For many organizations, success is largely based on the speed with which they can bring products to market. Especially in markets where competitors can easily gain a foothold, first mover advantage helps solidify leadership and establish an effective competitive advantage.
Given the slow pace of internal R&D projects, many companies opt to establish collaborative innovation partnerships to acquire new technologies and to rapidly develop new products. While productive, these partnerships come with hidden dangers and challenges that companies must be aware of beforehand. These challenges include: differences in company culture, rules around intellectual property, and ability to achieve organizational momentum.
Company Cultures in Joint R&D
While the impact of corporate culture is often overlooked, it can have a dramatic influence on how productive and effective a joint-partnership can be. Given that innovation is as much a social endeavor as it is intellectual, identifying cultural differences between organizations is a key step in ensuring its success.
One of the key justifications given for partnerships between large and small companies is that smaller organizations are better suited to quick decision making and pivoting projects. This is an advantage when compared to large firms, as small companies are able to pivot and make decisions without needing to consult with multiple levels of management. Without this bureaucracy, decision are made quickly and don’t require as much organizational consensus. This difference compared to larger firms can leave smaller partners frustrated as they may be ready to move on to the next steps in a project while a larger organization would still be trying to establish a consensus or working through the decision.
Part of the reason behind the ability of small companies to make faster decisions is the lack of a hard-coded process. In smaller organizations with fewer layers of management, process isn’t as defined, meaning individuals often have a lot more leeway in decision-making and how a project moves through a pipeline. This can cause friction, as smaller company teams can be find the hardcoded process in large firms frustrating, as it requires much more time and forces projects to move slowly.
Furthermore, within large organizations there is a strong internal pressure to only use technologies and tools that are created internally. One of the most common forms of corporate tribalism, not invented here syndrome (NIH) is a frequent barrier to greater efficiency, as companies insist on using internal tools only. This is due to an aversion to paying recurring licensing costs for a platform, not understanding its value, or believing that a tool can be built cheaper internally than the market price. Partnerships can be harmed by this, as if outside processes or tools aren’t accepted, then the advantages of the partnership wither away and partners are reluctant to fully engage. Given that smaller partners are generally more open to using external tools and methods, this serves as another point of friction.
Intellectual Property Issues
For many partnerships, issues around intellectual property management and rights are incredibly common and can lead to make-or-break moments for joint-research partnerships. With issues in enforcing rules, assigning ownership, and termination terms, the legal negotiations behind such agreements must be taken seriously.
A common sticking point for joint-partnerships is the enforcement mechanisms and regulations. In order for agreements to be seen as legitimate, both parties must be willing to accept and concede certain regulations and rules on the agreement. In particular, it is important to make sure that these requirements treat both parties equally and that negotiations do not overly favor one side or another. Especially when there is a power disparity between firms, it is important that larger firms do not press their advantage, as this will alienate the smaller partner.
Furthermore, assigning ownership of the intellectual property rights to the project can be difficult, and is naturally fraught with danger. While the default compromise may be ‘equal ownership’, this rarely works in the real world as both parties will want to implement and commercialize the results. The effort, investment, and time put into IP development is never equal, meaning parties might be slighted to find that their heavier efforts do not result in more ‘fair’ intellectual property ownership. This is particularly tricky when both parties participate in similar industries, as both will have competing interests to use the product within the same market.
One of the most important difficulties that such partnerships will face is in the ability to generate organizational momentum for a project. Large corporations are huge entities with thousands of employees, meaning that drawing an organizational consensus and coordinated movement on a project is a time-consuming endeavor. With multiple layers of management, it can be difficult to convince all the necessary groups of the necessity of a project and to commit the same level of enthusiasm to a project. As such, getting everyone on board and willing to commit their full attention to a project is difficult. This tends to manifest itself in the form of data management, evaluation processes, and the speed with which the partnership moves.
With firms typically preferring their own proprietary method of organizing and distributing data, getting partnership data streamlined can prove to be a challenge. This becomes especially complicated depending on the sensitivity of the data and how closely-guarded an organization keeps it even from its own partners. As such, conflicts over data management can slow down the process and leave partnerships vulnerable to breakdown.
Organizational processes can differ wildly between organizations large and small, especially within large organizations that are not particularly organized. Depending on the level of efficiency (or lack of) each department might have a different process in place. This complicates coordination between firms, as the more differences in processes and their alignment, the more difficult it is to get everyone on the same page.
The differences in processes can also impact the speed with which firms can evaluate and approve technologies and identify their fit. This is impacted both by size and the complexity of the product: products that involve multiple disciplines will require longer evaluation times, as they need to be evaluated by multiple subject matter experts. As smaller firms can typically evaluate technologies faster, this causes friction within the partnership.
Fortunately, it is not all doom-and-gloom for partnerships between large and small organizations. There are a number of steps organizations can undertake to internally support the partnership and ensure that cultural, intellectual, and organizational issues do not impede success.
The key to addressing ‘not invented here’ and other cultural issues is to first acknowledge they exist; by admitting there is a problem, organizations can devise policies that over this issue. This can be done through establishing rewards problems that incentivize teams to move forward with external solutions rather than dwell on re-inventing the wheel within the organization. These incentive structures can also be created to ensure that organizations pursue decisions in a timely manner and encourage companies to move part roadblocks together.
With organizational momentum being key to every joint-research partnership, establishing clear processes and a centralized knowledge management system is crucial to its success. Fortunately, there are a number of software tools that help joint-partnerships stay on the same page and ensure their long-term success. Software tools are key, as they are able to create an air of accountability behind their users and give both partners insights as to how the partnership is actually performing.
Tools like Wellspring allow firms to centrally store data for analysis, manage interactions, processes, and external technology scouting all within one system.