10 Open Innovation Questions for SME’s

As a follow-up to my slightly provocative blog post, Why Open Innovation is Not for Small Companies, I have begun looking further into the interesting topic on how small companies can innovate with others.

I plan to interview several small companies and I am working on a set of questions for this. You can see the first 10 questions below. What do you think of them? Can you add others that can help highlight the real issues on this topic?

  1. Why should small companies embrace open innovation?
  2. What does open innovation mean to small companies? How does this differ from how big companies view open innovation?
  3. What are the benefits of innovating together with others for small companies?
  4. What concerns should small companies have about open innovation?
  5. How can small companies prepare themselves for open innovation?
  6. Which business functions should “own” open innovation at small companies?
  7. What kind of people should work with open innovation at small companies?
  8. Open innovation is very much about ecosystems with several partners. Small companies often take the back seat in such setups. Is this a problem? Are there things small companies can do to level the playing field in such relationships?
  9. Small companies often have limited legal resources. What can they do to get better deals and protect their intellectual property?
  10. Are there myths about open innovation and working with big companies that small companies should realize aren’t true?

Your input is highly appreciated…

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  • http://fernandofusterfabra.wordpress.com/ Fernando Fuster-Fabra

    In Cataluña, there are innovation clusters set up to facilitate SMEs taking advantage of cost savings schemes in major innovative revamps in their businesses. Such is the case, for example of firms involved in bio-medicine, to cite one line of innovative business. 2.0 technology is offered to several firms that would probably not risk doing it alone.

  • Fern

    I am studying the effects of Open Innovation on SMEs’ resources for my PhD, as although I can see the benefits of OI for SMEs, my concern is that the covert costs of collaboration need to be clearly identified and managed to maximise opportunities. You may like to include a related question.

  • SSusanna M Ross

    Having started and ran two small nano-tech companies, and worked in two very large corporations (DuPont and Ciba), here are my ‘two cents’ on your points:
    1. Most small companies are underfunded, therefore they NEED to be creative in their resource allocation. This oftentimes means outsourcing certain skillsets, such as research (in areas not part of one’s own core competencies).
    2. For small companies, open innovation can mean collaborative work with other small companies, developing ‘industry partner’ relationships to jointly develop new products that may be small (volume not interesting for large companies) but profitable (small company may take responsibility for distribution channel).
    3. Benefits of innovating with other small companies = share the wealth and an efficiency in resource allocation (per unit cost accounting basis perhaps) and greater potential for growth via mergers/attraction of funding. “Creating linkages”, as I call open innovation, enables multiple organizations to learn, grow and gain from collaboration.
    4. Concerns are mostly legal: You have to sort out the “who does what” and “who gets what for what work” prior to ‘creating the linkage’. A Strategic Partnership agreement and Joint development agreement work even for small companies (though we don’t have to make them as lengthy as larger corporations!).
    5. Small companies can prepare themselves for open innovation by doing an internal audit of their expertise (core competencies) and begn to create relationships with other companies in their industry, at universities and with funding sources (great for making match-ups). Small companies can also utlize their legal resources to make sure they are aware of the implications of any open innovation work, joint development or strategic partnership or whatever you want to call it.
    6. My opinion is that CEO’s need to “own’ the open innovation. Otherwise, you don’t have support of the effort, and at small companies, that means direct resource allocation and, often, direct involvement at the legal and relationship levels. Also, the person(s) responsible for the outcomes must ‘own’ the open innovation, which includes any research, sales/marketing and financial functions.
    7. The kinds of people who participate in the open innovation are ones who are interested in broadening their skills and see the big picture that all can gain from their ‘linkage’ with another organization. I would not put it as a function, but rather a mindset. Those who are closed-minded and greedy will not survive at a small company anyway.
    8. I do not think that small companies take a backseat. I think you have a biased opinion here. Again, it falls down to a strong strategic partnership or joint venture development agreement, good common sense, and a willingness to be direct and forthright with your collaborators during good and tough times. We never took a backseat to a large company and we were an OEM to global providers with private label materials. They wanted and needed us, and we wanted their distribution channel. If you see what each brings to the table and constantly remember this, andput good people together who have the mindset to make it work for both parties, then there should be no worries. The scale of potential will also drive the partnership. Small compnies should never yield to “larger’ comapnies just becausethey are big – that is an old notion of hierarchy and paternalistsm.
    9. First, start with trade secrets and ensure a certain level of creativity in that regard. Typically, Law firms will provide good templates and reduced fees for small companies in exchange for future growth (they will get more work when the small company grows). We always used templates from software we bought for our agreements, and had others from our Big Corporation days, so we were fairly set. Small company members are usually very smart and willing to work longer hours than their corproate counterparts. 10. I do not know the myths, but I have enjoyed my time working with large companies mainly because I was ‘one of them’. Small companies do have to understand that large compnies are often slower to respond and/or are more deliberate in their efforts, for a variety of reasons. Patience may be what is needed in working with large corporations.

    Stefan, I hope this information is useful to you. It is my initial reaction to your questions, so I hope they are objective enough to use. Please feel free to contact me via linkedin if you wish any more input!
    Best Regards,
    Susanna Ross


    I doing research on open innovation challenges but i am facing the questionair problem. anyone would like to help me, please contact, [email protected]

  • Emma Anderson

    I am about to begin my master’s thesis which is looking to focus on open innovation in SMEs, and I intend to study this subject as a netnography. I feel this post is very relevant to what I’m looking to do and wondered if any follow up work was published or you had more thoughts on this area that you could share?

  • Amelia Johannsen

    Hi Emma, we have many articles discussing innovation in SMEs and Open Innovation. To start, try looking here: http://www.innovationmanagement.se/tag/sme/ and here: http://www.innovationmanagement.se/tag/open-innovation/

  • Emma Anderson

    Hi thank you for this guidance.