10 Reasons for Open Innovation Failure

• Companies have difficulties making innovation happen internally. Now they hear about open innovation and think of this as an approach that will make everything better. Not true. If you cannot make innovation happen internally, you will have even more difficulties doing this with external partners.

• Many companies start off with idea generation platforms hoping that external contributors will contribute with great ideas and/or technologies. Most do not deliver on the expectations as they get more trash than gold.

• Companies copy competitor’s initiatives rather than creating their own unique initiatives that match their business reasons for doing open innovation.

• Companies fail to make their employees, partners and customers understand what open innovation means to the company and they fail to explain the impact of such a new direction to the internal and external stakeholders.

• The various organizational units – and in particular the operational ones – are not fully aligned with the innovation initiatives, making it difficult to execute in full on otherwise well-devised initiatives.

• Executives fail to understand that issues surrounding handling risk and fear of losing control are key to successful open innovation and thus they don’t deal with them head-on.

• Companies put their “best people” in charge of open innovation failing to recognize that the “best people” who do great by doing things as usual are not necessarily what is needed in order to succeed with open innovation. It is a paradigm shift and you often need different perspectives to succeed.

• Companies focus more on their own gains rather than working towards creating a true win-win scenario.

Deborah Mills-Scofield, an innovation advisor and partner with Glengary LLC, an early-stage venture capital firm, has previously offered these reasons for open innovation failures:

• Management – “Trying to ‘manage’ the process vs. ‘moderating’ the process. While well-intended and rationalized, many open innovation ventures are not done on a level playing field. If it’s a large company starting it, they tend to be condescending or paternalistic instead of viewing the other ‘innovators’ as equals and this sets a very strong tone.”

• Trust – “This is somewhat related to above, but there is a fear of losing control over intellectual property (and hence money), and I’ve even had clients mention losing people – that the open innovation forum becomes a means of recruiting away their best talent (which in and of itself is a symptom of bigger issues).”

10 Reasons for Open Innovation Failure | 15inno