The complexity of high-tech product development and technological innovation has reached a level where open space collaboration and exchange of valuable resources has become a necessity to be successful and competitive. The industry is opening up to collaborate with technological universities, knowledge institutes and governmental organizations and governance of open space collaboration has become an important new skill. Organizations that are able to open up in the short-term and manage properly, will profit the most from the strength of open innovation. This requires not only management of processes within an organization, but also the processes between collaborating organizations.
Organizations have to develop a strategy based on open innovation to keep a competitive advantage. They have to choose the right projects and identify the required internal and external competences to complete them with success. Management of an organization has to be prepared on the open innovation model by developing the right mindset and the required skills. They have to identify the role their organization wants to play in the open innovation process and allocate their resources accordingly. After potential partnerships have been identified by management, open space collaborations can be initiated.
To govern open space collaboration both contractual and relational governance strategies are known. When organizations do not share a history of collaboration, often a contractual governance strategy is chosen. With formal agreements opportunistic behaviour is reduced through inflicting penalties for not showing cooperative behaviour or showing behaviour that violates the collaboration. Partners can also choose to rely on resilient trust and inter-company routines to govern their collaboration. This relational governance will push the need for formal contracts to the background, but it does not eliminate the need to negotiate formal agreements. Good relations with partners will rather facilitate the process of negotiating.
Trust in the capabilities and intentions of partners, respect for differences in company cultures and commitment to the shared vision of a partnership are essential conditions for an open space collaboration based on open innovation. Only when these three basic conditions are in place, agreements can be made about the division of successes and failures. This foundation of the partnership is required to define a shared vision and openly discuss the individual and mutual interests to find a balance between contribution and reward for each partner. When organizations do not have a history of collaboration, formal contracts usually form the basis for a partnership. Shared failures and successes make a collaboration stronger and will decrease the need of formal contracts. However, formal contract are necessary for situations where trust, respect and commitment are gone, the collaboration is severely damaged or even terminated. With a strong foundation of trust, respect and commitment, partners of open innovation are able to focus their attention on the alignment of their individual and mutual interests with the shared vision. Key to successful collaboration is a balance between the individual contribution of organizations and their rewards for that contribution. Open innovation and uncertainty travel together. Open space collaboration therefore requires a governance structure that enables organizations to manage these issues with sufficient flexibility from all partners to handle the dynamics of the open innovation process.
Based on the findings in theory and the experience from practice of key professionals in the high-tech industry, a new governance approach is suggested. To implement this new approach for managing the challenges of open space collaboration based on open innovation, three actions are required:
Separation of the partnership on different levels within each organization will make the collaboration more transparent and stable. Issues within the partnership can be addressed quickly on a lower management level, a middle management level or an executive level, with a focus on product innovation, the progress of operations and the relations between collaborating partners, respectively. An integral approach from fundamental research to commercialization will enhance the probability of success. The exchange and application of the available knowledge is essential to critically assess the new idea on feasibility at each stage of the open innovation process and required to ensure the outcomes will meet all partners’ expectations. By shifting the project leadership to the organization with the most expertise, skills and facilities for each stage of the innovation process, their level of commitment will be high., They will also be more open to exchange valuable resources and create the best solutions possible as this will increase the value of the outcomes. The exchange will create transparency within the partnership and in turn improve the levels of trust, respect and commitment of all parties.
Challenges
for Successful Open Innovation - The Role of Governance (download)
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