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The Side Effects of Open Innovation

by Stefan Lindegaard
March 30, 20123/30/12 8 Comments

Open innovation will not only lead to new ways of making innovation happen. Innovation leaders and their executives will also experience side effects. I think most of these effects will be positive, but some will be mixed or perhaps even negative.

As innovation leaders and their executives implement open innovation practices, they can just as well start figuring out how to deal with side effects of open innovation such as described below.

• Open innovation is very much about managing change. If a company can handle the change process related to implementing open innovation, then they have learned valuable lessons that can be used in change management situations. In the current and future business climate, I think everyone should appreciate working in an organization that is agile and prepared for changes.

• Often, the biggest enemy of innovation is the company itself as the company begin to focus more on its needs than the needs of the market. When you begin to innovate with partners, you will see that these partners either focus on their own needs – and then innovation will definitely fail – or you will see that they come together and funnel their resources towards a market need. If the latter happens, then you have a great chance to succeed with innovation. Pressure from external partners can shift awareness from internal needs to market needs and this move can be helpful beyond the innovation process.
• Open innovation can bring along new organizational structures. As open innovation becomes the way to innovate, the functional/divisional or matrix organizational structures as we know today will change – or perhaps even break down. I am not sure what will be next…

• Open innovation will be one of the key drivers in bringing in new types of communication tools into the organization. Think LinkedIn, Twitter and Facebook. Once the initial resistance has been defeated, this can benefit many business functions.

• Customers are one of the first places to look for external input. Although, there are dangers involved in listening to customers when it comes to innovation, the increased focus on customers can lead to better relationships with them. This can change the role of sales and marketing units as they need to get even more involved in innovation.

• At a recent open innovation conference, Cisco said that they are trying to move from a culture of competition to a culture of shared goals. This was by large driven by a desire to make innovation happen with external partners. There is much talk on changing the not-invented-here culture, but perhaps open innovation will drive even more corporate culture change.

• As you work with external partners, you are exposed to other ways of getting things done. You bring diversed thinking into the organization. This can make you consider whether your current practices are good enough, whether you have to adjust these or perhaps even develop new next practices for your organization. An example: You get new perspectives on collaboration. Perhaps this can inspire to better interaction and collaboration between business units.

• Overall creativity as well as overall complexity increase with open innovation. The increased number of actors provides new ways for people to be creative. This can also increase the level of complexity, which is also driven by fact that the organization is no longer itself in control.

Let me know what you think of this and please share your own views.

Currently there are "8 comments" on this Article:

  1. Hi Stefan

    Nice post on the positive side effects of Open Innovation (Culture Change especially is a big one in my books – but whether positive or negative very much depends on the execution and success of the program) , but I'd be very interested to hear about what you would consider the negative effects too.


    http://www.completeinnovator.com http://twitter.com/bpluskowski

  2. Stefan Lindegaard says:

    Hi Boris,

    Actually, I think several of the effects mentioned could be positive as well as negative.

    Perhaps a new organizational structure might not necessarily be a good thing. Some times, companies do strange things without asking the proper why questions.

    An overall increase of complexity also sounds as a negative thing to me.

    However, your comments inspired me to think more about the negative effects of open innovation and I will hopefully share some thoughts on this.

    It would also be great if others could chip in on this.


  3. raul lansink says:

    Hi Stefan,

    I agree with the abovementioned side effects. In our experience, we daily see the clash between management aspirations and the ingrained reflexes of an organization shielding itself from too much complexity and ambiguity. Being overconfident, companies often fail to comprehend that opening up requires more then just soliciting ideas from outside or inside.

    The point of ambiguity is very important. Once companies start loosening up their watertight protocols, the inner workforce becomes disoriented, as they often lack the routine to charter their own course of action. Selforganization and collaboration are easily claimed, yet hard to realize in a traditional corporate culture. To make matters worse, middle management often conveys signals that run counter to the intention of higher management.

    Ambiguity cannot be ruled out in an open ecosystem. People need to learn how to deal with it and be trusted to cope with it in an effective way. Arbitrage is also essential. I have adressed this point in my blog http://www.communitize.net.


  4. Stefan and Boris, one often cited negative impact of Open Innovation is that it demotivates internal R&D staff, who feel sidelined and insulted by the need to go outside. My take on this is that, if OI doesn't precipitate the change, then the insular and internally focused culture will allow a competitor to bring it down through erosion of competitive position. Companies need the right innovation culture, focusing on output and business growth, and less on patents and R&D spend.

    Another potential negative is that it can take longer. This is in the early stages, where new approaches are being implemented, contracts are being negotiated etc. What is often missed is the positive, the time it would have taken if it had been done completely internally.

    One negative may be that OI could be over-hyped and thus lose credibility in the company. That's why it's important to have an "Innovation meritocracy" where each innovation opportunity is judged primarily on its merits, not whether its internal or external. In those circumstances I think OI will thrive, as will internal innovation.


  5. jameslramsay says:


    I like the idea of Sales and Marketing being more involved in Innovation – these functions are very transactional and all about the execution. Short term focused because that is what the organisation asks of them. if we ask different things of them they are likely to deliver.

    I have a lot of experience of logging feature requests as a sales person but knowing they wont be progressed – selling back internally means going around these mechanisms – forming coalitions and tribes to get some influence over strategy – but always having to manipulate the system to get it to listen to what customers are asking for. A good skill to learn but it could be better handled – more proactive and trusting/open.

    The comment on Ciscos culture is interesting – Im a fan of Cameron & Quinns culture work – its simple but helps make sense of these choices companies make for themselves. The shift in culture for Cisco is a recognition that they cannot (and have not) grown so rapidly recently and they search for collective meaning in what they are *now* about. Cisco attended the Social Enterprise event in Oxford this week – http://www.OxfordJam.org.uk they were in a learning mode not selling tin – is it authentic?

    As we know we need to unlearn as mush behaviour and we need to learn



  6. Kevin,

    Glad you brought up the point about internal R&D being demotivated. I think that what needs to happen within the culture is to change the requirement of R&D from "developing" the solution to "presenting" or even "sourcing" the solution. They can present something built elsewhere, developed externally with partners or even just received from the outside.

    What they need to be recognized and rewarded for making the connections.

    Often they can develop the solution internally or match an existing solution with a current situation, but it doesn't have to be.


  7. Mukumo Amadhila says:

    What is Innovation? Other then Conscientious Intervention…
    Closed or Open leads to varying degrees of Conscientiousness. I would think the more open, the more it is 'C': all rounded, fully involved, taking a holistic approach.

    Its great to see that it is getting more attention now. I believe it has always been there in the 'shadows' so to say and where the 'norm' has started showing its short comings innovation proved to stand better against the natural 'ebbs and flows' of business. Slow it might be the more it is open, but you get a fuller solution that allows itself to be improved as it does not claim supremacy.

    The side effects of OI I think are quite neutral. So long as they are given up to the inevitability of change. The 'blocks, pins and needles' that the norm thrives on I believe problematises opportunities and cancels out channels of innovative stimuli. eg. An R&D department that solely depends on internal ideation & improvements will likely miss market demand if clientele liaison is not part of their 'process of R&D'. Test tube R&D…

    The vastness of possibility is daunting to me, one can almost be paralised by it. If this parasitic competition can be over thrown, then collective innovation, say symbiotic transaction would be the order of the day. I see OI as the current level gateway towards there. And it seems as an open ended loop that Innovators have to tighten individually to not get overwhelmed, but in collaborating the partners bring the other edges into play and things grow into a spiral of sorts that all can get to grips with.

    The ambiguity of the subject is really something else. So in that sense I wonder how it is possible to Develop and Master effective "Ambiguity Tools"?