Professor Wim Vanhaverbeke’s new book, Managing Open Innovation in SMEs, (CUP, 2017) observes that it’s not just large companies that can successfully implement open innovation, offering in-depth case studies of small and medium sized firms to illustrate specific learning points for managers and policy makers.
If you’ve Googled the term “open innovation” (OI), you might have been surprised by the vast amount of information that is available online about that topic. Yet the majority of publications focus on large firms. The impression you might get is that open innovation is useful only for large companies, not small firms. However, the opposite is true: open innovation can be beneficial for both – but it has to be managed differently.
What are the challenges for small firms?
Most small firms face a harsh business environment through increased global competition. Various factors, including changing market conditions or new regulations, force them to reinvent their business through new technologies or novel value propositions. Collaboration with external partners – suppliers, customers, research labs and universities, or larger companies and networks of other SMEs – is a must, as most small companies have insufficient financial resources and technical competencies to develop technology in-house. However, open innovation is not yet a common practice in small firms, and although innovation is imperative for most European SMEs, few understand how to benefit from innovating through partnerships.
And the way forward?
In Managing Open Innovation in SMEs, Vanhaverbeke explores how open innovation can be implemented in SMEs, and takes things a step further to suggest a framework for successfully implementing OI strategies. Managing open innovation in small companies is actually quite specific, and the concept almost has to be reinvented to make it useful for entrepreneurs in small firms. For this reason, the book pays a lot of attention to the role of the entrepreneur, and the integration of strategy, business model changes and open innovation. To address these issues, the book offers an in-depth analysis of open innovation practices in small enterprises based on rich case studies from successful European firms. The result is a set of practical guidelines for entrepreneurs at the end of each chapter.
What’s so exciting about OI for SMEs?
For a start, open innovation connects SMEs with new partners from completely different industries. Innovation is usually associated with high-tech industries and top-notch technology. But the companies studied in this book are examples of low-tech or medium-tech industries – those manufacturing bicycle parts, quilts and pillows, chemical treatment of textiles, barometers, radiators, etc. Innovation and open innovation in these industries is not about inventing new technologies or pushing the technological frontier, but boils down to find interesting applications of existing technologies.
Take for instance Quilts of Denmark, a Danish start-up with a goal to produce high-quality functional quilts and pillows that could actively contribute to healthy sleep. Open innovation with a space agency resulted in the production of an ‘intelligent’ quilt that could regulate body heat, using technology originally developed by NASA. Applying technologies in a new industry context requires a lot of applied technology development, which becomes over time a valuable asset for the innovating SMEs, and allows them to transform the company into something completely new.
What’s different about this book?
Most policy makers assume that simply explaining the need for, and urgency to, innovate will lead SME managers to start innovating. Observing SMEs for eight years, Vanhaverbeke’s experience was almost the opposite: that entrepreneurs and SME managers only start to innovate when other SME managers show that it can be done. SME managers learn from the experience of other managers. As they have limited time to learn, this can only be done in local networks organized by local organizations supporting SMEs – networks which should be at the core of the European innovation policy for SMEs, as these local coaches understand the needs of, and are trusted by, the SMEs in a particular region. The problem is that good examples of open innovation are rare on a local scale and managers who successfully implemented open innovation get too many requests to be a guest speaker to cascade their knowledge. Moreover, many coaches don’t have professional guidelines to instruct open innovation to SME managers.
Managing Open Innovation in SMEs steps in to fill this gap, recognising and responding to the urgent need to understand how entrepreneurs can organize open innovation by breaking down just how innovating entrepreneurs learn, and suggesting how more SME managers can be incentivized to start their innovation journey.
Who should be reading it?
It’s nothing short of essential reading for SME managers who are seizing new business opportunities through open innovation, for managers in large firms who innovate together with SMEs and start-ups, for SME innovation coaches, and for policy makers who intend to create a social and economic environment conducive for open innovation in small firms.
Professor Vanhaverbeke suggests that a set of short videos / multimedia cases about best practice in open innovation in European SMEs (to be distributed freely on YouTube), and strong guidelines, would greatly empower local coaches in their attempt to initiate SME managers into open innovation. Given its potential impact on changing the mindset of SME managers it is possibly one of the most powerful initiatives policy makers can take at the EU level to stimulate (open) innovation in SMEs.
The open innovation theme will continue at the R&D Management Conference at Milan in July 2018, where several tracks are dedicated to the theme.
Want to know more?
Order the book @ www.Amazon.de
Read the case studies @ Exnovate
Post by Wim Vanhaverbeke, Professor of Innovation, Management and Strategy at the Hasselt University, Visiting Professor at the ESADE Business School and National University of Singapore