Challenges in Implementing Open Innovation

Published on 01 Oct, 2021

Today, every organization seeks new ideas to innovate and develop the next best product. However, at times, companies may not be able to get access to the best ideas in-house. This is where open innovation comes into play. Although this concept is being adopted and implemented on a wide scale, organizations face certain challenges in incorporating it. If companies can overcome these challenges, they can enjoy the many advantages of open innovation.

Corporates and organizations are becoming cognizant of the vast pool of knowledge and ideas that exists beyond their walls. To tap this repository, they are now adopting “open innovation.” This concept is highly beneficial to organizations as it allows the fusion of internal and external ideas and helps integrate paths, thus enabling the growth of new technologies and concepts.

Open innovation encourages not only the inflow of ideas but also the outflow of underutilized thoughts known as outbound open innovations. The ideas flowing in must be in line with the company’s long-term objective and business model and contribute to its growth. Therefore, these need to be filtered and only the most appropriate are chosen for further development.

There are various ways to implement open innovations, such as idea competition, collaboration with other companies, involving customers in designing, crowdsourcing, and using innovation intermediaries.

However, open innovation comes with its own set of challenges:

  • Strategic challenges

    • Unclear goals – Unless the organization has a clear end objective to be achieved through open innovation, implementing it is futile. The objective could be to attract relevant talent, create disruptive technologies within the industry, or improve the current offerings. A research firm can help an organization understand its needs and clarify the main goals.
    • Right partners – Undertaking open innovation proves profitable only if the organization can connect with the right partners. Whether it is the existing networks or completely new external sources, their objective should be in tandem with the organizations to make the collaborative efforts successful.
  • Operational challenges

    • Developing ideas – Open innovation can lead to an influx of several new ideas and thought processes. To be effective, the organization must prioritize ideas, assign responsibilities, ensure optimal utilization of resources, and create plans for concepts not being used right away.
    • Third-party opinion – The open innovation process consists of scouting, idea evaluation, and finally, financial valuation. Currently, most organizations only outsource the scouting process. However, it is ideal to outsource all the three phases to a third-party expert such as a research firm to eliminate prejudice or bias in any of the processes.
    • Effective process – The organization must ensure a streamlined process to implement open innovation. A dedicated team should identify the right partners, liaison with them, and benchmark the ideas. The process should support the overall strategy and long-term plans of the organization and be communicated clearly to all stakeholders.
  • Cultural challenges

    • Cultural values – An organization should encourage a culture conducive to open innovation. It should develop clear communication lines, commitment for projects, and welcoming attitude toward change.
    • Rewards and recognition – The deserving candidates in an open innovation platform must be awarded. At times, only recognition may act as the motivating factor and the reward need not be monetary.
  • Legal challenges

    • Terms and conditions - Open innovation projects must have clearly defined terms and conditions to eliminate any uncertainty. It should identify how ideas are handled and whose property the ideas are after they have been submitted.
    • Intellectual Property Rights (IPR) – It is essential for an organization to take the necessary legal steps and file the required patents, trademarks, and copyrights as required in the name of the inventor to be free of potential lawsuits in the future.

Open innovation is a remarkable platform to access diverse sources of new perspectives, ideas, and thought processes. It increases the chances of finding a truly unique and innovative idea. The platform is becoming increasing popular across all sizes of organization. To develop a successful open innovation business model, organizations must overcome the strategic, operational, legal, and cultural challenges faced in its adoption.