In traditional thinking, being competitive in the global marketplace requires a significant investment in time and resources. But the reality is that any organization today can take advantage of open innovation to innovate faster and cheaper than ever before, positioning them as true competition in the industry. This article will explore the top five ways SMEs can leverage open innovation.

The pace of business today requires creativity, new ideas and new product innovations on an almost on-demand basis.  Small and medium enterprises are often constrained by limited resources and struggle to quickly and affordably identify new market opportunities, solve business and technical problems, and access partners and talent.

To solve this problem, a growing number of small and medium sized companies are turning to open innovation and crowdsourcing as a way of leveling the playing field with large, global corporations boasting extensive in-house marketing, R&D and business development departments, without increasing fixed costs.

Open innovation is accelerating lean, startup ventures and kick-starting more established small and medium enterprises by distributing work to a large network of problem solvers, allowing them to pay only for success.  Investing only in solutions is a highly efficient way to run a business and make limited budgets last longer and go further. Open innovation enables small and medium businesses to focus on their core capabilities while allowing them to find solutions to their biggest problems and bring products to market faster and more cost-effectively.

Recognizing the opportunities that open innovation presents, below are some tips to help you take advantage of open innovation in 2012:

  1. Check your ego at the door—If you could solve all of your company’s problems by yourself, or if you had unlimited time to formulate all the right answers, you’d already be the market leader in your category. But the fact is that the clock is ticking, and your competitors are already using open innovation to find the solutions you’re looking for. Any company that isn’t sourcing solutions outside of their own four walls will be gone in five years. Don’t get caught up in the idea that seeking help is a sign of weakness.
  2. Leave no stone unturned—Some of the best ideas come from the most unlikely places. Cast a wide net and welcome all participants; keep in mind that Thomas Edison once worked selling newspapers to train passengers. Pose your problem to anyone who will listen, not just the people you think will be your solvers.
  3. Embrace diversity—If you have an engineering problem that your engineering team can’t fix, would adding another engineer to the mix be helpful? Or might it make more sense to pose the problem to someone who can approach it from a completely different perspective? Look for people with different experiences, different backgrounds and different cultural references for a unique slant on your challenge.
  4. Ask a better question; get a better answer—Albert Einstein once said, “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.” The trick to solving a hard problem is to ask the right question. Take the time to identify the real problem, then formulate a question that will produce answers to solve the true problem at hand. The reality is that with enough eyes, most problems can be solved. The trick is to make that problem portable, and thus accessible to anyone.
  5. Invest in solutions, not effort—R&D departments can spend years researching a problem to no avail, wasting time and money. With open innovation, only the solved problems require payment, not the trials and failures. By tapping into a global pool of talent, you don’t need to pay for the full round of effort associated with internal R&D.

The global marketplace is demanding and can force companies to act mature at a very young age. Open innovation essentially changes the economics of work by bypassing the “ramping up” phase that stymies so many small companies. By taking advantage of the opportunities that open innovation presents, small and medium enterprises can not only innovate like the “big guys,” they can often beat them at their own game.

By Dwayne Spradlin

About the author

Dwayne Spradlin serves as President & CEO of InnoCentive, the pioneer in open innovation and crowdsourcing. Previously, he served as President of Hoovers Online, President and COO of StarCite Inc., Senior Vice President at VerticalNet Inc., and Director at PriceWaterhouseCoopers, where he spent ten years delivering technology and strategy solutions to Fortune 500 clients. He has been featured on CNBC, ABC, NPR and BBC and quoted in the Economist, BusinessWeek, The New York Times, and many other journals and periodicals. In April 2011, Dwayne and co-founder of InnoCentive Alph Bingham co-authored the groundbreaking book, The Open Innovation Marketplace, published by FT Press.