Top 10 Reasons for Open Innovation Failure
A recent 15inno Twitter Chat made me ponder on the worst and most common mistakes that companies do on open innovation. Here comes a list of my thoughts – still work in progress.
1. Companies do not identify proper business reasons for engaging with open innovation.
2. Companies copy competitor’s initiatives rather than creating their own unique initiatives that match their business reasons for doing open innovation.
3. Companies fail to make their employees, partners and customers understand what open innovation means to the company and they fail to explain the impact of such a new direction to the internal and external stakeholders.
4. The various organizational units – and in particular the operational ones – are not fully aligned with the innovation initiatives making it difficult to execute in full on otherwise well-devised initiatives.
5. Executives fail to understand that how they handle risk and fear of losing control-issues are key to successful open innovation and thus they don’t deal with them head-on.
6. Companies put their “best guys” in charge of open innovation failing to recognize that the “best guys” who do great by doing things as usual are not necessarily what is needed in order to succeed with open innovation. It is a paradigm shift and you often need different perspectives to succeed.
7. Companies often have problems making internal innovation work and they see open innovation as a quick fix with long-term effect. Wrong. You will not succeed with open innovation if you cannot make innovation work internally.
8. Companies focus more on their own gains rather than working towards creating a true win-win scenario.
Hey, that’s only 8… That’s right. I hope you can help identify more reasons for open innovation failure. What can you add?
Stefan,
Just a few additional reasons from my recent research:
9) [PARC] Companies do not share their strategy with their Open Innovation partners [similar to your #1].
10) [John Hagel] Companies create Open Innovation Strategies that are not conducive to long-term trust-based relationships among participants, or to participants building cumulatively upon the contributions of others.
11) [Joel West]Companies do not let their Open Innovation Partners go [out of control]
Arie.
@ariegoldshlager
Another great post Stephan.
My two cents is: Open Innovation needn't be completely open.
In some cases that is relevant like a software company collecting customer feedback totally open can be ok. Other cases call for a hybrid or a completely closed submission process.
It's important to nail how open you need to be based on your industry/company/market/product, rather than just copy another company as you point out.
If you are seeking to 'borrow' anything from the leaders like P&G, etc. It should be the enduring commitment and investment they have made to Open Innovation, putting smart people in place who are empowered to make significant decisions on behalf of the company. It also helps to have someone willing to be a public face for the company to various open innovation constituents.
Matt
@brightidea
I typically like to concentrate on why things succeed rather then fail but that's just me…the eternal optimist.
Most company's business units are misaligned themselves so how do they expect to be able to communicate and collaborate with the outside world?
Secondly action is not taken on suggested ideas….that's the kiss of death if you want folks to be engaged.
Scott
@tshapesolutions.com
Scott, I also try to take the positive approach to business and life. However, it is my experience that we often can learn more from failures than successes. Unfortunately, most companies are just not that good at extracting learning out of their innovation processes and in particular not from their failures.
I will add, two new reasons:
- The open innovation initiatives are launched by specific departments of the organization , normally the R&D
or the technical ones , the rest of the units are not deeply involved in the process that means they will not support the
new potential initiatives as they would have to do.
- Most of the CEO's are most oriented to acomplish with short term projects with expected low risk and
limited benefits than promoting medium- term innovative projects with higher potential benefits but higher risks.
Good article, but might easily just be called, 'what Open Innovation isn't'
In recent work with Fortune 500 companies, academics and NGOs on collaboratories and other open-innovation approaches, it's clear to me that the organizational and societal rewards for open-innovation are so nascent that they do not motivate the resource allocation or commitment necessary to sustain the activity beyond the initial (and often very exciting) labs.
It is critical that corporations and governments begin immediately rewarding 1) learning from others 2) benefiting from getting the best innovations through joint effort and experience 3) massively sharing what is learned that can take a sustainable economy forward.
Changing the way we manage change – that is the opportunity
How do we change the way we manage change – that's the challenge
Why change the way we manage change – perhaps that's the "secret sauce"
Hey Stefan. Great article as usual.
We find that one of the major reasons "open" innovation fails is that the company asking for ideas is more than ready to take ideas, but rarely has a good method for following up and doing anything with the ideas. Typically, most firms don't understand that much "open" innovation is really a version of social media – people expect give and take on their ideas, rather than a "black box" approach. So when the company can't or won't respond, the open innovation program loses credibility.
Two big points to consider: first, do you have the commitment and staffing to commit to an open innovation effort? Second, do you understand how to communicate and interact with the community you are encouraging?