In today’s business environment, there is tremendous pressure on corporations to continuously innovate with greater efficiency in order to stand out from the pack. Henry Chesbrough in Open Innovation describes a growing trend: small firms seeking to augment in-house R&D by integrating external technology into a corporation.
This is not without operational risk. While external technology partnerships can accelerate innovation, they create new dependencies and management issues. The firm and external partner must collaborate and jointly manage and control in the Front End of the development process. This is the only way a technology will successfully be incorporated into a new product offering.
In traditional Open Innovation processes, there is focus on tightly defined sourcing of technology, to enable a predefined solution. This tight focus rules out the potential for iterating into a more creative breakthrough solution. In fact there are four stages to successful effort with an external technology partner that maximizes innovation:
A collaborative effort in the Fit stage allows for the sharing of ideas to create the unforeseen “adjacent possibility” of possible breakthrough or disruptive potential. It may allow shared joint IP as a result of the development effort or shared risk reward on a true partnership basis in the “Obtain” stage. The sharing, “no walls” paradigm creates a true joint success based partnership