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Challenges and risks in open Innovation

open innovation challenges

Resolving open innovation challenges is a key ingredient to a successful business in today’s fast-paced and tech-forward economy. Many startups begin with an elegant solution to a problem. To borrow from the FinTech sector, let’s say not enough people have access to basic financial wellness tools like budgeting organizers and high-yield savings accounts. FinTech startups all over the world have jumped in to solve this problem, offering quality financial wellness tools and access to financial services and institutions from which users would normally be barred.

But sustained open innovation, creating new products or solutions with the help of outside resources and information, requires an internal mindset of innovation and pushing to make products better, as well as many other ingredients that lead to better products and solutions over time for a company responding to what their customers need.

Internal and external forces can block new ideas and improvements to products and services. While there is rarely just one culprit stunting a company’s innovation initiatives, there are common challenges that many companies face when trying to integrate innovations into their offerings to their target market. Below are five common open innovation challenges and how to avoid them.

 

How to Overcome the Main Challenges of Open Innovation

 

  1. Internal Politics – It’s difficult to avoid power struggles amongst any group of people, especially individuals who are dedicated to creating innovative products and services designed to disrupt and change marketplaces on any scale. When people feel like they can’t contribute to new ideas because they are afraid of the consequences of starting new initiatives, innovation wanes. All members of a company need to agree on the need for constant innovation and challenges to their products, services, and how they market themselves. Leadership then needs to get out of the way and avoid discounting the vital role that emotion plays in the development of new ideas and eventually new products and services. Leaders that create an open atmosphere also build an environment conducive to open innovation.

    2. Unclear Brand Story – Marketing experts will tell you that one of the most foundational building blocks in a successful brand is its story. This helps explain the company’s identity and aligns all who work for the company with the same goals. For most technology-focused companies in any sector, a large part of their brand story involves disruption with innovative new products and services–a newer, better way to do X. If company leaders and workers can’t easily define the story of the company they work for, they won’t be effective in leading the kinds of changes required for any new product or service, and open innovation initiatives become dead on arrival.

    3. Misalignment of Priorities – This is a common pitfall for larger companies that struggle to empower their middle management to aggressively pursue innovation initiatives. Leaders actively working to push their companies forward and offer new and better products and services are necessary, but if their goals of open and rapid innovation are not shared by middle management and on down to the lowest-level workers, innovation initiatives will fail. Everyone involved in any kind of innovation work needs to be empowered, motivated, and educated on the need for further innovation and what kinds of innovation their company needs to push forward.

    4. Shaky or Missing Sponsorship – Innovation initiatives need to be supported and sponsored by the leaders of the company and middle management. Workers in teams engineering the next big innovation need to know that their work will be rewarded. Middle managers need to know that their efforts in motivating their teams and pushing initiatives forward will be rewarded. Everyone benefits from better, innovative products and services–the company makes more money. But what business leaders need to understand is that overcoming these open innovation challenges is extremely difficult and that their workers need to be recognized for their work on an individual scale. We’re not only talking about pizza parties and pay raises here, however. The innovation initiative itself needs strong sponsorship to get out the door. Leaders and everyone involved in innovation in the company need to believe in the initiative enough to go the extra mile to get it out.

    5. Removing All Constraints – Ask any poet and they’ll tell you that constraints can be inspiring. We could sink into creativity theory here for another 5,000 words but essentially, when creative people, the people leading an innovation initiative, have some rules to work around, they often find elegant solutions that fit and often end up being better than if there were no constraints to work around at all. A hypothetical: Your company offers financial services through an app. All innovation initiatives need to be able to fit within the existing UI. This forces your engineers to develop more user-friendly features to add to that UI.

 

Investors are looking for innovative companies. If you’re an investor, you can compare innovation strategies and so much more on the Finnovating Platform.

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