Does Open Innovation Work Behind Closed Doors?

Small software companies are amongst the most innovative firms in the world. But how do they achieve, what every company longs for?

One element certainly is their cultural DNA that places individual freedoms over corporate hierarchies. At some companies like Github, the developer of the software repository platform, there are no reporting lines at all. There’s no better shot in the arm for the motivation and productivity of your employees.

But the main driver might be open innovation. These companies publish their core product, the software code their developers have put together. This is a tremendous departure from the mainstream business model that proposes to develop a product, keep its secrets secret and then lock in customers by building strong barriers to switching to the competition, such as making the device technically incompatible with other firms’ products. Then push constant upgrades and new models into the distribution channel. But if you’re customer can’t quit, there’s no more incentive to innovate.

This is part of the reason why companies give access to the inner workings of their products. It keeps them on the edge. If everybody can see what you are doing, you better make sure you are the best at what you are doing and always one step ahead of everyone else. It also builds and engages a large community of supporters who help you making your product better by constantly spotting errors. Its like having your customers make your product better for you before you have even sold it. A customer loyalty program that’s for free.

Beyond that, large corporates have also benefitted from keeping some of their products open. This has enabled smaller companies to build products on top, creating an ecosystem that renders the original products more attractive and spurs overall demand.

In more traditional industries that lack the collaborative and open culture of software development startups, it might also be too much of too much of a cultural shock to make products available through open innovation. Can these companies use the prowess of open innovation nevertheless?

They can if they involve more of their human resources in innovation. In particular large companies are often bogged down by a lack of communication between departments and even conflicting interests between business units. Internet-based tools that are accessible from anywhere help overcoming mental and physical barriers that traditional reporting hierarchies often result in. This allows companies to reduce the impact of hierarchies and to tap into the creative potential of employees that have previously not been involved in any kind of innovation. For instance, if a company can’t make its products open, it can at least make the internal product development open to everyone inside the company.

It is one strength of software startups that there is little division of labour: developers write code but also talk to customers and think about marketing. This is difficult to be replicated by larger corporates but online idea management tools can at least have those who develop products constantly be in touch with those who talk to customers and those who think about marketing, thereby providing them with feedback from a bigger and more diverse pool of people than before.

By the way the company behind WE THINQ, crisscrossed, has also published some of its software projects as open source software. We are big fans of Open Source Software.

If you want to learn more about how you can use open innovation and collaboration with your team we’ve got a wealth of information here