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What is open innovation and what can it do for business peformance?

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21st Jan 2014
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What is open innovation?

The theme of innovation is nothing new, but ‘open innovation,’ - where organisations look beyond traditional company boundaries for inspiration and new ideas - is a relatively new concept, and it’s something HR Directors should be taking notice of.

The concept of open innovation originated, like so much modern business practices, in the IT sector, but has spread to interest those in other industries and increasingly those in SMEs and smaller businesses.

Working directly with competitors

My research team and I spent some time looking at how businesses today are innovating and realised that more and more organisations were choosing to work with, and draw inspiration from, companies in entirely different sectors and even their competitors.

For instance, some rival companies send their employees on joint training courses specifically so they can share ideas and information with workers in their market, while others invite external parties in to offer new perspectives. Some organisations encourage employees to put themselves forward as speakers at events or include customers in training programmes. Alternatively, teambuilding activities between different divisions in which information about projects is shared can be used to kickstart innovation.

Engaging in open innovation v implementing it

Until now, open innovation has been discussed mainly from a strategic viewpoint – and from a board-level perspective there is a clear case to be made for sharing information in a way that allows a company to profit from outsiders’ experiences. But, the more we looked into it, the clearer it became that many organisations, having made the decision to engage in open innovation, were having trouble implementing it.

The key to a successful ‘open innovation’ approach lies in people management and organisational culture. It requires a complete change in the way both employers and employees think about sharing information with external parties. Moving away from the traditional protectionist mindset and infusing the entire organisation with the value of sharing will help promote open innovation between separate divisions and previously unconnected companies.

Team > Individual

It’s therefore significant that employees should be encouraged within a system whereby performing in a team is more important than excelling as an individual. Groups, for example, can be highlighted on company websites or magazines as recognition for their top performance. Individuals should be rewarded in a way that reflects their contribution to the team, department or organisation as a whole – rather than for individual achievement.

If we focus on employees on an individual level, they need to be able to work with different businesses while being in full control of their own projects. It’s a balancing act. They need to form contacts and build a network to acquire new ideas, learn new things and broaden outlooks. Being adept at switching between teams is important, being able to thrive within their own organisation and beyond it, making deals and coping with chaos. Employees who are not encouraged to innovate outside the bounds of their company or business unit simply won’t do it.

How to make open innovation succeed

Successful open innovation isn’t going to happen spontaneously. External knowledge must be recognised as a valued commodity and treated as such within the working environment – implementing the right setting is central in displaying commitment to the cause. Too many rules, on the use of social media for example, act as a barrier, while setting up a coffee corner where employees from different departments can meet one another in an informal way would be a reinforcement of the theory.

Further encouragement comes in the form of re-recruitment. For many organisations, it goes against the grain, but instead of being perceived as a lack of loyalty this could be an opportunity to benefit from new experiences. The employee already knows how the company works and can return with fresh ideas on how to improve the business. Imagine employers as football managers – loaning players to another club, letting them gain two years’ experience and then taking them back.

Conclusion

It’s easy to take a decision to employ an open innovation strategy, but the challenge comes in developing a culture where employees feel encouraged to share experiences and knowledge with others. If this can be achieved, open innovation has the potential to change the way a whole company thinks and operates. It’s about time HR, and business as a whole, got a better handle on it.

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