Social media channels have enabled organizations such as Dell, Starbucks, and NASA to successfully reach out to external contributors to collect suggestions, which have in turn stimulated innovation. This research, however, shows that most initiatives to source external contributions fail and that organizations seeking external ideas need to proceed with care and establish proactive processes to avoid potential pitfalls.
Crowdsourcing and social media channels have largely replaced the private channels between a lone individual and an organization with a public debate in which external contributors not only submit suggestions but also vote for and comment on suggestions made by others. In the best cases, these interactions evolve into a vibrant initiative, granting the host organization a rare and valuable window into external contributors’ ideas and needs.
The potential benefit of sourcing suggestions from – customers, business partners, inventors, academics and other external networks – is self-evident and can result in more effective problem identification, problem solving and innovation. So it is important for organizations to determine how they can access open innovation in a cost effective way. The trouble, as researchers at ESMT and Stanford discovered, is that most initiatives to engage external contributors fail.
Prior to the ESMT/Stanford research, there was no empirical research into the success rate of efforts to involve external contributors, nor into what organizations can do to maximize their chances of success, nor into why some organizations are more successful in eliciting suggestions than others. Compounding the problem is that by focusing on the high-profile successful initiatives and ignoring the negative impact on the average firm an over-optimistic false prospectus has emerged.
ESMT and Stanford researchers analysed initiatives undertaken by 23,809 organizations – both successful and unsuccessful. This study demonstrated that most organizations attempting to receive suggestions from external contributors will not be successful and that most of the initiatives wither and die. It also reminds us of the risks involved when studying only successful cases and the danger of organizations underestimating the resources required to bring initiatives to a successful outcome.
The study revealed several important things including that:
- Only a small percentage of initiatives get off the ground, most not receiving many suggestions at all;
- There are actions organizations can take to influence external contributors to submit suggestions;
- Results are contingent upon the stage of the initiative, i.e. an organizations’ actions have more weight in the early stages when initiatives have few prior suggestions;
- It is particularly beneficial to pay attention to new contributors;
- Organizations tend to invest in an initiative only after it has crossed a certain threshold, and they interact primarily with external contributors who are already familiar to them. Correcting this common behaviour could pay big dividends.
The high failure rate and the need to pay detailed attention to external contributors highlight the importance of considering the costs of open innovation and of managing the process with care.
In considering the process organizations should bear in mind three specific ways to encourage suggestions from external contributors which were identified by the researchers:
- They suggest that ‘proactive attention’ – measured as the extent to which organizations post suggestions to their own initiatives – is more likely to elicit suggestions from external contributors in the future.
- They posited that organizations that pay ‘reactive attention’ to suggestions – measured as attending to suggestions from external contributors – will elicit more suggestions in the future.
- They advise that the effect of attending to external contributors should decrease with the stage of the initiative.
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- June 2014
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