Companies such as Procter & Gamble, Cisco Systems, Genzyme, General Electric and Intel are often credited with having attained market leadership through open innovation strategies. That is, by tapping into and exploiting technological knowledge that resided beyond their own research and development structures, these companies outmaneuvered rivals that relied largely on in-house approaches to innovation. But while other organizations try to follow the example set by these trailblazers, our research shows that many are failing because they neglect to ensure that the outside ideas reach the people best equipped to exploit them. (See “About the Research.”)
There is a way to change this path for the better. By understanding the roles of two types of innovation brokers — “idea scouts” and “idea connectors” — in the open innovation process, and by utilizing their talents effectively, managers can preside over major improvements in the conversion of external knowledge into innovative outcomes.
Consider the case of a software company that specialized in developing solutions for multimedia customer-contact centers. Because the pace of technological change in this particular field is extremely rapid, competitors need to continuously identify and integrate emerging advances in communication technologies from the outside world. This particular company lost a major client contract to a rival primarily because the rival’s product featured more advanced voice-recognition capabilities. During the course of our work with the company, we discovered that the very voice-recognition technology displayed in the rival’s product was actually identified by one of the company’s software engineers almost a year earlier. The engineer in question had learned of the new technology from a working paper published on a university lab’s website. Realizing its potential, she immediately brought the new development to the attention of her team leader. However, this opportunity developed no further.
To determine why this idea came to naught within the company’s internal R&D network, we used organizational network analysis, or ONA, which revealed the team leader to be a peripheral player in the network structure. (See “ONA: A Tool Adapted From the Social Sciences.”) Even if he had genuinely wanted to incorporate the new voice-recognition capability, he lacked the trusted personal connections to see it through.
1. E. Whelan, R. Teigland, B. Donnellan and W. Golden, “How Internet Technologies Impact Information Flows in R&D: Reconsidering the Technological Gatekeeper,” R&D Management 40, no. 4 (September 2010): 400-413.
2. An overview of the critical role of central connectors is provided in S. Parise, R. Cross and T.H. Davenport, “Strategies for Preventing a Knowledge-Loss Crisis,” MIT Sloan Management Review 47, no. 4 (summer 2006): 31-38.
3. T.J. Allen, “Managing the Flow of Technology: Technology Transfer and the Dissemination of Technological Information Within the R&D Organization” (Cambridge, Massachusetts: MIT Press, 1977).
4. H.W. Chesbrough, “Open Innovation: The New Imperative for Creating and Profiting From Technology” (Cambridge, Massachusetts: Harvard Business Press, 2003).
5. A.B. Hargadon, “How Breakthroughs Happen: The Surprising Truth About How Companies Innovate” (Cambridge, Massachusetts: Harvard Business Press, 2003).
6. P.H. Gray, S. Parise and B. Iyer, “Innovation Impacts of Using Social Bookmarking Systems,” MIS Quarterly 35, no. 3 (September 2011): 629-643.
7. For a profile of Marissa Mayer and an assessment of her role at Google, see “Managing Google’s Idea Factory,” BusinessWeek, Oct. 3, 2005.