Overcoming Corporate Cultural Barriers to Adopting Open Innovation

Posted by Jo Edwards on Jan 16, 2018 8:30:00 AM

Open innovation is a growing phenomenon. Recent studies show that, for large European and US companies: 78 per cent report practicing open innovation; none report having abandoned the approach; and 82 per cent of practicing companies have increased their focus on open innovation. But what is stopping all companies from taking up the benefits of open innovation? The new ‘paradigm’ of open innovation means changes right across the organization. Here, we look at the arguably the most important of these – company culture – and how to address cultural barriers to open innovation.

Why are there barriers to open innovation?

Researchers have identified two main barriers to open innovation, both cultural ‘syndromes’ that can have a negative impact on adopting the new approach.

  • "Not-Invented-Here" syndrome: Many organisations – and individuals within them – are reluctant to adopt any approach that supports the development of products or services using external knowledge or technologies. If the product or service has not been invented solely by the company, they argue, then quality, performance and availability cannot be assured.
  • "Not-Sold-Here" syndrome: Similarly, many organisations seek to protect the ideas they have developed, missing the opportunities for external commercialisation. If they created the IP, they argue, then this should not be shared with anyone outside of the company.

Both attitudes can impact a firm’s ability to innovate generally, and signal a clear barrier to more open collaboration. In the changing world, these organizations are unlikely to thrive. But there is another way.

How can you overcome these barriers?

Put simply, change your culture. Organisational culture – the personality of your company – can be summed up as the shared values, policies and unwritten rules that drive the behaviour of your employees. The language your use, the ways you approach work, the actions you reward; all signal the type of culture your company exhibits. For open innovation to work, your culture needs to embrace the characteristics that open innovation embodies: collaboration, knowledge sharing, creativity, and new ways of thinking. Here, we explore five ways to build an open-innovation culture.

One: Management ethos

For open innovation to work, the right mind set must come from the top. Your senior team needs to embrace the opportunities that knowledge sharing will bring to your organisation, and model the behaviours that will make collaborations thrive. This might mean changing the way your C-suite has acted in the past, but is an essential first step in championing a different practice. Supply your management team with evidence-based examples of how open innovation has worked for other organizations, and present open innovation as a positive, strategic choice.

Two: Company values

Your values should reflect the types of attributes that make open innovation work. Listening, openness to new ideas from all quarters, opportunities to work with others, and an attitude that embraces failure are all vital. Share these values widely throughout the company through strong communications. Internal messaging should focus on the benefits of open innovation to employees. External customer branding and communications to partners should focus on your willingness to collaborate, share knowledge, and think differently. Most importantly, encourage all your staff to live these values, through everything they say and do.

Three: Management structures and decision making

Flatter structures and faster decision making will help your organization take advantage of open innovation. By providing clear messages and establishing clear parameters on the behaviours and attitudes that the company will accept, your employees will be empowered to take accountability for their decisions and actions. By building innovation labs, you’ll be creating spaces for employees to interact and be creative. And by introducing open innovation teams who provide links across departments, share knowledge and ideas, deliver training, and identify opportunities for collaboration, you’ll be setting clear examples that others can follow.

Four: Employee rewards

Employee rewards should reflect and incentivise the organization’s values. Make sure your performance management processes reflect the kinds of behaviours that encourage open innovation. Performance indicators should include open innovation measures, which may be less tangible than traditional targets. And staff should be rewarded for new developments, whether they were a product of internal ideas or of external collaborations. This approach should extend to your recruitment strategy, so that you hire new staff who actively embrace open innovation.

Five: Relevant skills

Finally, your staff need to be equipped with the skills that make open innovation successful. No single individual will embody all the necessary attributes. The first step is to provide training to develop skills in strategy, analysis, negotiation, communication, collaborative working, project and program management, and networking. When you have done this, you can build teams that combine these skills. Use these teams to build relationships with partners, within the organization and externally.

Conclusion

There is no ‘one-size-fits-all’ solution to overcoming the cultural barriers associated with this more collaborative, externally-facing practice. Each organization will have different concerns, and need to make changes to their values, behaviours and working approaches in different ways. Large organizations are likely to have subcultures that also need to change. But, focusing on these five core areas – management ethos, company values, management structures, employee rewards, and relevant skills – should provide the first steps to successfully adopting open innovation in your organization. The benefits will speak for themselves.

Further resources

Armellini, F., and Beaudry, C., Corporate culture barriers for the adoption of open innovation: The Canadian aerospace cluster perspective. Conference Paper: Uddevalla Symposium 2016. https://www.researchgate.net/publication/321038166_Corporate_culture_barriers_for_the_adoption_of_open_innovation_The_Canadian_aerospace_cluster_perspective

Balsano, T., Open Innovation: The Importance of Culture. http://corporateinnovation.berkeley.edu/wp-content/uploads/2014/10/Solvay.pdf

Boston Consulting Group, The Most Innovative Companies 2016: Getting Past “Not Invented Here”. http://image-src.bcg.com/Images/BCG-The-Most-Innovative-Companies-2016-Jan-2017_tcm9-163125.pdf

Chesbrough, H., Open Innovation and Open Business Models: A new approach to industrial innovation. Presentation to the 2010 Conference of Rectors and Presidents NTNU. http://www.crp-eut.org/2010_Chesbrough.pdf.

Chesbrough, H., & Brunswicker, S., A Fad or a Phenomenon?: The Adoption of Open Innovation Practices in Large Firms. Research-Technology Management Vol. 57 , Iss. 2,2014. http://www.tandfonline.com/doi/abs/10.5437/08956308X5702196

Hoque, F., How To Create A Culture of Innovation. https://www.fastcompany.com/3031092/how-to-create-a-culture-of-innovation-in-the-workplace

McKinsey Quarterly, September 2017: Creating an innovation culture. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/creating-an-innovation-culture

Mortara , L., et al., How to Implement Open Innovation: lessons from studying large multinational companies. http://www-cikc.eng.cam.ac.uk/wp-content/docs/COIN.pdf 

PA Consulting, Driving open innovation through a culture of collaboration. http://www.paconsulting.com/insights/driving-open-innovation-through-a-culture-of-collaboration/

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