Why are we still talking about Open Innovation? Isn't it a given?

Articles Innovation

Since 2003, the Open Innovation approach has been widely disseminated and analysed in the scientific and professional world of management, but its application is by no means a given. It requires partnerships that are not obvious and that offer unconventional and sometimes unthinkable knowledge, ideas, skills and information.

Today companies face a truly large number of challenges: pandemics, climate change, energy transition and social inequalities. They are tests of great complexity and to meet them it is necessary to integrate different knowledge, to be able to allow them to communicate and integrate them. Companies have to find ways to read and interpret these new phenomena and this is possible only thanks to contamination between different types of knowledge that are seemingly far from each other. It is necessary to master:

  • Vertical knowledge, to understand specific and often ambiguous phenomena;
  • Transversal knowledge, to find and highlight the bridges between vertical knowledge, generating a synthesis, a model, a project and experimentation.

We live in a globalised, interconnected and dynamic context, where there are no longer exclusive places for the production of knowledge: therefore it is essential to create a dialogue between companies, startups and economic, cultural and social realities. Open Innovation systemically deals with relationships, collaboration and partnerships between external resources concerning the company perimeter. Thanks to these relationships, it promotes the interaction between skills from different sectors and offers new solutions to known problems or multidisciplinary and updated solutions with a view to progress and innovation.

There are obstacles that this paradigm has not yet been able to overcome, though Henry Chesbrough - in his book "The Future of Open Innovation" - completely dedicates the first chapter to the existential paradox: technology is accelerating while the growth of productivity and income slows down or comes to a standstill. Chesbrough states that it is not enough to just create new technologies; we must also think about disseminating them widely and applying them if we want to profit from their economic benefits.

Many companies believe that innovation is a luxury: consequently, at the first economic difficulty, they exclude it, thus losing out in terms of competitiveness. Other companies, on the other hand, allow themselves to be drawn in by the latest technological innovation and suddenly commit to applying it, without first asking themselves, instead, how that technology can be scaled to be profitable.

In general, little attention is paid to the spread and effective use of technology in society. Some examples of this are Artificial Intelligence and Data Science: there are still very few companies that make systematic use of them.

It is possible that the innovations still concern few companies, probably of minimal importance, and that they are therefore unable to concretely demonstrate their actual potential. Furthermore, it must be clear that new technologies can enable businesses to do new things rather than simply improve what is already being done.

Only if we develop business processes capable of generating, disseminating and making the most of innovative sustainable technology, will we be able to give a new boost to productivity and salary growth. And this approach must also spread to SMEs, not just large companies.

Furthermore, some mental attitudes hinder the affirmation of Open Innovation, including:

  • Not invented here: the need to exert supremacy over other people outside the company and instead of collaborating, a person enters into competition with them because they undermine the reputation or ego of the manager, especially if in a prestigious company.
  • It may not work: again, an inclination to take risks does not seem to belong to the DNA of medium and large companies that struggle to accept investing resources in testing and experimentation.
  • Change is tiring and disruptive: years of psychological, sociological and economic research highlight the resistance to change, be it negative or positive because habits "give pleasant stays" in comfort zones. Companies must integrate new solutions with their consolidated processes and this determines having to abandon the routine in favour of foreign processes, which, only with time, will become new habits. This transition from one habit to another is not easy, it is not taken for granted and is not without cost. The wisdom of change management experts tells us that any alteration in the work routine is perceived negatively due to the interruption that it causes, rather than celebrated for the best result that it will produce.

None of this is insurmountable, but it often happens that a solution that already exists in an adjacent business sector is preferred, that this prevails and that the effort of innovating together is considered excessive. Managers must be very good at making people in the company aware of the competitive pressures in the market and of how Open Innovation can be a way of overtaking competitors.

The fact that the term "Innovation" is very overused and often used ambiguously, adds to these issues, diminishing the value that it can generate.

Let's clarify therefore what Open Innovation is not:

  • A communication and marketing campaign to attract the attention of customers, leads, partners and talents;
  • A way of innovating at a low cost. You cannot save on the purchase of raw materials and on the salaries of those who work on the project;
  • A legitimate manoeuvre to ask startups to work for free and sell shares, to then be at the service of the ecosystem leader;
  • Buy new technology, which is the trend of the moment. (I remember an important company that had purchased a big data platform worth a few million euros and had migrated a structured database to it in a year);
  • A hackathon to recruit and make the ideas generated their own, rewarding them with gadgets, pizza and beer. (I participated in a couple of hackathons, it's not "fantasy innovation", it's reality);
  • A call for ideas, where the intellectual property belongs to the organizing company but this is never specified.

In a historical moment like the one we are going through, where economic, health and social problems are increasingly frequent and interconnected, we cannot afford to joke. Innovating is vital for the future of humanity.

We must resolve problems that have never before been faced and we need new solutions. We need to move quickly, to decipher the exponential paradox (produce more and generate greater incomes) and Open Innovation is a model that can be of great help as it allows for lower internal costs, a reduced time to market and a substantial risk reduction.

It is not about a do-gooder attitude, nor about generosity, not even about common sense. We are forced to abandon our egocentricity, to choose collaboration, competition, partnerships, and knowledge sharing. In this constantly accelerating world, and a "black swan" economy, innovation is no longer a choice but an obligation.

Published by:

Barbara Vecchi

Head of Innovation Hub @ SECO Next