Open innovation: Collaborating successfully with small high-tech firms

Many large companies are turning to partnership with small high-tech firms to drive faster and more effective innovation.

OVERVIEW

In the age of big bang disruption, inward-looking growth strategies can be risky. It comes as no surprise then, that there are a large number of companies turning to partnership with small high-tech firms to ensure faster and more effective innovation.

By directly engaging with outsiders – consumers, suppliers, universities and even competitors - large companies have been able to develop highly efficient innovation processes and differentiated products. However, a recent survey with 200 large companies and 200 small high-tech firms in China, India and the US showed that these open innovation initiatives are not delivering the hoped-for outcomes. Such failure has been caused by three types of unresolved “deficits”—strategic, operational and cultural gaps between the partners.

This research reveals how companies can close these deficits and succeed with open innovation. By following a three-step action plan, large firms can build awareness and openness within themselves, address partnership challenges, and tap into the larger ecosystem, and eventually transform themselves into active and successful open innovators.

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KEY INSIGHTS

Rather than fighting small high-tech firms, established companies are seeking to drive disruptive innovation with them.

Our Survey shows that more than 85 percent of incumbent businesses from China, India and the US believe that collaborating with their smaller rivals will give them access to game-changing technologies that can help them thrive in technology-driven markets.

There are however, three deficits that drain value from collaborators. These are:

1. Appreciation deficit:
During the early stages of collaboration parties may fail to fully appreciate the nature of the opportunities presented – this can be characterized by an unwillingness on the large company’s part to recognize disruptive opportunities driven by technology innovation as well as the inability of the small company to convince large companies about the value and relevance of their technological offerings to the incumbent’s business.

2. Assimilation deficit:
Collaborators may fail to assimilate each other’s strategic priorities, goals and needs. If the incumbent firm cannot overcome strategic and operational barriers to collaboration; the established firm cannot smoothly integrate new technologies into its organization and the small high-tech firm cannot customize its technology offerings to suit its large partner’s needs.

3. Application deficit:
When it comes time to scale up the results of the collaboration efforts, they may fail to use the larger innovation ecosystem resulting in lack of support from both partners.

DOWNLOAD THE FULL REPORT [PDF, 1.25 MB]

Recommendations

How might large companies collaborating with small high-tech firms in open innovation initiatives overcome these deficits?

The three deficits indicate that open innovation is never made possible with a single party’s efforts.

Accenture’s three-step Aggressively Driving Returns of Open Innovation Technology initiatives (ADROIT) model illustrates actions that companies can execute to successfully address partnership deficits and succeed at open innovation. By using this model, incumbents can transform themselves into active and successful open innovators.

STEP 1 focuses on addressing the appreciation deficit by addressing awareness by company leaders.

STEP 2 solves the assimilation deficit by addressing the alignment of the small partners’ technology offerings to the large company’s business strategies.

STEP 3 focuses on addressing the application deficit by looking at the establishment of an operating model that ensures gains for itself as well as its smaller partners.

DOWNLOAD THE FULL REPORT [PDF, 1.25 MB]

About the Institute for High Performance

The Accenture Institute for High Performance develops and publishes practical insights into critical management issues and global economic trends. Its worldwide team of researchers connects with Accenture’s business leaders to demonstrate how organizations become and remain high performers through original, rigorous research and analysis.

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Research Team Leader

Accenture Raghav Narsalay

Raghav Narsalay
Managing Director of Innovation Research as well as for India and China Research.

 

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