Companies Are Scared of Open Innovation – and Other Insights

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Scott Wurtele, the founder of IdeaConnection has been around ever since the open innovation movement started. In this interview, he shares his experiences, insights and foresights. One is that he believes companies are still scared of open innovation and not acting enough to realize the full potential.

He also shares this qoute: “What really has surprised me is that many companies are intellectually sold on open innovation; they know it makes perfect sense and can see how they could benefit. But due to their corporate culture they have great trouble implementing an OI program.”

Keep on reading, you are in for a treat with Scott!

Scott, what is IdeaConnection?

IdeaConnection uses small diverse teams of brilliant people to solve problems and they solve them more effectively than individuals. We solve simple problems to very complex in depth problems mostly for large organisations, but also for small companies and even sometimes individuals. It’s all based on pay for success and contingency; clients only pay us if we deliver a solution they want.

When I started the company I knew absolutely nothing about open innovation. I had not read anything about it or even heard about it. I wasn’t even aware of the words ‘open innovation’. The origin of my idea was just to solve problems. I’m fascinated by problem solving and the interaction of people – particularly people from diverse backgrounds – to solve those problems and create something brilliant that didn’t previously exist.

When I started the company I read and studied problem solving for about six months, and then I studied team problem solving and then I looked at books and material about being a facilitator for virtual teams.

You started IdeaConnection in 2007 and today we are four years into a big, financial crisis. How has this impacted open innovation?

I would say the financial crisis has had a negligible effect, and that’s because most companies still do not understand or trust open innovation. It has not really caught on yet. Even companies that are really into it are not spending a large portion of their overall R&D budget on OI. Yes there are Fortune 500 companies that are engaged with open innovation, but they are only dabbling because only a small amount of their budget is devoted to it.

So the financial crisis hasn’t had a great affect because many companies haven’t adapted their innovation processes at all. But some are realising its value and the crisis has perhaps encouraged more of them to look at open innovation. Although, they’re not acting. They are scared, they’re not trusting of it and they don’t understand IP transfer amongst other reasons. They are concerned about confidentiality; it’s just the nature of companies to keep everything secret.

We see a lot of companies are excited about open innovation and want to get involved, but even though the management is engaged the corporate culture is reticent.

In terms of some of the companies that come to IdeaConnection we have seen that the financial crisis has had some effect. They realise that open innovation saves them money and it allows them to expand without making a big investment.

As R&D departments receive new recruits from the next generation are we seeing more companies engage with open innovation?

I’d say definitely not. There are very few schools encouraging open learning, but some are emphasising collaboration. New people going into the corporate world are not bringing in a new openness.

I think the problem starts from way back in the home. When you as a family discuss things, are you authoritarian or democratic? Do you explore alternatives with the family? Do you show your kids how thinking is done and how different ideas are entertained and not jumped on as soon as they come up? Do you encourage them to listen to outside ideas?

The polarisation of American politics is a good example of why the culture of open innovation is hard to introduce to most companies. It’s the same reason; people are full of what they know and less and less able to entertain the different, the other, the strange, the threatening. They want to follow paths that have already been trodden because they understand them and feel safe on them.

IdeaConnection is one of the few innovation intermediaries with a strong focus on smaller companies. What do you see as the biggest differences between big and small companies when it comes to open innovation?

Actually, most of our business is from Fortune 500 companies. We do work with some smaller companies that have 100 or 200 employees.

It’s easier for smaller companies to implement open innovation initiatives, whereas bigger companies get push back as it goes through different sections and layers. Smaller companies can often do it easily.

Can you give any general advice to companies when they approach open innovation?

If companies are serious about learning about open innovation they shouldn’t just toss out one or two of their biggest problems and say, ‘well solve these and I’ll see if open innovation works’. That doesn’t work even though we do ccasionally solve some of the big problems that a company’s scientists have spent 20 years looking.

But what organisations new to open innovation should do is take a portfolio approach and issue several challenges of different degrees of difficulty. For example, they could issue 10 challenges and perhaps they’ll get exciting results from four, and maybe one of them leads to a product that’s on its way to market. In doing it this way a company is able to get a fuller and more accurate picture of how open innovation works and what it can do for them.

But also remember that an incomplete or failed answer can also be very valuable to a company because sometimes it helps their scientists, and turns them on. They may say, ‘we never thought of that, we never explored that path. I see what those problem solvers were attempting. Why don’t we explore it and see where it leads us?’ So you see, even the bad is good.

I would also say to companies thinking about open innovation that they shouldn’t be afraid. Study how confidentiality is looked after and realise that intellectual property transfer is taken extremely seriously.

There is still lots of talk about the intellectual property issues related to open innovation. What do you see as the biggest challenges on this? What can be done to make this work better?

We haven’t come across any problems. Our clients are extremely happy. But I do see that fear is making companies less open to open innovation. Instead of spending time worrying companies should go and explore exactly how confidentiality is protected and how the patents are protected and get their lawyers to read up and study about it in much more detail.

The use of social media for open innovation efforts is one of my key focus areas. Given your position in the marketplace, how do you view this intersection?

It hasn’t quite happened yet or we are just at the beginning of the very early stages of seeing its potential. It’s an exciting time and the marriage of open innovation and social media makes intuitive sense. I do think that companies that use both well will benefit greatly.

Our network of technology scouts uses social medias to ferret out information. But in terms of engagement we will see some of the same problems that we witness with open innovation. It will scare the hell out of some companies.

You got involved with open innovation early. What has surprised you the most?

What really has surprised me is that many companies are intellectually sold on open innovation; they know it makes perfect sense and can see how they could benefit. But due to their corporate culture they have great trouble implementing an OI program. They know they have to innovate and that open innovation is one of the best ways.

Intellectually corporate leaders are becoming more aware of the need for innovation; they can no longer just sit back. Things are happening more rapidly, and there are millions of brilliant minds out there that are available to them.

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