Implement Open Innovation Strategy: Focus on Input.

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It’s about time to take the next step in Open Innovation theory and practice. Too long we have only been focusing on certain ‘utopian’ output that Open Innovation should bring: shorten innovation cycles, involve customers, out-of-the-box thinking (or as Prahalad would call it: challenging the ‘dominant logic’), increase customer loyalty, access to exclusive knowledge and creativity, and create competitive advantage by opening-up the organization (among others). All about output without questioning the input that is preliminary to this output; it’s time to develop concrete strategies on how to implement organization’s Open Innovation ambitions in a sustainable way.

Since Henry Chesbrough introduced Open Innovation to the greater public in 2003, both science and business investigated extensively in the subject of Open Innovation. Great potentials have been identified, especially due to the ability to innovate more (effectively) while actively integrating marketing targets at the same time. Open Innovation has hyping potential because Open Innovation activities serve the organization in several ways: (1) it leads to new innovations, (2) it represents the company and its proposition to the outside world, (3) it empowers internal resources, and (4) it fulfills the increasing need of influence consumers have on the products and services their paying for.

Scientists and thought leaders studied the opportunities of Open Innovation in detail. By now we know exactly what kind of Open Innovation should be most effective in certain markets, we know which parties to involve while ‘doing’ Open Innovation, and how to stimulate them. We even developed toolkits (Von Hippel) and strategies (Chesbrough & Appleyard; Ulrich & Lichtentaler) on Open Innovation execution. Further, research identified barriers to adopt Open Innovation, like (e.g.) intellectual property, corporate influence, business model, and culture (e.g. Chesbrough & Appleyard; Munsch; Read & Robertson), and more specific the well-known ‘not-invented-here-syndrome’ has been subject of discussion (Van de Vrande et al; Katz & Allen).

Research even suggests ways to deal with those barriers, but the great lack in current research is a practical toolbox that enables organizations to implement their Open Innovation ambitions in a sustainable way, taking these barriers into account. It’s exactly the ‘opening-up the organization’-part that’s underestimated in current theories. Open Innovation research to date is focused on how to organize the execution of Open Innovation, without questioning requirements an organization has to meet to execute Open Innovation effectively by itself.

Without Input No Output

Research keeps focusing on Open Innovation successes and analyses success factors instead of failure factors, which seems to be a false start! As if success can be guaranteed in a dynamic environment…

We shouldn’t only be analyzing output of some (lucky? temporary?) successes, while the successes are coming from a few pioneering organizations and lots of other initiatives are failing (Ulrich & Lichtentaler). Rather focus on what environmental characteristics must be met in order to decrease the chance of failure. There’s a need to learn more on how to effectively manage Open Innovation (Haverbeke; Van de Vrande et al.; Chesbrough) and the organizational needs that are essential to make sustainable implementation of Open Innovation possible.

From this moment, research must start focus on input. Without the essential knowledge about the needed input it’s not relevant to know how to deal with the output. Which internal and external barriers are organizations really dealing with in their aim to make effective use of Open Innovation; and how to deal (concrete) with these barriers? Input is needed to achieve a predefined output. Without input, no output!

Impact of Open Innovation on the Organization

Executing Open Innovation purely based on output is like starting just another marketing campaign, only this time with an innovation twist. Unfortunately that’s exactly what’s happening at the moment: stand-alone Open Innovation projects, without mandate, without clear corporate vision and without a well defined (corporate) strategy. That seems to be the reason why there are so many Open Innovation failures: ‘campaigns’ hardly pay attention to the impact of Open Innovation on the organization. These campaigns are simply not intended to involve organizational impact and don’t have the budget and mandate to do it either.

Looking at the input side, Open Innovation has significant impact on the internal organization. Imagine what Open Innovation means to:

1. involved people (employees, clients, suppliers, other stakeholders) in terms of new ways of working, incentives, fading distinction between work and (social) networks;
2. operations ((e-)processes and (e-)infrastructure) in terms of (e.g.) web access, communities, facilitation of knowledge and creativity sharing;
3. policy (written and unwritten rules) regarding (e.g.) intellectual property, privacy, outside communication; and
4. culture (e.g. openness, learning, networking) to create the right (and safe) atmosphere.

And all of them with impact on both inside and outside the organization. As a result, effective use of Open Innovation has a huge impact on an organization’s business model, since all underlying elements of the business model have to deal with the impact of Open Innovation and so must be redefined in terms of Open Innovation.

Manage impact

The above means that effective implementation of Open Innovation ambitions implies an organizational change from a certain state of ‘closed’ to a predefined state of ‘open’. Implementation of Open Innovation results in a change process involving people, operations, policy and culture. As a result, implementing Open Innovation requires professional change management skills, extensive preparations and effective leadership in order to be sustainable. During the change process the organization must be guided effectively through all barriers regarding the transformation from ‘close’ to ‘open’. The organization and its environment have to be informed about the new goals, have to gain experience with the new ways of working in a safe environment, and have to participate freely to finally become open through their veins.

This requires a concrete plan of action and true leadership with a clear vision. Everybody must know where the organization is heading. Leadership styles that adjust to the developing situation, from transactional in the starting phase to transformational during the change process (Bass). The leader has to involve all parties, guide them at the start and empower them during the change process in order open-up themselves in the end.

To solve these complex structures at the input side of Open Innovation current theories unfortunately won’t help. Existing models and strategies are far too abstract and output focused. In my next expert blog at Openinnovators.net I will introduce a new paradigm which enables organizations to implement Open Innovation ambitions in a sustainable way. A concrete implementation strategy existing of a clear plan of action, concrete goals, roles and leadership during the change process, and extensively paying attention to the essential input needed to bring the organization to the desired output: effective use of Open Innovation.

Rob Veldt is researcher, consultant and public speaker on Open Innovation implementation. Serial entrepreneur and investor; owner and founder of www.ideavents.com, www.ThinkTankThursday.com and www.Cash4idea.com, among others. Follow Rob at Twitter: @RobVeldt or email him at rob.veldt@ideavents.com.