Businesses utilize open innovation programs to get access to a larger pool of expertise and ideas with less effort, allowing them to produce value they wouldn’t be able to develop otherwise.

For many people, the objective is to develop ways to solve unmet needs through the proper acquisition of concepts and information with outside parties. However, despite its proven success, there are numerous issues and hazards that open innovation comes with.

Recognizing these issues early on can help enterprises solve these issues early on. In this article, you will learn more about open innovation challenges and how to solve them.

Let’s get started.

What is open innovation?

Open innovation is an innovation management strategy that encourages collaboration with groups and individuals outside of the organization.

When a company creates open innovation challenges, a genuine cultural shift away from the business silo approach happens, along with the exclusivity that has long been recognized with commercial R&D.

When a firm realizes that many brilliant people and ideas are lingering beyond the walls of the business, this concept becomes more feasible and practical to apply.

As such, the company does what it can to acquire such external persons, institutions, and ideas for the benefit of the business.

Open innovation is essentially an alternative to the traditional innovation approach in which knowledge must remain inside predetermined boundaries. In essence, it refers to one’s openness towards sharing ideas and expertise.

Companies use open innovation techniques in a variety of ways, including corporate collaborations, university research departments, crowdsourcing challenges, and establishing other relevant and creative ecosystems.

By the way, if you’re interested in gathering ideas and managing them, we published an ultimate guide to idea management you can download for free. You can learn there how to design an efficient ideation process.

Examples of open innovation

Here are some examples of world-renowned establishments that applied open innovation:

1. Samsung

Even though it has been linked to certain copyright cases, Samsung has been named one of the most inventive large corporations globally.

Despite having a large internal research and development unit, the business is also a strong supporter of open innovation, especially startups. Samsung has purchased SmartThings, an IoT startup, to get an IoT platform without investing resources in R&D.

Samsung recognizes possibilities in the IoT market and sees it as a key component of their company’s future, particularly in industries where they wish to lead and take over.

SmartThings still runs as an independent business with the assets and resources of a large corporation. With Samsung’s investment,  SmartThings can become a crucial facet of smartphones and home electronics by generating new and creative IoT capabilities.

2. Nivea

The B&W deodorant by Nivea demonstrates the inclusion of customers in the creation of new products from concept to completion. The company developed the said project in collaboration with Nivea’s users on social media by working with its customers throughout the R&D process.

Acknowledging how some of their present products can cause stains in garments, they asked their customers about their experiences and home cures for product improvements.

In response, the brand’s users shared what products they think the company should focus on and what they do to get rid of the stains. In effect, Nivea’s B&W deodorant became the first of its kind in the market to prevent the formation of white and yellow stains in clothes.

On the onset, the admission of flaws in their product may have been interpreted as an indication of ineffectiveness.

But users saw how dedicated the brand was in resolving product problems, so they responded to Nivea’s questions and contributed to their success. Today, Nivea still stands as a trusted brand in the skin and body care market.

3. Telegram

Telegram is a messaging program similar to WhatsApp that works on desktops and smartphones. What sets it apart is, though, is the extent to which people may openly contribute to its contents.

Telegram’s appeal and popularity stem from the fact that one can customize the app’s content according to their personal preferences.

On this platform, anybody with any level of programming ability may build bots and stickers. Although users can use Telegram like other messenger apps, they still have the freedom to develop and modify their own user experience.

Although instant messaging service is a very competitive and dynamic field, Telegram has attracted many users due to its simplicity, flexibility, and ability to produce personalized content. Moreover, there are times when the organization provides rewards for new material.

Custom stickers enable you and your pals to design stickers depicting the funniest events you’ve had together. Telegram also highlights the finest stickers by keeping a rolling collection of the best ones that caught the attention of other users.

What are the challenges and risks of open innovation?

Understanding what challenges this type of innovation presents is a great way to determine circumstances where open innovation isn’t applicable.

Below are some risks and challenges of open innovation:

1. Insufficient dedication and involvement

One of the most difficult aspects of open innovation is engaging people and keeping them invested throughout the entire process.

It is critical for organizations to assign roles to ensure employee engagement. This way, point persons can manage and oversee the innovation process to provide essential feedback regarding the ideas of the participants.

2. Generating ideas and putting them into action

It might be difficult to get substantial benefits from open innovation if ideas are not created and deployed. It can be tough to predict which ideas can bring considerable advantages, especially when there are bigger audiences (and hence a greater quantity of concepts) in R&D.

As a result, it is imperative for businesses to have a system or procedure in place for distinguishing and sorting ideas before moving forward with them.

3. Uncertain objectives

Making an uninformed choice to implement open innovation is hazardous since it might be unsuitable for your current business conditions. For this reason, it is critical to define your objectives and determine whether open innovation is appropriate in your circumstance.

For instance, if a company’s purpose was to discover a new name for their product, the organization should take future challenges into consideration and prepare emergency measures to remedy them.

4. Dwindling financial outcomes

That is why innovation projects must be accomplished on time because the longer you take to innovate, the more your funds will diminish, and more errors may take place. In other cases,  determining whether to continue innovation endeavors or not is difficult.

In the end, innovation projects should be long enough to obtain the needed input, but quick enough to remain cost-effective.

5. Choosing the best tools for innovation

In order for open innovation to be successful, it is necessary to provide a platform where all of the innovation activities may take place. Moreover, finding the perfect set of tools to assist you in achieving your objectives might be difficult.

Include your core business concepts when choosing innovation tools. Remember that innovation is critical to a company’s success. It is a key factor of competitive advantage, economic growth, revenue gain, and survival.

6. Improper audience

Selecting the proper customer segment may be difficult. If done hurriedly, or if picked for the wrong reasons, an improper audience can result in a failed investment. It’s crucial to know what you want to accomplish and what you think the best route to achieve this is.

If your products do not resonate with your target audience, your pitch will remain unheard. Customers’ needs will remain unmet, and you will only get minimal to no orders for your products and services. Hence, select the right audience and align your brand with them.

7. Creating an efficient open innovation procedure

An effective strategy to support open innovation is necessary for it to be as useful as possible. 

Developing an efficient process can be difficult for a variety of reasons, including a lack of goals, stakeholder support, ambiguous communication, strategy alignment, immeasurability.

As open innovation is the process in which companies exchange knowledge and expertise with communities of users and consumers, an efficient process that includes acquiring suggestions and concepts in the creation of product and service ideas is needed for it to be successful.

8. Rights to intellectual property

It might be difficult to obtain the originality of ideas, particularly with huge audiences, as you might not have an idea where the proposed concepts of participants came from.

Hence, thorough research is necessary to provide documented confirmation of the idea’s originality. This way, you can reduce the chances of obtaining copyrighted or trademarked ideas.

9. Terms and conditions

It’s critical to have chosen innovation participants sign properly drafted terms and conditions for their proposals.

Both parties must reach an agreement, especially with an open innovation development process that involves external participants who don’t have continuing contracts with the organization. Failure to do such may result in conflicts with the ownership of the concept.

How to overcome the challenges of open innovation?

The challenges written above can be grouped into three major issues.

Here’s how you can solve each of them:

1. Creating a functional innovation structure

Businesses that create open innovation programs cannot anticipate fantastic concepts to begin flowing up the product development pipeline.

There is no established method for receiving and acting on different submissions. But companies can track and monitor open innovation through significant KPIs and implement terms for participants to follow.

In addition, having a good innovation structure ensures that the greatest ideas are promoted up the ranks and are protected against intellectual property lawsuits. This establishes a systematic and regulated process for submitting ideas.

2. Evaluating ideas thoroughly

The number of ideas submitted is one metric for open innovation success. However, each thought must begin on an equal basis. When the quantity of ideas is huge, it becomes difficult to examine them in a timely manner, so deciding which ideas to go for takes time.

As such, if the organization lacks an innovation strategy in processing ideas efficiently, disarray is likely to occur. In effect, businesses put open innovation efforts on hold or abandon them entirely.

Time-to-market is decreased, and innovation returns are more likely to grow when ideas are analyzed and studied quickly. Moreover, with strict assessment criteria, submissions are rated and graded based on company advantages and business value.

3. Legal Risks and Intellectual Property Issues

Intellectual property is widely regarded as the most difficult and complicated challenge that firms encounter when trying to launch open innovation programs.

The possibility of a legal conflict over intellectual property rights might impede the development of ideas contributed by third parties.

Hence, it’s critical that a company’s open innovation program is set up to receive the right data. To ease complexities and reduce lawsuit risks, the key to success is managing the ideas as well as the amount and type of information sent by outside parties.

In the end, remember to focus on execution instead of marketing or image. Innovation is more of the value that companies can add to both the organization and its customers, so open innovation programs should focus on that.

To get you started with overcoming the challenges of open innovation, you can download our free innovation toolbox here. It contains powerful models and rewritable canvasses that you can easily execute in your organization.