One Critical Mistake You Can Make in the Pursuit of Open Innovation

October 01, 2013

I recently attended TechScout 2013 in Amsterdam where I was able to listen to a variety of presentations on corporate open innovation programs. The event included participants who were in leadership roles as technology scouts and also showcased the resurgence of corporate venturing programs.

Both types of programs had widespread diversity in how they were managed. The venturing programs ranged from pure financial arrangements, where an independent fund was created to manage the organization’s investment, to programs that took more of an incubation approach for both spin-outs and spin-ins.

In the case of technology scouting programs, the conference attendees mentioned during the roundtable discussion several different opposing ideas about how these should be operated. One idea that was particularly relevant to Open Innovation was the amount of time that should be spent by tech scouts communicating general opportunities or trends to the other groups in organization versus concentrating on specific technology acquisition deals.

These themes represented a common tension among the new innovation programs. Although increasing Open Innovation was an overarching goal of firms that want to engage with external partners, a flaw in the program design was the lack of incentives to collectively share and distribute the knowledge created from these programs. If venturing is done by third parties or technology scouting isolated to finding specific opportunities, the organization learning from these knowledge-gathering activities is lost.

Barriers to knowledge exchange can be a critical flaw in creating new types of innovation programs and could ultimately undermine the maximum benefits that are possible from engaging in Open Innovation. By not consolidating and coordinating the knowledge exchange between different innovation programs, knowledge gained by the firm is not retained. Although many of these isolated programs are successful, the full value of effort and organizational learning may hinder the speed and impact at which innovation will impact the organization growth.

This insight was echoed by a recent article in Forbes, How To Turn Corporations Into Innovation Machines. Steve Blank, entrepreneur and author of The Four Steps To The Epiphany, says that adding divisions to already broken structures won’t make a difference.

“The solution is actually blowing up the architecture completely and figuring out how to make continuous innovation an integral part of the organization,” says Blank.

I agree.  A stronger top-down approach to knowledge management needs to emerge so that the innovation group can report not just on individual and program success, but the contributions and impact on other activities within the firm. This is a difficult task due to culture, organizational structure, and the complexity.

Wellspring had a great time showcasing Sophia at Tech Scout 2013 and found a few organizations that understand that to be an innovation leader, new tools are needed to coordinate information flow and report on intermediary innovation outcomes. Although each innovation program has its own function, the overall goal is the creation of new knowledge assets that can be exploited by groups throughout the company.



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