Managing innovation in a network – the beginnings

When you are convinced that your company is ready for open innovation and you have clear objectives in mind, it is time to ensure that the network approach can effectively work and help you achieve the desired result.

1. Find and carefully select the right partners

The competencies and the resources of your partners are critical for reaching your open innovation objectives. After you figure out what you want from your external partners you can dive into the search for the resources and competencies that you need for completing your innovation project. You can do it directly by analysing profiles of partners in your network – customers, suppliers, local research organisations and other companies and organisations, reach out to your network for helping you identify the right partners – using your partners or intermediary organisations, e.g. chambers of commerce and industry, business associations, clusters and similar.

But a good partnership requires more than that.  Collaborative orientation, working style, or partners’ organisational objectives will impact the outcome of any collaboration. Gaps in ambitions, time horizons, tolerance to risk, or attitude toward investment between partners may cause serious tensions or even break the partnership. The gaps can be managed. However, SMEs should carefully consider whether the benefits from the inclusion of such a partner will compensate for the additional investment in bridging the gaps and the additional risk that such gaps bring into the open innovation.

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Before you commit to a new partner verify its reputation in your business environment. Learn as much as possible about what to expect. What kind of positive and negative behaviours to expect? That will help you with a decision, on whether to engage. In many cases, when you will need specific resources, you may need to accept some behavioural challenges of collaboration with a partner. For example, needing a specific research contribution you may need to engage with a research centre that can struggle with focusing within projects on customer-oriented specifications. Knowing a working style and challenges related to the specific partner will help you to make a well-informed decision and define strategies to offset expected in the partnership issues[2]. Organisational and behavioural differences can be managed. But gathering as much information about potential issues as possible beforehand will help you decide whether the benefits of inclusion of a potentially problematic partner, compensate for the additional investment of time and effort that you will need for managing the risks. Try to get prepared for managing frictions and risks by doing due diligence beforehand.

2. Ensure network management and effective organisation

An open innovation network/partnership, like any other organisation, needs to be managed to reach its objective. It is critical that there is a clear understanding among the network participants regarding rules how the network is managed and who is responsible for it. If you initiate a project in a network, it however does not need to automatically mean that you will assume the leadership. While it is a common practice, large organisations in the network will often put pressure to lead the project. You should consider the effectiveness of different approaches. In many cases, shifting leadership across different stages of the project to the partner with the strongest competence in key in each phase of activities area can be beneficial. It will allow taking advantage of partners’ core competencies along the project and can decrease the burden of leadership, which can be especially relevant for SMEs. Make sure that the assumed management model for your open innovation network/partnership considers the needs of the project you are implementing and the capacities of the engaged partners and is known and acceptable to all partners.

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Independently from the chosen approach, it is critical to clearly set the rules of leadership. Efficient and transparent leadership in a network will impact the stability of your project. It requires in the first place ensuring that all partners are engaged in working toward the final goal. For that, participating in a network needs to offer a specific relevant benefit to each participant. Having a strategic interest in a project is key to foster engagement. It is the leader’s role to monitor across the engagement duration that each partner is better off by belonging to the network, rather than by leaving it.

3. Make sure that arrangements and rules are clearly defined from the beginning.

To manage the knowledge network effectively, you need to ensure that all partners understand the rules of collaboration, what role each of the partners plays, and what kind of engagement and results are expected. The key partners‘ concerns are usually related to their resources. Make sure that it is clear to everyone what type and extent of resources are expected as a contribution from each of the partners. Do not forget to agree on a way you will deal with new opportunities, disagreements, or unexpected situations. Define at what point the collaboration will be finalized and how the result will be exploited (discuss intellectual property rights and exploitation plans before formalizing your open innovation partnership). The clearer the rules within the partnership and their communication across the partnership, the easier the process of managing the partnership/network.

Once you set the rules, it is critical to make sure everyone is complying with them. It is in the interest of the stability of your network to ensure that whenever a partner does not comply with agreed rules it faces consequences. Sanctions should be catered to the individual context. Bending internal network rules will weaken the strength of the network and reflect badly on the overall partnership. So, react whenever a partner breaks the rules and not only when it has a direct impact on the project‘s success.

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PRoF, a Belgium knowledge network can serve as an example. A set of clear rules drives collaboration in the PRoF network and the way that the partnerships are structured. The rules cover[3]:

• Engagement of only complementary firms to avoid competition,
• High level (90%) of non-for-profit organisations engagement to make sure that the consortium focuses strongly on the needs of target customers,
• To ensure a high level of engagement, each of the manufacturers needed to be involved at every stage of the project or could be replaced by a competing company,
• To avoid using the network just as a showcase, involved SMEs were required to commercialise the project within six months.