Open innovation for small companies

Open innovation may seem to be the preserve of big business. After all, it is often associated with long established monstrosities like Proctor and Gamble and IBM. But it is an approach that can be used by all companies, especially start-ups and small businesses. After all, when a business comprises just the owner-operator or a handful of partners or employees, it lacks diversity of mind. Yet, diversity feeds creativity and innovation.

As you doubtless know, open innovation is the action of involving in your innovation process people from outside your company. It may be as simple as inviting a trusted supplier to help you develop ideas or as elaborate as launching a web site to collect innovative proposals from the public. For the most part, however, open innovation focuses on the fuzzy front end of innovation: that is idea generation and development.

Initial Considerations Before you get started on your open innovation actions, you need to consider a number of issues that will help you determine the best approach as well as prevent you from making disastrous mistakes.

How Much Are You Willing to Share? Open innovation means sharing information that most senior managers prefer to keep secret. It may mean sharing confidential information about how your product is manufactured, it may mean letting people know your marketing strategy for the near future, it may reveal certain problems or weaknesses about your company. That can be hard to do.

By the same token, if you invite the public to share ideas on an open platform, your competitors can also read those ideas and act upon them!

So, one of the first decisions you have to make is how much and what information you are willing to share with whom. You need not share everything with everyone. You may simply decide to involve your suppliers more directly with your product conception and design process. That would make them privy to confidential information, but your lawyer can draw up non-disclosure agreements that would ensure anything you share remains secret. In any event, most suppliers are aware that giving away their customers’ trade secrets is a sure route to a destroyed reputation.

Intellectual Property Before you even hint to an outsider that you want to involve her in your innovation process, you need to consider intellectual property issues. If an outsider suggests an idea to you, that does not make it yours. Indeed, you could develop such an idea into a highly successful product only to be sued inside out by the idea contributor if she can prove ownership of the idea – such as a patent.

The easiest solution is to have a legal expert draw up a disclaimer that grants your company all rights to any ideas generated in any open innovation initiative that you