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L17. Why Now Is the Time for “Open Innovation” - Coggle Diagram
L17. Why Now Is the Time for “Open Innovation”
Leverage two-sided motivation.
As the initial open innovation enthusiasm has settled, companies often realize that they rely on voluntary and active participation of employees and partners to succeed traditional means of command and control have little reach.
Instead companies need to rely on a combination of hard and soft incentives to motivate internal and external collaborators. Companies need to identify and respond to their partners’ true motivation.
For example, our own research on open-source software development has demonstrated a diverse set of motivations among developers. Some developers are motivated to freely share their code because of labor market signaling.
Aligning all of these motivations with what companies wish to achieve takes effort, curiosity and a portion of humbleness.
While this might be easy in the early stages of a collaboration that’s responding to the pandemic, companies should not expect collaboration beyond the pandemic to go as smooth. Instead, it’s worth putting the work in ahead of time to discover and potentially nudge partners’ motivation.
Other developers are driven by strong ethical concerns, vigorously opposing any move to develop software that cannot be inspected, modied, and openly shared.
And some companies are motivated to donate time and resources because it is an effective means to access complementary skills and assets.
Urgency leads transformation.
The initial steps towards open innovation in “normal times” are relatively simple.
For example, hire some consultants, set up an innovation tournament, wait for ideas to come in. The results though are usually quite meager. To fully reap the rewards from open innovation, companies need to recognize the transformational challenge ahead.
These initiatives are often the tip of the iceberg, and successful open innovation often requires operational and structural changes to how business is done. Such changes are difficult for any one employee, team, or even business unit to undertake.
In a time of crisis, the necessary executive focus is suddenly there.
Smart companies seize this opportunity to rethink their innovation infrastructure.
Perhaps our own sector, higher education, could stand as a beacon of hope that open innovation can work on a truly grand scale and that a conservative sector can change.
Looking ahead.
These are promising developments. But to what extent will these observations hold true in the future? As business will one day go back to normal, how many of the altered ways of innovating will stick inside companies? And how will we as a society face other grand challenges, such as global warming, that are no longer looming on the horizon but are already here?
We hope that the world’s response to the novel coronavirus has taught us that a truly shared experience of a common enemy can unlock the speed, strength and creativity needed to address even the greatest challenges.
For managers, an important reflection is to think about what needs to be delivered after the crisis. A big crisis often alters the behavior of customers, employees, and partners.
Don’t waste those experiences by planning for how to get back to the old normal. Plan for a new normal.
Embrace new partners.
A common challenge in open innovation is to take on new partners.
And we know that when it comes to big thorny problems like Covid-19, new partners are necessary to provide complementary skills and perspectives.
The massive scale of the Covid-19 crisis may have alleviated these challenges in at least two ways.
First, top management has assumed a lot of the risk associated with new partners, by sending strong messages that open innovation is the way to go.
When companies across the globe are affected by the same crisis, and many are searching for new ways to conduct business, a combinatorial exercise suggests that there are many better partners available now than a month ago.
A crisis can prompt companies to explore a greater number and even new kinds of partners. Preserving some of that open-minded attitude towards new partners after the crisis can help companies stay on top of innovation.
Second, not only the spread of the virus has grown exponentially but the pool of potential partners as well.
Forget about the IP for the moment.
Earlier research has found that many companies are extremely worried about value “leaking” from collaborations with outsiders.
As a result, they often stick to their knitting and collaborate on a few peripheral tasks, but not on the most important business issues.
For example, if heavy truck maker Scania — a company known for its world-class manufacturing system — sends some of its best manufacturing experts half an hour north to work at Stockholm-based Getinge to ramp up their ventilator production, it risks none of its core technological assets but by contributing to the effort to build medical capacity and combat the virus, hopefully it’s speeding up how quickly it own plant will be back up and running.
These intellectual property concerns are of course real and important, but they risk blocking any open innovation initiative from gaining momentum. However, during the Covid-19 crisis it could be wise to focus more on creating value than capturing value.
For example, we are aware of several chemical companies in Europe and the U.S. that made it practically impossible for their open innovation partners to provide help and advice. How? They wouldn’t reveal what their most critical problems entailed, as that could endanger future patenting. Instead the innovation partnerships slipped into irrelevance.