What firms can learn from how their R&D staff cope with open innovation 1


 

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If you have ever seen the movie “Flash of genius”, you know the trouble independent inventors face when seeking to partner up with large corporations to commercialize their technology. The story is about Robert Kearns, who invented the intermittent windscreen wiper. Being partly visually impaired – reportedly he got a cork in his eye when he opened a champagne bottle on his wedding day – he had a strong incentive to develop a screen wiper that would more effectively work with light rain. Kearns’ design had just three main parts and was much less complex and cheaper to make than any of the prototypes under development at mainstream car manufacturers. In negotiations to set up a licensing contract with Ford, he revealed all details of the technology. Ford pulled out, but had all the knowledge to bring the clever wiper to the market without Kearns’ help. Which it did. Although Kearns eventually won compensation from Ford (and Chrysler), the long struggle to achieve that cost him his marriage.

Kearns’ sad story nicely illustrates the paradox of disclosure. Inventors have to reveal knowledge underpinning their technology to gain interest from potential partners that could help them further develop or commercialize the technology. Without knowing what the technology is, prospective partners are not willing to pay for it. Yet, once an inventor has revealed the knowledge behind the invention – and it is unprotected – the partner has no further incentive to pay him or her for accessing the knowledge. It is difficult to assess for “small inventors” how much they have to reveal to trigger interest, whilst not giving away too much before a contract has been signed.

In a recent study, we show that this type of insecurity is by no means limited to small independent inventors, but equally applies to scientists and engineers in the R&D departments of large corporations. Open innovation is part of a corporation’s formal strategy. In a desire to enlarge the pool of ideas that companies can use to generate new product or service offerings, managers encourage their R&D staff to go out and hunt for valuable external knowledge. However, scientists and engineers tasked to implement that strategy may often get little guidance as to how they should go about building external partnerships and getting the conversation with external parties started.

Why is this problematic? The shift to open innovation that many organizations expect from their R&D staff has brought about a fundamental change to the nature of their day-to-day work: from inventing internally within the boundaries of the R&D lab to inventing collaboratively with outsiders. R&D scientists and engineers may not necessarily have developed the skill set needed to make that shift. The great promise of the corporate open innovation strategy – improved innovation performance through the use of external knowledge – may not materialize if the scientists and engineers tasked to implement that strategy touch in the dark how to do so.

We conducted interviews with 35 R&D technical staff (as well as their managers) in the R&D department of a large multinational that had embraced an active open innovation strategy to find out more about the challenges that open innovation brings to individuals “on the ground”. It may come as no surprise that also R&D scientists and engineers in large corporations face difficulties in relation to confidentiality. Where independent inventors may be reluctant to reveal details of their inventions out of fear that their ideas would be stolen, R&D scientists in large corporations face the same reluctance as they are critically aware that disclosed information may get in the wrong hands and put the competitiveness of their employer, as well as their job, in danger.

“It’s really difficult, you know, I mean, my legal people understandably would get really [upset] if I kind of just went off willy-nilly on my own. So, it’s always finding this balance point between saying enough so that you actually get something out of it, but you don’t say too much that you don’t destroy your IP position later on.”

“Often, setting up all the confidentiality agreements, determining the ownership of any IP, can be fairly lengthy, time consuming, and, you know, often can lead to us going down to a point where we don’t actually then move forward because we’ve found sufficient reasons why we wouldn’t want to or the vendor wouldn’t want to.”

These quotes from our interviews illustrate that R&D scientists and engineers find it difficult to overcome the paradox of disclosure in getting conversations with prospective external partners started. R&D scientists and engineers may even forego the effort of building new partnerships because of the time intensive and complex nature of setting up confidentiality agreements, potentially losing out on valuable external partnerships.

So, how do scientists and engineers overcome the paradox of disclosure? Apart from pointing us to the challenges of open innovation, the interviews also helped us find potential practices firms can introduce to help their staff become more effective open innovators.

trafficlightFor example, one interviewee explained he had it clear in his mind which elements of corporate intellectual property were top secret and could not be talked about under any circumstances, and which ones were a little less guarded and could thus be used to open up conversations. This may be something that an experienced open innovator can do, but would certainly not be clear-cut for everyone. Organizations should provide more clarity to their staff about what can and cannot be disclosed by adopting modular IP systems with labelling methods. A traffic light system might be an effective way to differentiate between “top-secret” (red), “ok to talk about” (green) and anything in between (amber).

Another interviewee mentioned she would first engage in “transaction-light” partnerships. When engaging with new unfamiliar partners, she first works first with them on a smaller, exploratory project that is not of critical strategic importance. That engagement takes away the need for complex agreements, but still allows the parties to work together and get to know and trust each other. Deeper exchanges may then follow suit. HP is a company that has formalized this logic in the form of its Innovation Research Programme, in which it invites university scientists to submit proposals for research projects. Such projects, covered by standard contracts, may build the foundations for more “strategic” engagements further down the line.

These are but a few examples of challenges and solutions that have come from our field study. Often individuals will not just be able to put their finger on the challenges in their work. The clever ways in which they cope with the challenges forms an important inspiration for new formal practices organizations can introduce to help alleviate these challenges for all staff. Our paper, published in California Management Review, gives an overview of a range of challenges, coping strategies and organizational practices at different stages of external engagement.

You can find our article here:

To see the trailer of “A flash of genius”, see http://www.imdb.com/title/tt1054588/


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