Where Open Innovation Stumbles

Harvard Business Review

When I urge managers in a company to make open innovation part of their innovation strategy, they get it conceptually. They see that a solution coming from outside is more likely to be a dramatic leap versus an incremental one—simply because it came from a mind not narrowed by conventional thinking. They understand that the infusion of fresh ideas can also open their own R&D engineers and technologists to new and different possibilities and cause them to push their thinking further. At a minimum, they agree that better solutions tend to emerge when there are more options to consider in the first place.

A recent project we did for FVA, a branch of the German trade association VDMA for companies that provide drive-train systems and components, bears this out. Every year, FVA conducts an industry-wide technology search to identify new and emerging solutions, and it shares the results as a service to its member companies. Although the search has been productive, members within the FVA leadership circle wanted to see if there was a better search process that would unearth more solutions and potentially create more value. A vice president of the group had been to a presentation on Open Innovation and was intrigued by the concept. And although he seriously doubted it could work in a field as specialized as drive-train technology, he was willing to find out. FVA commissioned Aachen University to manage a selection process and trial study, and the selection committee found us at NineSigma most suitable to conduct a series of technology searches.

These technology searches took the form of requests for proposals (RFPs) seeking solutions to four different technological needs: 1) durable, non-lubricated gear materials; 2) extra-fine micro particle removal from lubricated mechanisms; 3) translational research in bio-similar particle capture and 4) low-friction hard surfaces. We distributed the RFPs worldwide, within and outside the industry. The results were measured in two ways: How many solutions were submitted by new sources versus known sources? And how many of the solutions submitted were new to the industry versus already familiar to industry engineers?

In all four areas, the new solution providers far outnumbered the known ones. For example, 33 new providers and only 2 known ones addressed the low-friction hard surfaces problem. The new solutions swamped the familiar ones, as well. For example, for the durable, non-lubricated gear materials problem, the search yielded 16 new solutions versus 6 known.

For the kind of manager who believes it's a waste of money to go looking for smart ideas from "the crowd," this is the kind of evidence that challenges the skepticism. Moreover, when we talk to companies about how they should connect with innovators outside their business, we encourage them to solicit ideas both from unrelated AND adjacent industries.

I'm convinced this focus on both unrelated and adjacent industries produces the best yield of viable solutions. At the same time, however, I've come to recognize a danger in the approach. When it comes time to harvest the actual value of an innovation, everything depends on how well the solution has been implemented across all steps of the value chain—and the more ideal a solution appears to be right out of the box, the more its discoverers might be inclined to think value will materialize automatically. In other words, if a solution seems like it isn't too much of a stretch, you might be fooled into thinking it will be simple to put into place and start benefitting from immediately.

Think again. Even the most obviously applicable solution has to clear three big barriers to uptake:

It wasn't invented here.
First, whatever solution your open innovation search yields, it is something that by definition was "not invented here." And just as biological organisms have antibodies whose job it is to combat intruding organisms, every company has human versions of antibodies who make it their business to fend off foreign ideas. Rather than being expressed directly, this usually comes in the form of challenges like, "Do they really understand our issue?" Or: "the technology is close, but not quite developed enough." Or, my personal favorite: "Yes, it's exciting and I think it might actually be more applicable to so and so's program..."

It might not actually work.
Consider, however, that not all the antibodies are acting out of mindless prejudice; some may be reacting reasonably to heightened risk. Before you completely discount their worries, think about whether there might be something to them. Because solutions found in other industries are often more mature, they can look like a convenient shortcut. They're more fully developed, further along the R&D timeline, and often easier to modify for your application. However, even mature solutions should undergo rigorous evaluation and testing. This sounds obvious. The common pitfall, however, is that the company doesn't invest the time and effort into creating and performing the kind of test that will show whether or not the solution will really hold up when it goes into production.
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The change is disruptive.
Even when testing does prove the solution's viability, integrating it won't be painless because the organization will need to adjust its current processes to accommodate it. It is basic change management wisdom that any alteration of work routine is more naturally cursed for the disruption it causes than celebrated for the better outcome it will eventually yield. Managers know this means they must manage expectations and shift mindsets to appreciate the case for change. But again, all this is more likely to be forgotten in the excitement of discovering an already existing solution in an adjacent space.

None of this is insurmountable, of course. It doesn't even require much beyond the usual carrots and sticks that managers use to bring about any kind of change. Engineers and technologists are as eager for fame and reward as anyone and there's nothing like the recognition from above to affect behavior. So recognition should be given equally to people who unearth solutions that succeed in market, whether they attracted them from outside or developed them in-house. (The days of celebrating only the inventor-genius who gets the patent should really be over.) And most everyone responds when they are made more aware of competitive pressures. Open innovation offers the appealing prospect of finding ways to leapfrog over competitors still relying on solutions produced entirely within the industry.

Open innovation is an approach every company should consider. Having more technologies to choose from always increases the chances of finding one that has the potential to not only fit the bill, but truly advance the end-product above and beyond the competition's capabilities. But here's what most people don't understand, or they don't understand soon enough: A plan to switch to any new solution that doesn't include tactics for overcoming internal barriers to adoption is no better than a plan for failure.

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