Challenges of Open Innovation and How to Overcome Them

Open innovation offers many great opportunities for organizations to generate diverse, resilient, and innovative ideas. However, many challenges can arise with open innovation if you are not clear about your desired outcomes and the processes required to achieve them. Applying the right innovation management tools and methods to overcome these challenges can make the open innovation process much more collaborative, streamlined, and effective. In this blog, we will unpack the most common challenges in open innovation and explain how to tackle them.

Open innovation has received increasing attention from companies in recent years as a collaborative approach to problem-solving. Opening up the traditional innovation process and sourcing ideas and solutions from a wide range of external audiences can be a cost and time-efficient way to improve existing or develop new products and services.

Submissions for open innovation campaigns can include ideas around specific challenges or opportunities, proposals from potential startups and partners, and direct input from customers. However, the approach may prove ineffective or a waste of time if certain prerequisites or conditions are not met.

Based on our years of experience with clients looking to integrate open innovation into their innovation activities, we have compiled a list of challenges many teams face when applying open innovation in their organizations.

1. Lack of clear goals for open innovation

For successful open innovation endeavors, it is imperative that you have clearly defined goals for open innovation projects to be able to measure success and build trust within the organization. Without clear goals, it is difficult to set direction and motivate others in the company to participate. You have to define:

• Objectives: What do you want to achieve with an open innovation initiative? Do you want to identify disruptive solutions for specific search fields or new ideas to improve existing offerings? Or are you looking for collaboration opportunities with startups? Who is your target group; are submissions limited to the company's customers and partners or extended to the general public?
• Ownership: Who is responsible for digesting promising idea submissions further?
• Problem: What problem do you want to solve with an open innovation initiative?
• Timeline and milestones: Is the open innovation challenge always-on (constantly offering externals the opportunity to submit proposals) or time-bound (your campaign has an end date by which you would like to receive as many proposals as possible)? Are there milestones or different phases?

The German engineering and technology company Bosch, for instance, had a very clear goal when launching the Bosch Open Innovation Partnerships platform. They aim to receive outside-in perspectives for defined search fields relevant to their strategic direction and co-create with startups, universities, and other experts. It allows them to access and coordinate idea submissions easily.

2. Lack of commitment from internal stakeholders

When it comes to open innovation efforts, companies often experience cultural challenges and a lack of commitment from internal stakeholders. Ideas or solutions that do not come from in-house often harbor the problem of the "not invented here" syndrome, which means they may not be accepted or viewed critically.

If individuals feel that they cannot contribute their own ideas but instead have to source ideas from somewhere, they may feel disengaged or discouraged. This can result in innovation blockades within a company, impeding the progress and output of your open innovation initiatives.

3. Raise awareness for open innovation challenges and address the right audience

The most elaborate open innovation initiative won't help you if you don't receive enough (valuable) submissions. And to achieve that, you need to figure out how to reach and engage the right external audience.

You first need to consider who you want to receive proposals from (startups, partners, customers, students, or other individuals). Then you have to decide which communication channels to use to raise awareness for your open innovation campaign and what information you need to provide to point idea submitters in the right direction.

4. Keep idea submission forms simple

There is a fine line between requesting enough information to help evaluate submitted ideas afterwards and requesting too much information from your external audience. Our experience has shown that if the form is too lengthy, complicated, or requires a lot of time and effort to complete, people are more likely to abort the submission process.

5. Manage and coordinate a large number of submissions

Another challenge that often arises is that it can become difficult to keep track of and coordinate a large number of idea proposals. You need a proper process in place to identify and move forward with the most promising ones, for instance, by defining phases the ideas have to go through.

Externally submitted ideas run the risk of falling short in quality or not aligning with defined goals. To filter out such submissions in the first step, regular quality checks must be made using clearly defined criteria, such as language, precision, and richness of explanations.

This task should be performed by a dedicated team or a responsible person to facilitate the subsequent selection process. While these are primarily internal teams or individuals, some organizations assign the task of evaluating ideas to a third-party research firm to eliminate bias in the process.

Moreover, you have to define clear evaluation criteria to ensure that the most relevant ideas are chosen for further development or collaboration with open innovation partners.

A famous example where the criteria were not set correctly in the evaluation process is Netflix. They launched an open innovation challenge in 2006 to find a filtering algorithm that improves suggestions of movies and series for users by 10% compared to their existing one. In less than three years, a winner was selected whose algorithm improved the suggestions by over 10%. However, they realized afterwards that the winning algorithm was too costly to engineer. Netflix then used an algorithm from the runner-up group, whose improvement rate was “only” 8.43%. If the required resources had been considered in advance, time and money would have been saved.

6. Further digest qualified ideas from your open innovation initiative

Once you receive external ideas and they have gone through the qualification phase, the ideas need to be passed on to someone who can process and utilize them further. A common challenge companies often face in open innovation is that ideas do not find a "home" in the company and are not developed further.

One reason could be that there is no clear stakeholder upfront who actively seeks an outside-in perspective and disruptive solutions. Innovation teams often try open innovation because everyone else is doing it and seeing what comes of it. This, however, often ends up in ideas not being further pursued, which, in turn, leads to frustration of employees and external partners (as well as wasted time).

How ITONICS helps establish a successful open innovation process

With proper planning and execution, open innovation can be invaluable for generating new ideas and driving innovation. Finding the right platform to manage your open innovation projects is one of the factors for a successful open innovation process. The right tools can help you to reach your goals faster and more efficiently.

The ITONICS Innovation OS is an end-to-end innovation management software, allowing organizations to integrate open innovation with other innovation projects and manage submissions on one platform. Our tools also support outside-in startup scouting to discover collaboration opportunities.

With our open innovation software solution, you can collect idea submissions, evaluate them collaboratively with other internal stakeholders, and prioritize the most important ideas and projects for further development. Moreover, the platform enables you to organize and structure project information to provide quick views on objectives, risks, workflows, budgets, and KPIs.

If you want to see for yourself how ITONICS can support your open innovation initiatives, get a free demo!

Have more time?

• Mechanisms to Identify Valuable Ideas Fast in Open Innovation
• Open Innovation: Strategies and Best Practice to Manage Partnerships
• How Open Innovation Can Unlock Growth in Times of Crisis