With the recent developments of open innovation as a formal management discipline, many organizations today are struggling to form effective internal competencies that can be leveraged to generate measured success. Many companies are using a trial-and-error approach that too often leads to unnecessary cost overruns and even failure. The model presented in this chapter provides readers with a simple, yet elegant structure necessary for the design and implementation of a successful open innovation program. The chapter explores the leading causes of failure in a new open innovation program, and offers guidelines and criteria that open innovation leaders and practitioners can use to avoid these pitfalls, and to establish a program that generates tangible returns, while motivating participants to achieve more desirable innovative behaviors.
TopBackground On Today’S Open Innovation Environment
Although “Open Innovation” is a relatively new term, the concept has its roots back in the early stages of the Industrial Age. Until the early 20th century, most manufacturers relied heavily on external research laboratories and inventors to supply them with ideas for new products and product enhancements. As management theory advanced, giving way to such practices and disciplines as division of labor and the five year strategic plan, companies began to safeguard their intellectual property from the outside world, with the fears that competitors would pick up on their new ideas and copy them, or somehow use this competitive intelligence against them. The idea of the research and development department became increasingly popular through the 1900’s, allowing companies to retain their ideas, knowledge and assets within the physical boundaries of the organization. With the slow pace of information dissemination and employee turnover throughout most of the 20th century, this idea of guarding intellectual property worked just fine.
As information technology began to skyrocket in the late 1900’s, many things began to change, thus creating a disturbance in this once stable system. The Internet suddenly provided a means of rapid dissemination of new information, giving access to online publications, patent information and other sources of knowledge (Chesbrough, 2006).1 Knowledge workers and technology-based markets began to become more transient, and information was exposed at an unprecedented rate. Management was no longer able to rely on the safety net that their corporate boundaries once provided. A fork in the road was eminent, and corporate leaders had to choose between one of two options: Find new ways to safeguard intellectual property, or accept the fact that information is no longer as safe as it once was, and focus instead on the acceleration of innovation. With the recent emergence of open innovation, the latter was obviously the choice of many.