Innovation hubs often are set up to engage in external ecosystems and bring in new ideas from the outside. While the number of these "outposts" has grown significantly over the last years, most find that successful collaboration with and knowledge transfer to the mothership is far from easy.

Often, negative attitudes about receiving external knowledge and sharing internal knowledge externally lead to several not-invented-here (NIH) and not-sold-here (NSH) problems.

During our recent Innov8rs Connect on Strategy, Leadership & Organization, Marie Amann (Management Consultant at PA Consulting) and Gabriel Granström (Program Manager at The Knowledge Foundation) discussed the causes and consequences of these two types of problems, to prevent tensions and misunderstandings proactively. By applying effective mitigating mechanisms, corporate innovation hubs can become more than just innovation theatres.

The Fundamental Problems with Corporate Innovation Hubs

A corporate innovation hub is an early intermediate between a corporate and a startup ecosystem that scouts for new ideas, concepts, and technologies. These hubs (also called innovation labs or R&D centers) have been popping up worldwide. For example, Honda established an innovation hub to collaborate with over forty startups and a technology organization, that helps them leverage new technologies and ultimately generate new business.

Gabriel and Marie recently published a scientific paper on corporate innovation hubs in Technovation, one of several top-ranked innovation management journals. The research investigated the knowledge transfer between a startup and the parent company when collaborating through a corporate innovation hub. After asking people about their experiences working in that unique collaborative environment, two main challenges emerged - labelled as Not-Invented-Here (NIH) and Not-Sold-Here (NSH) problems.

There seems to be no escape - all of the innovation hubs they researched reported to experience these problems. Fortunately, there are ways to mitigate them. The key is first to recognize the causes and consequences.

How to Mitigate Not-Invented-Here Problems

The Not-Invented-Here (NIH) problem is where you share an idea, but it's not accepted. You must be aware of common causes and consequences to ensure successful collaboration and innovation.

Causes of NIH Problems

Several NIH problems tend to exist. Those collaborating on innovation projects exhibited exaggerated knowledge valuation, obsessive control, and internal antagonism.

  • Exaggerated Knowledge Valuation: Exaggerated knowledge valuation is a common problem where people think their knowledge is better than someone else's knowledge. They don't think they learn from others because they already know the best.
  • Obsessive Control: Obsessive control is commonly found in large corporations that want a safety check for everything before going forward. Not fully trusting what they're being told, they become afraid they'll face many consequences if something goes wrong.
  • Internal Antagonism: Internal antagonism involves a bit of jealousy or envy between the people working in the innovation hub and the parent company. The parent company may feel that those in the hub are being secretive and not communicating their ideas, and they're left in the hot spot with negative ideas.

It's important to recognize these problems as soon as they occur among those collaborating through the innovation hubs. Failure to acknowledge the issues can result in some undesirable consequences.

Consequences of NIH Problems

When NIH problems aren't recognized and addressed, they are likely to lead to various issues that impede the intended knowledge transfer. These problems are rooted in resource inefficiency and include knowledge lag, suffocation of external ideas, and sub-optimizations.

  • Lagging Behind in the Knowledge Frontier: When inflated knowledge valuation happens, the collaborators have difficulties absorbing new ideas and knowledge. In turn, they can't access expertise and keep up with technology. As a result, a knowledge lag they don't realize exists is created.
  • Suffocation of External Ideas: Obsessive control often leads to the suffocation of external ideas. In this situation, knowledge gained isn't used properly, or ideas are killed in search of perfect ideas. The inefficient use of resources leads to people losing motivation to continue.
  • Sub-Optimizations: Sub-optimization does nothing but leads to extra work and negative politics. Internal antagonism leads to resistance when a startup fails to sell its idea to the parent company. In response, they look for other ways or become involved in parallel projects.

Mechanisms to Solve NIH Problems

A couple of approaches are effective at mitigating NIH problems. Collaborative participants solved their issues by translating the relevance of ideas and creating mutual ownership.

1. Translate Relevance of Ideas

This approach is to make ideas relevant to startups and organizations. It's one of the most important mechanisms to overcome NIH problems. To translate the relevance of ideas, you must:

  • Explain benefits from different actor's perceptions
  • Explore technologies from agreed strategic interest
  • Figure out the motivation of recipients'

2. Creation of Mutual Ownership

The creation of mutual ownership becomes essential, mainly when the one who came up with the idea isn't the same one that implements or commercializes it. Creating ownership helps the idea survive and requires you to:

  • Involve technical specialists in scouting activities
  • Make fast and small steps together with actors
  • Make sure the internal recipient has reliance
  • Show results to create publicity internally and externally

Whether for idea relevancy or mutual ownership, the alignment of objectives allows organizations to overcome NIH problems.

How to Mitigate Not-Sold-Here Problems

In contrast, Not-Sold-Here (NSH) problems—or the easier to understand term Not-Shared-Here (NSH) problems—is where you don't want to share your ideas. You're afraid of losing your "crown jewels," or you don't want to appear vulnerable. Unlike NIH problems, NSH problems aren't well represented in the literature. So, information on the causes, consequences, and solutions is relatively new.

Causes of NSH Problems

NSH problems frequently stem from fear of giving knowledge and proving value without receiving it back. The leading causes include confidentiality unawareness, depreciation of knowledge, and desire to monetize knowledge assets.

  • Confidentiality Unawareness: People who don't know what they're allowed to share will be less inclined to collaborate. That's because they don't want to anger people or violate a non-disclosure agreement (NDA).
  • Depreciation of Knowledge: In this case, knowledge is shared because one might not think the information is good enough. Rather than being vulnerable, they keep it to themselves.
  • Desire to Monetize Knowledge Assets: Startups commonly have a strong desire to monetize knowledge assets. They are often afraid of sharing with a large corporation and losing that knowledge, which might be their most significant asset.

Consequences of NSH Problems

NSH problems involve painting oneself into a corner. The consequences include loss of autonomy, constrained problem-solving abilities, and over-protectiveness.

  • Loss of Autonomy: Often, people aren't sure what they can share, even when they try to find the answers from their manager or elsewhere. Once they choose not to share their knowledge and ideas, they lose their autonomy.
  • Constrained Problem-Solving Abilities: When people lose autonomy, they stop talking with each other. If they can't describe the issue and the knowledge they have to offer, then collaboration becomes impossible. This lack of communication leads to constraints on the ability to solve problems.
  • Over-Protectiveness: If someone holds back ideas because they don't know what they're allowed to share, they may also be afraid of losing their only monetizable knowledge. Fear causes them to be overly protective against someone stealing their knowledge, which hinders innovation for projects they're involved in.

Mechanisms to Solve NSH Problems

Mitigating mechanisms of NSH could be achieved with mutual confidentiality understanding and appropriate safeguarding.

1. Mutual Confidentiality Understanding

This mechanism is used early on in a project or collaboration. Mutual confidentiality understanding requires you to:

  • Assess confidentiality before engaging in a conversation
  • Share the intention of how to use shared knowledge
  • Balance the risk and opportunity of sharing

2. Use of Appropriate Safeguarding

Using appropriate safeguards isn't as easy as it sounds. For this mechanism, you're advised to:

  • Only protect what is necessary
  • Create stepwise NDAs that are a natural part of work
  • Have NDA decision-makers close to the conversation

These two mechanisms are ways to mitigate NSH problems. That way, you'll be more comfortable sharing your ideas and knowledge through innovation hubs.

NIH and NSH Scenarios

Following are several real-life examples of NIH and NSH problems that commonly occur among collaborative partners within a corporate innovation hub. See how the experiences translate into the specific issues and associated causes. Then consider how you might work through those problems to avoid consequences if that happened in your hub.

Scenario 1

The Problem: An intelligent machine learning technologist from a startup and a seasoned mechanical engineer from a manufacturing organization need to work together. Instead of collaborating on ideas, they tend to talk past each other. In other words, the technologist may think the engineer's opinion is silly and wrong. So, they say their approach will be replaced and solved by the technologist's way.

The Solution: Innovation managers can take steps to prevent participants from exaggerating the value of their knowledge, resisting other ideas, and causing everyone to become less motivated. First, explain that every participant's views are valuable because they come from different experiences. Second, it's essential to explore the differing ideas from a strategic standpoint so everyone agrees on a common goal. Lastly, participants' motivations may influence behaviors that go against collaborative efforts. Study those motivations and eliminate those rooted in egos, attitudes, and other negative behaviors.

Scenario 2

The Problem: A startup found it extremely difficult to get their ideas through because the parent company didn't participate in the concept development. The parent company lacked context and couldn't understand the design choices being made. As a result, the knowledge was rejected.

The Solution: In this case, your responsibility as an innovation manager is to ensure that all parties take mutual ownership of the project. It doesn't matter who has the original idea or who's the one that puts it on the market. Involve technical experts, take small steps together throughout the process, and improve internal reliance on innovation.

Scenario 3

The Problem: A startup is asked to share their knowledge. They may feel like they're being interrogated to reveal everything they know. At the same time, they may feel vulnerable because they're the only ones giving. The tricky parts come because they might have 25% they can share, 25% they know they can't share, and 50% not sure. Typically, they turn to their supervisor to confirm what they're allowed to share. In some cases, the supervisor may not even know themselves.

The Solution: This case has to do with confidentiality issues where there's a grey area when it comes to what can and can't be shared. As an innovation manager, you must address confidentiality before discussions ever take place between participants. All involved should understand the intentions of the knowledge shared to balance the risk and benefits. When warranted, NDAs should be used throughout collaborative innovation.

To mitigate the NIH and NSH problems, you must recognize the causes and understand the consequences.

When collaborating through a corporate innovation hub, these issues commonly arise in knowledge transfer between parent corporations and startups. There are four key factors in mitigating the not-invented-here and the not-shared-here problems:

First, you can mitigate NIH problems by translating the relevance of ideas and involving all participants early on in the process.
Then, create a sense of mutual ownership so they feel included and valued.
To mitigate NSH problems, be sure to discuss confidentiality before entering into a collaboration.
Then, use appropriate safeguarding techniques a step at a time without feeling the need to save yourself.

Essentially, whether NIH or NSH problems, it all comes down to communication, communication, communication.