The question of direction in open innovation is quite simple: if SME has something that other companies could also use in their own work, outbound O.I. is to be used; if SME wants to change itself with solutions that others posess, inbound O.I. is to be used.
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.
As with other business models, Open Innovation isn’t for everybody. SMEs need to be aware of inputs they need to invest in this type of innovation.
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.
- 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
- 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.