What external stakeholder groups can you tap into to build value for your innovation initiatives? Are your relationships with these external stakeholder groups solid or do you need to do additional work to build good, mutually beneficial working relationships? Are there potential stakeholder groups that you have not yet tapped at all? If so, what is your plan for reaching out to organizations within these pools so that you can further expand your innovation ecosystem? Are your channels for communicating with your external stakeholders strong or do they need further work?
In this post, I will look into the external stakeholder groups you may have to tap into for better open innovation. Such groups include customers, consumers, users, suppliers, startups, universities, competition and several others as you can read about in this post; A Quick Guide to External Collaboration.
Most large companies have 8, 10 or maybe even 12 different external stakeholder groups that they can look into, but even companies with a good understanding of open innovation and external collaboration and processes for this are generally not capable of working with more than two or maybe three stakeholder groups at the same time. They simply do not have enough “bandwidth” to cover more than this. This means you have to strategically choose your value pools to match your specific innovation initiative based on the assets you need to acquire to move forward.
Today, the most common stakeholder groups to work with for innovation purposes are customers/consumers/users, suppliers and startups.
Become a preferred partner
Aside from the most important element of allowing your company to access the assets in these external stakeholder groups for innovation projects, it is also important to have in mind that a key objective of open innovation is to become a preferred partner of choice within an innovation ecosystem. You need to work well with your stakeholder groups to achieve this position.
This is very relevant for big companies, but smaller companies also need to have in mind that as big companies control the ecosystems and play a key role in setting the terms and directions, small companies have to fight hard and contribute well to become the preferred partner of choice in their “category” and thus become part of the best ecosystems.
Most industries have two to four major competitors and these competitors cannot all become the preferred partner of choice within their given industry and thus win the big prize.
It is also worth having in mind that most industries have two to four major competitors and these competitors cannot all become the preferred partner of choice within their given industry and thus win the big prize; a first look at the best innovation opportunities. Some will lose and this will show in their market offerings in the coming years.
With regard to smaller companies, these often take the backseat in the innovation ecosystem unless they have a very unique offering. As such, there are many more winners here and not really that many losers, but the prize is not as big and important as with the big companies. However, if small companies get into the right ecosystems, they can experience rapid growth that can help take their companies to the next level.
Winning the battle to build the strongest ecosystem with the best stakeholder groups rests on your ability to:
- Build the foundation: You cannot build a strong reputation and a perception of being a preferred partner if you do not have the infrastructure in place to deliver on your open innovation efforts.
- Build the perception: Once the foundation is in place, you must make others believe that your company has what it takes to be a “preferred partner of choice” within your industry.
Building the perception is to a high degree based on stakeholder management and communication efforts (primarily externally focused), and I don’t think this is high enough on the priority list at most companies even though it is key for grabbing the top position. Communication efforts in the context of corporate innovation capabilities – not just outcomes – need to improve.
Best potential or least resistance?
You should of course pick the projects and external stakeholder groups (i.e. suppliers, startups or universities) with the best potential, when you start out with the open innovation efforts in your company. Right?
Well, not always. At a recent conference for the oil and gas industry, which is a slow mover on open innovation, I was asked where a company should start with their efforts.
Companies should not necessarily start out where the biggest potential lies. You need to see the bigger picture and thus you need to balance two factors against each other when selecting the starting projects.
They are best potential versus least resistance.
There is no point in starting projects with a great potential if it turns out that this requires that you need to overcome a high internal resistance to this specific stakeholder group. Key reasons for such internal resistance include fear of change in general and risk management attitudes such as low tolerance for failure and worries on sharing intellectual property. These are general obstacles that you need to tackle now as well as later. If this is the case, then this should not be a big factor in your decision on whether to engage with the specific value pool. However, if the resistance is due to the specific stakeholder group itself you need to consider if this is worth the effort.
In such cases, the second-best option in terms of expected outcome might be a better choice if this gives you a better chance of success, which is crucial to winning over the skeptics in the long run.
Open innovation is in many ways like fighting a war and you need to choose your battles carefully.
By Stefan Lindegaard
About the author
Stefan Lindegaard is a Copenhagen-based author, speaker and strategic advisor. His focus on corporate transformation and innovation management based on leadership, the work force and organizational structures has propelled him into being a trusted source of inspiration to many large corporations, government organizations and smaller companies. He believes business today requires an open and global perspective and he has given talks and worked with companies in Europe, North America, South America, the Middle East, Africa and Asia.
In his role as a strategic advisor and coach, Stefan Lindegaard provides external perspectives and practical advice for executives and corporate transformation and innovation teams. He is a widely respected writer and he has written several books including The Open Innovation Revolution published globally. You can follow his work on LinkedIn Pulse.
Featured image via Yayimages.