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Entrepreneurship and innovation March 28, 2014

The secret to successful open innovation initiatives

By Linus Dahlander and Henning Piezunka
Orange reflective architecture
Best practices companies can adopt to ensure effective engagement with customers.

A new study by Linus Dahlander, associate professor and KPMG Chair in Innovation at ESMT, co-authored with Henning Piezunka, a PhD candidate at Stanford University, finds that organizations that display a feedback button on their website to invite suggestions from customers frequently struggle to foster thriving online forums for new ideas. Their study, which has been published online by the journal Research Policy, looked at just over 23,800 organizations, and found that success with the online feedback mechanism varied widely.

The types of organizations included in the study represent nearly every sector: public entities ranging from rural towns to national governments, and private companies ranging from small startups to multinational corporations. Whereas prior studies on suggestion solicitation looked at just a handful of organizations, Dahlander and Piezunka worked with one of the leading software firms in the field of online feedback in order to conduct a much more comprehensive study.

The findings have broad implications since businesses and other organizations increasingly turn to the Internet to engage customers, and adopt so-called open innovation strategies to harvest ideas. According to Dahlander, “it has been shown that organizations can innovate if they interact with their customers. However, many organizational attempts at open innovation campaigns often wither and die. We wanted to see how companies can elicit suggestions successfully.”

One of the biggest reasons why most organizations fail to replicate those successes is that outsiders don’t see how much effort actually goes on behind the scenes to make those external engagement campaigns takeoff. Organizations often make the mistake thinking that all they need to do is launch their campaign and customers will start engaging.

In addition to pointing out the shortcomings of organizations’ outreach efforts, the researchers also identified several actions that organizations must take if they want external contributors to send in their suggestions:

Proactive attention: Instead of waiting for suggestions, the organization should initiate the conversation with an internally developed suggestion to stimulate debate.

Reactive attention: Organizations should actively respond to suggestions from external contributors to signal that their thoughts are being heard. The study found this was especially important for newcomers to the discussion.

Catalyzation: Organizations should focus their efforts on new users and the early stage of their open-innovation effort. In particular, organizations need to be aware of the time, effort, and commitment required to nurture a fledgling forum into a thriving discussion.

Those may seem like common-sense rules for successful communications, but the reality is that organizations frequently underestimate the investment needed, and often fail to apply such widely understood best practices when it comes to corporate engagement. If organizations actually adopt the strategies of proactive and reaction attention, they can then unlock the enormous potential of open innovation.

This is an edited version of an article published by the Stanford Technology Ventures Program on its blog.

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