At intervals throughout the year, chief technology officers (CTOs) of large research and development departments across industries gather for an open exchange of information and an opportunity to learn from each other; this gathering is known as the CTO Forum. The 2010 CTO Forum addressed the challenges associated with the effective management of open innovation and innovation partnerships to create breakthrough products. Gathering at the 2010 Annual Meeting, eight CTOs discussed the increased need for innovation partnerships, critical success factors for managing them, and issues that must be confronted to make them work.
All participants agreed that there is an increased need for such partnerships to create value in today's marketplace, and that partnerships need to be managed both carefully and fairly if they are to be valuable and sustainable. Each of the CTOs reviewed a specific case that had created a dilemma for his or her company. The partnerships under discussion covered the gamut, from open innovation programs to channel partnerships, supply chain partnerships, and partnerships associated with contractor/ subcontractor relationships. Four basic criteria for a productive partnership emerged from the discussion:
* There must be a match between what each party is seeking and what the other brings to the partnership. One CTO discussed a creative partnership in which the smaller partner got investment and access to the market, and the larger partner gained access to unique capabilities and ownership of jointly developed intellectual property (IP).
* The parties must be willing and able to negotiate a win-win agreement. Members noted cases where lopsided agreements led to eventual breakdown of the partnership.
* The participants must have compatible intentions for the partnership. One partnership between two large companies foundered when it became clear that the time frames for monetization were significantly different.
* All participants must be willing to put "skin in the game." All sides of a partnership must be willing to devote both financial and time resources to the relationship. Even where partnerships were well funded, when management time was not invested by either partner, the partnership failed.
Once the parties decide to enter into a partnership, the relationship must be managed on an ongoing basis. Based on their experience, the CTOs identified several critical success factors at the management stage. These translate into specific practices for partnership management:
* Be very clear about the goals of the partnership and who is to do what to achieve those goals.
* Negotiate difficult issues, like IP ownership, in the initial partnership agreements.
* Assure that there is a champion in each company who can oversee the partnership and address issues as they arise.
* Establish contacts at multiple levels to build trust throughout participating organizations and create a sustainable partnership. …