Posted in Let’s face it. Executives are under a lot of pressure to follow the latest management trends.
Columbia business school professor Eric Abrahamson, who has written about the diffusion of managerial innovations, calls this the “norm of progressivity”: the expectation that you either follow the latest management innovations — even if they later prove misguided — or suffer a diminished reputation among your peers, the press, and your shareholders.
Thus it’s little surprise that nearly every company now has some sort of experiment or program relating to open innovation. Open innovation means reaching out to take advantage of talent beyond the firm (or responding to such outreach opportunities). It’s a terrific concept, borne out by several oft-repeated examples such as InnoCentive and GoldCorp.
But are companies, with all their good intentions, getting the most from open innovation? We suspect that the initial successes, encouraging as they are, represent only the beginning. What if open innovation were defined more broadly and more ambitiously? Could even greater value be realized? If so, what would the next wave of open innovation look like?
If you look at most of the widely cited examples of successful open innovation, the model in use poses a question to a group of “solvers” who then provide an answer. You might call this the transactional model of open innovation — involving only narrowly defined, short-term transactions. Problem posted, solution offered, payment made, transaction completed, all parties move on.
This approach has two limitations. First, it misses the opportunity to build long-term trust-based relationships among participants. Second, it does not encourage participants to build cumulatively upon the contributions of others.
Why do relationships matter more than mere transactions? Transactions work when explicit knowledge is involved — problems must be precisely framed and solutions must be equally precisely articulated. Of course, this works for a certain class of problems but some of the most challenging problems cannot be precisely framed — that is part of the problem. On the other side, really challenging problems require tapping into the tacit knowledge possessed by more than one individual in order to create new knowledge and generate a workable solution.
Tacit knowledge is the “know-how” that is hard to express or transfer and therefore much more sticky than explicit knowledge. Sharing this kind of knowledge typically requires long-term, trust-based relationships that can support the inevitable fumbling that occurs as we try to express and share tacit knowledge. Effective sharing of tacit knowledge also requires shared practices — the participants need to engage in real work to address challenging performance needs, rather than simply engaging in casual conversations.
We’re moving from a world where value is created and captured in transactions to one where value resides in large networks of long-term relationships that provide the rails for much richer “knowledge flows.” For open innovation to realize its full potential, it will have to navigate a similar course from a narrow focus on transactions. It will have to provide much richer support of long-term, trust-based relationships coalescing around joint initiatives to address real problems or opportunities.
This evolution is beginning to occur spontaneously. One of the most prominent open innovation platforms discovered to its surprise that many of its most prolific Solvers were in fact supported by teams that had come together offline. These teams had been organized to bring together a more diverse set of skills and tacit knowledge that would be helpful in solving problems posted on the site. The company running this platform is now hard at work developing mechanisms to encourage teams to organize and creating collaborative workspaces that can help these teams to work together more effectively.
SAP, another open innovation pioneer had a similar experience. In this case, the company had created the platform to help software developers find help in addressing specific problems they were encountering in their development projects. Software developers began to establish reputations as effective problem-solvers and they started to seek each other out and form teams to engage in collaborative development efforts.
Of course, shifting from a narrow transaction model to one that embraces both long-term relationships and cumulative contributions is not easy. It requires more thoughtful governance mechanisms, more robust tools and platforms, and more sophisticated incentive systems. These can and will evolve over time as open innovation pioneers gain more experience with these initiatives.
But the key is to challenge ourselves to go beyond the transaction models that are just the simplest and earliest stage of open innovation. Far greater rewards are likely to accrue to those who realize that relationships and cumulative contributions dramatically accelerate the ability to tackle challenging problems. Properly conceived, open innovation platforms can evolve into the creation spaces that we discussed earlier and unleash the collaboration curves that drive increasing returns.
Does your company have early experience with open innovation platforms? What are the obstacles that prevent companies from being more aggressive in their open innovation initiatives? What has been useful in overcoming these obstacles? Are the executives in your company moving beyond the first stage of open innovation or are they stuck in a transactional model?
Post written by: The Big Shift @ HBP
UXfeeder (UX Feeder)
Boldsaikhan_dr (Boldsaikhan Bundan)
Tranchier (Tranchier)
Newhillon (Newhillon.com)
