a series of illustrations to generate issues and opportunities. Basically, we would start by showing a cartoon of a wooden wagon being pulled by a guy with a rope and being pushed from behind by people. The wagon rolls on wooden Square Wheels®. The cargo of the wagon are round rubber tires.
The session can be nuanced in different direction but the basic idea is to show this "inkblot" and allow people to consider what it might mean. Different people will frame the illustration with their unique perspectives and thinking, with some going along issues of trust and leadership while others look more at processes and procedures. There is most definitely an issue of motivation and engagement in how this metaphor would actually work.
Relating to the "dark side" aspect of things, we can often generate many dozens of ideas on themes of Round Wheels, as well as those anchored to "What things work but could be improved." If there is no existing process for sorting and managing ideas, it could be a huge mess, in that different people think that one issue is "more wrong" than another or that their own idea is better than other people's ideas.
If the process feels biased, people can dissociate and become frustrated, as others in this thread have noted. If there are existing cultural issues of competition and inter-departmental conflict, some of these ideas can become territorial or imposed on others. People do not generally react too well to changes pushed on them, especially if they feel that things are working okay (even though things are thumping and bumping along).
So much of this can be framed up around improving engagement and collaboration and by building better teamwork among the workplace and, most especially, inter-departmentally. It is no accident that "inter-departmental collaboration" is an oxymoron. It is easy to build accidental adversaries in other departments over time, especially during periods of innovation.
All of this stuff can represent a dark side. On the other hand, what most organizations really need is "continuous continuous improvement" to improve products, services and profitability.
We share some simple approaches to getting things done at http://www.squarewheels.com and at http://www.performancemanagementcompany.com
Remember, "Nobody Ever Washes a Rental Car." We need to do more to keep people engaged and motivated in the workplace.
Scott
I am currently writing an white paper on the downsides and potential issue of implementing open innovation.
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