Last month I had the opportunity to attend the annual meeting of the Academy of Management (AoM). The Academy is the global professional organization for business academics, so the annual meeting draws attendees from business schools all over the world. I’ve typically been too busy to travel to the annual meetings, but luckily for me, this year it was held in Boston, so I was able to spend a couple days attending some of the sessions.
One of the sessions I was able to attend was an excellent panel on open innovation featuring Allan Afuah from Carnegie Mellon, Karim Lakhani and Michael Tushman from HBS, and Todd Zenger from Washington University of St. Louis. It was really, truly great. Open innovation is a method of innovation that has arisen in recent years which allows companies to essentially source some of their innovation efforts to outside parties, often through contests where individuals compete to develop the best solution to the innovation challenge the company has set forth. Companies perform open innovation by essentially putting forth an innovation problem they are facing to the public (or, at least, a community of individuals outside of their firm) and then inviting individuals to submit solutions to that problem. There are some very notable companies, like InnoCentive, which help facilitate open innovation by both helping companies clearly define the innovation challenges they are facing, as well as by creating platforms on which these innovation challenges can be held. One of the main benefits of open innovation is that it allows firms to reach beyond their organizational boundaries and tap the outside expertise of a broader set of individuals than they could otherwise reach. The rise of social media in recent years has been a significant enabler of open innovation, as it allows firms to develop strong communities of external innovators eager to solve problems. Open innovation isn’t an area where I’ve done any research personally, but there are some terrific scholars, like those who were on the panel, who have done terrific work in the area.
One of the most critical points made on the panel was that when researching and writing about open innovation, scholars (and, I would add, managers) need to be very careful with their definition of what open innovation is and how they use it. The benefits of using a precise and specific definition for open innovation is that we can more clearly study it and understand its benefits and its limits. From what we already understand about open innovation, it offers significant benefits to certain innovation challenges, but it also may have specific limits. For example, open innovation can be an excellent means for innovating around specific technical challenges. In contrast, open innovation may be a less effective means for bigger larger architectural or business model innovations. The important point is, though, that using a precise and specific definition for open innovation allows us better study, understand, and utilize open innovation, knowing where it is most effective and knowing where it just won’t work.
There is also a major downside to being imprecise in the definition of open innovation. An imprecise definition not only makes open innovation more difficult to understand, because little research is done on the actual phenomenon, but it also makes it more difficult to implement, because there are a lot of people who claim to talk about “open innovation” but are actually talking about something else. When a new, hot field of research or business activity arises, such as open innovation, the terms often get thrown around carelessly enough that they lose their specific meaning and consequently some of the power of the original concept. It’s very unfortunate when this happens, because managers end up dismissing these watered-down ideas for their vagueness or lack of specificity, when the original concept was actually quite robust and promising. There’s a real possibility that this could happen to open innovation, as the panelists noted, so while we continue to try to understand the benefits of open innovation and how to best utilize it, we need to be incredibly careful about how we talk about it, lest we ruin an otherwise great idea.
Subsequent conference sessions on “open innovation” at the conference confirmed the importance of being careful about how we use terms and defining them explicitly, in that much of the research presented used the term “open innovation” so loosely that they actually didn’t say anything about open innovation, as defined above; they were all instead using the term “open innovation” to talk about something else. One paper, for example, categorized looking at competitor patents as a form of innovation, while another posited lobbying of the government by private-sector intermediaries as open innovation. While both of these papers look at how firms can look to external sources for ideas, neither of them were actually about open innovation. Another paper claiming to be about “open innovation” was actually about how firms can better tap the expertise of its own employees to find new opportunities for innovation. And yet another paper categorized stealing and copying competitors’ technologies as open innovation. The troubling thing about this is that while all of these papers were interesting in their own right, they all completely misapplied the term “open innovation” to their research.
From a research perspective, it is concerning that these scholars were conducting research in a subject area and using specific terms that they clearly did not understand. As individual scholars, it’s an unfortunate waste of research effort, and collectively it’s unfortunate to see things going awry in this nascent field.
Hopefully future research in open innovation will heed the panel’s call to be more precise in its use of key terms and concepts. There’s a lot of potential here, but only if we get it right.