Trust – a key factor

When a country lacks:

  • good legislation frame,
  • underdeveloped intelectual property protection and
  • suboptimal business practices,

getting trust becomes crucial for good collaboration.

Every partner in innovation endeavour must have a good credibility, otherwise nobody will want to collaborate with him. Trust is a bridge that connects the gap made by lack of legislation and protection. Obviously, to form a trust between partners, time has to pass and good things need to happen, which is slowing things down. Therefore, SMEs could use some sort of authority to help them reckognize a trustfull partner without having to invest in him first. Sometimes, SMEs turn to general public or their partners, to check potential partner’s reputation. In other cases, SMEs are forced to cautiously get in the business together, constantly probing their partner, and deciding whether he is reliable or not.

Intermediaries

The problem of SMEs lacking resources, infrastructure, legislative framework and trust in developing countries is, in most cases, tackled by organizing some sort of protective innovation hub. This hub is usually sponsored and run by some sort of intermediary body or agent, whether it be a government body or an independent one.

This intermediary needs to be well experienced, organized and unbiased when it comes to innovation projects. It’s role should be to help innovative partners connect, collaborate and share results in a fair way. But, as research suggests, these intermediaries should not “find partners” for the SMEs; rather, they should empower SMEs to find partner on their own, and to help them connect and collaborate.

Main obstacles to OI

Innovation and especially Open Innovation face additional obstacles when it comes to developing countries.

First, SMEs in developing countries have very limited resources for research & development activities.

Second, SMEs in developing countries usually have no knowledge or resources to establish and maintain network that is neccessary for open innovation.

Trhird, developing countries often have poor legislation context, and good legislation is important for complex and delicate issues such as intellectual property protection, profit sharing and liability status.

Partners in innovation: Companies, Suppliers, Customers

If a SME is to innovate openly, it needs external partner or partners to collaborate with. That partners should possess complementary knowledge, in order to help the SME. In other words, SME should choose partners that have relevant knowledge and creative potential that could be used for innovation.

Other companies may be interesting partners since they are also interested in doing business the best way they can. If another company has interesting ideas or technologies that could be used elsewhere, they could be a potentially good partner.

Suppliers, distributors and other partners are sometimes a rich source of ideas for innovation. They do work with the SME, but often have different aprroach and perspective, being able to suggest something out of the standard frame.

End-consumers and customers are sometimes observed as a rich source of ideas for company’s innovation. After all, they are the ones that pay for the product. There are various approaches to immerse consumers, from a simple needs and idea collecting, all the way to including them in the product manufacturing process.

What it takes?

The conditions that need to be met for open innovation to work are multiple and dependent on type of activity that SME is after for. Nevertheless, a few elements are necessary.

  1. External partner. The SME needs somebody from outside to work together with. External partners may be:
  • business partners both vertical and horizontal (suppliers, distributors, sister companies),
  • other companies that have some technology or solution to share or sell,
  • end consumers or customers
  • universities, schools and research institutes
  • indepentent inventors
  1. Communication channel. Collaboration with external partners needs to be effective and efficient in order to be fruitfull. The type of communication that will be used depends heavily on the innovation partners and their properties. In some cases, a face-to-face communication is enough, if the SME has only one partner to work with. In other cases, a communication network should be used, when there are more than two partners, and they are unable to travel to each other. If SME wants to include it’s customers in the innovation process, it will have to decide what is the best way to collect their needs, ideas and oppinions.

3. A new management approach. SME can not innovate using external partners unless it’s management reckognizes the nature of that process and embraces it.