Since it was proposed by Henry William Chesbrough more than ten years ago, open innovation has become a widely accepted concept for many organizations in designing business strategies (Oumlil & Juiz, 2016).In the case study under investigation, four issues are brought to the fore in regards to the implementation of open innovation at Siemens: lack of information, the inadequacy of resources to carry out innovation initiatives, ineffective tools of identifying innovation experts within Siemens, and resistance among stakeholders. As evidence in the text suggests, these issues have frustrated the efforts of those who have been given the responsibility to champion innovation at Siemens.
Employees low awareness of open innovation is a significant issue in the case. A majority of the workers at Siemens do not have the understanding of what actually constitutes open innovation. To many, open innovation appears to be an intrusion into their normal activities. Lackner has not provided detailed information about this concept either. As such, a majority of the stakeholders tend show a negative attitude toward change.
Lack of effective tools for identifying technology experts within Siemens is another dominant issue in the case. Lackner finds it challenging to create a networking platform which links various experts in efficient technologies. As a result, there is minimal information exchange that could spur the generation of innovative ideas within the company. The problem is further aggravated by the decentralized nature of the organization. Decentralization encourages independence of business units within the same organization due to the higher authority accorded to lower-level executives who tend to pursue the agenda of their respective business divisions (Martin, Lewis, & Fifi, 2014).Accordingly, this form of organizational structure at Siemens appears to promote the silo mentality in which units show a lack of enthusiasm to collaborate with each other in matters of technology and innovation.
The process of developing a business idea from its conception to the stage of becoming a commercial product requires a lot of resources; both financial and human. In this case study, Dr Thomas Lackner receives $ 3million to facilitate his idea of open innovation at Siemens. According to Lackner, the amount given was too small to finance his initiative adequately. Considering that the time of presenting this idea the world economy was experiencing a recession, the business divisions, as cost centers, sought to minimize expenditures as possible.
Open innovation entails an inflow and outflow of information within the context of a given organization with the aim of gathering innovative ideas and putting such ideas into practice to come up with more profitable product designs (Oumlil & Juiz, 2016).While working with the Siemens Management Consulting group to actualize the concept, Dr Lackner faces resistance from the group employees for adopting a strategy devoid of teamwork. Members of his own division, Corporate Technology (CT) showed complacency in embracing his plan. The Workers Council also took issue with the idea of social collaboration in the generation of innovative ideas due to the potential adverse effects of such an arrangement could have on the privacy rights of employees. Moreover, a majority of Siemens staff resisted against sharing of information with parties outside the organization.
Reasons for Resistance
It is indicated in the text that Lackner adopted a one-man approach in implementing his plans. Instead of approaching other consultants for suggestions on how best to implement his innovation plans, Lackners approach appears to suggest that the need for involving the consulting group was to access the necessary resources to implement his idea. As Bernd Blumoser (one of the members of the consulting group) mentions in the case study, the consulting group was meant to assist Lackner to implement the idea he already had. Evidently, this behavior appears to have made members of this team feel isolated from the plan thereby showing little support for the idea Lackner advanced.
Inadequate involvement of stakeholders is also evidenced by the negative reaction of the Workers Union to the idea of exposing their profiles on a social network. These workers concerned that revealing their personal profiles on such networks would be an infringement on their privacy rights. Although the issue of protection of privacy was resolved and Lackners plan proceeded, wrangling delayed the implementation of the plan for six months. As Lackner indicates, the employees were worried that there could be repercussions of disciplinary actions from their managers. This shows that these employees have not been informed on how the company would gain in generating innovative ideas on such platforms.
Recommendations on Resolution of the Issues Highlighted in the Case Study
Stakeholder involvement is an essential ingredient for open innovation to take root in any organization. Participation of employees and other stakeholders helps to motivate staff and shape behaviors toward specified organizational goals. Besides, involving employees acknowledges their views and suggestions, and this offers legitimacy to the innovation efforts. For these reasons, they are more likely to embrace new ideas that seek to develop innovative products (Yang & Hsu, 2010). In context, Lackner should involve stakeholders in order to solve some of the challenges he experiences. For example, the involvement of the Workers Union and Siemens Consulting group at initial stages of implementation of his idea about open innovation perhaps would have created awareness about the plan, as well as built positive attitudes among stakeholders. This would avoid resistance occasioned by the lack of information about the need to support Lackners idea. As Llopis (2014) puts it, innovation is no longer a preserve of individual geniuses but a product of multiple ideas from an organizations workforce.
Effective communication to stakeholders must characterize employee involvement. Effective communication means that all employees and other stakeholders get the right information about a given innovation initiative. According to Beckett and Hyland (2009), the process of implementing innovation entails engineers, research scientists, management, marketing and fiance teams, and therefore, these groups must have an effective information exchange platform to avoid noncooperation among stakeholders. Beckett and Hyland further indicate that the mentioned groups should be informed of the financial implication of the proposed innovation in order to assess its viability in the context of the different units of the organization they represent. In the context of open innovation, external agents should also be involved. The failure to inform every stakeholder in the process is the cause of what is seen when NineSigma employees refused Zilners offer. They described it as a proposal full of gimmicks and a waste of their time. Such reaction would have been avoided if every individual involved in the process had accurate information in regards to the innovation that Zilner and Lackner proposed.
Articulating the relationship between the vision and innovation history of Siemens can reduce ambiguity about open innovation. This way, all stakeholders would know where the organization has come from, its current position and aspirations in regards to innovation and competitiveness (Yang & Hsu, 2010). Articulation of vision informs the workforce the desired future of the organization and the role of each stakeholder in should play in actualizing the desired position (Llopis, 2014).Perhaps, articulation of the vision would have avoided the scenario in the case where some executives resisted Lackners idea for lack of a better explanation on how the innovation efforts would impact the output of their respective units.
For open innovation initiatives to get the full support of the employees and external stakeholders, they have to be institutionalized and receive the backing of top management. Management provides resources for research and institutionalization accords legitimacy to innovation initiatives among external and external stakeholders (Yang & Hsu, 2010). Such move would ensure employees embrace innovation as part of their job descriptions. In the context of the case study, institutionalization would have avoided resistance from NineSigma executives who argued that Lackners proposal lacked official status at Siemens. Moreover, the executives could not assess the economic impact of the project.
Institutionalization of innovation initiatives may also allay fears over the possible theft of rights and patents most executives and employees appear to express in the case study. When collaboration between external actors is given official status in an institution, employees acquire confidence in such partnerships due to the reduction of fear of loss of a companys intellectual rights. Also, institutionalization spells out clearly the purpose, goals and avenues for collaboration (Oumlil & Juiz, 2016). According to Oumlil and Juiz, such official links promote the exchange of information among the collaborating organizations due to guarantees for the protection of intellectual property provided in official collaboration agreements.
Modification of culture at Siemens can play a significant part in reducing the resistance that Lackners open innovation efforts. Culture is considered as a set of shared norms, values and beliefs that are unique to a given organization (Yang & Hsu, 2010).It is an organizations way of doing things and, therefore, cannot be imitated. Since open innovation is a new concept at Siemens, a change of culture is necessary to redesign operations and attitudes of employees. For instance, a change of culture would enhance sharing of information among the various units of Siemens. Additionally, a culture shift would minimize the how-we- do-it syndrome due to nature of people to resist change (Oumlil & Juiz, 2016). For instance, Lackner faces resistance from employees of his own unit who contend that they have adequate innovation projects to run already. This position can be modified if a culture change is initiated before introducing innovation initiatives.
Attitudes, norms and beliefs take a long time to establish. Equally, a new culture shift will require some time to get hold of an organizations practices (Oumlil & Juiz, 2016; Yang & Hsu, 2010). As such, they should be gradually enforced to provide time for learning among employees and other stakeholders. As suggested in the text, open innovation efforts must be sustained for a long time to realize its goals. Thus, patience is an essential element in this cause.
Beckett, R. C., & Hyland, P. (2009). Effective communication in innovation processes. CINet Journal, 12(5), 96-106.
Llopis, G. (2014). 5 Ways Leaders Enable Innovation In Their Teams. Forbes.
Martin, H., Lewis, T. M., & Fifi, J. (2014). Centralized versus decentralized construction project structure Easing communication difficulties. International Journal of Construction Management, 14(3), 156-170. doi:10.1080/15623599.2014.922726
Oumlil, R., & Juiz, C. (2016). An Up-to-date Survey in Barriers to Open Innovation. Journal of technology management & innovation, 11(3), 137-152. doi:10.4067/s0718-27242016000300016
Yang, Y., & Hsu, J. (2010). Organizational process alignment, culture and innovation. African Journal of Business Management, 4(11), 2231-2240. Retrieved from https://pdfs.semanticscholar.org/05bf/f81fe3a1727d3e198e0748370ec20f77b038.pdf
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