How Open Should You Be With Open Innovation?

by Kevin McFarthing

How Open Should You Be With Open Innovation?Classical “Not Invented Here (NIH)” approaches are usually associated with a secretive and highly
protective approach to business. Such companies are keenly aware of the risk of disclosure, the
danger of handing even the most minor advantage to competitors and the personal career risk of
doing something wrong. The default position is usually legally-driven, involving heavy nondisclosure
agreements (NDA), concern about only reviewing non-confidential information,
invalidating Intellectual Property and not letting junior people loose.

One of the dilemmas these organizations face in the early stages of implementing Open Innovation
is to decide just how open they want to be.

This is not intended to belittle genuine concerns. Every company should be professional about
Open Innovation relationships and yes, that does include ticking all the legal boxes. Any company
representative meeting prospective partners should be appropriately trained and experienced in
the legal side of things, and know the right time to move from useful non-confidential information
to a NDA, what to say and what not to say. But this only gets you to base camp.

If you want to engage potential partners in a relationship, you need to give something and be open
to get something back. This goes for direct discussions as well as what you publicize on a
corporate Open Innovation portal.

So I’d like to suggest some guidelines:

1. Don’t surprise a competitor.

  • Most companies know their competitors’ businesses very well, and are generally looking for the
    same things. They are technical experts in their fields, they know what’s hot and what’s not, so
    they are unlikely to be surprised by the technical depth describing your search. You can go into
    great detail about your technology requirements on your Open Innovation portals without
    surprising a competitor. In conversations with other companies, you can use the same principle to
    describe what you want while still at the non-confidential stage.
  • For example, Procter & Gamble are currently looking for “A breakthrough solution to improve
    carpet cleaning”, and Reckitt Benckiser want “Technologies to help reduce or neutralise allergenic
    species in air and/or on surfaces.” Their competitors, like Unilever, Clorox and Henkel, won’t
    panic. Even if they could use this information to extrapolate what the overall brand strategy may
    be, they are unlikely to add much value.

2. Ask yourself “what’s the worst that can happen”?

  • You need to be realistic here. Don’t think of bad outcomes that have a very low probability. Use
    common sense and weigh the upside against the downside. The danger is you don’t seize a large
    opportunity because of a small risk.

3. Be very specific about what it is you are looking for.

  • At this stage you don’t need to explain why you’re looking. The reason to be as specific as you can
    be is to help people who don’t know you so well. Competent Open Innovation companies are
    expert at finding the “adjacencies”, technologies that are used in other industries that have
    application to yours. Specifying what you need helps people in those adjacent segments find you
    with what they have to offer. It also helps intermediary technology brokers who may have
    something valuable for you.
  • As shown above, P&G and RB are quite happy to go into detail.

4. If you’re still not sure, use intermediaries.

  • If you’re still concerned about disclosing your identity, you can stay anonymous and post your
    technology or product requirement with an Open Innovation Intermediary, like Innocentive,
    YourEncore or Hypios. The added advantage is these networks directly access large populations of
    solvers, or use semantic web techniques to find people who may have the solution you need.

Finally, Open Innovation needs open minds and open processes. You need to let go of some of the
false security that tight legal certainty gives you. Developing an open mindset doesn’t mean you’ll
encounter problems, you may actually have more problems if you do nothing and let your
competitors snap up the innovation of the future.

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Kevin McFarthingKevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He
spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.

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