The paradox of disclosure when exchanging ideas

“The paradox is about the fact that to succeed in open innovation you have to share information and disclose your idea, but then it risks being stolen,” says Ioana Stefan, researcher in industrial engineering and management at the University of Gävle.

Success demands collaboration

Ioana Stefan’s research is about the role of intellectual property in collaboration between businesses and other organisations. It could concern complementary assets, manufacturing capacity and, sometimes, it could be the very idea itself for a new product or process.

“There is a clear tendency that businesses are no longer able to renew themselves on their own; they need collaboration to boost their innovation process,” Ioana Stefan says.

She points out that it is beneficial that we are becoming more open and

collaborate more, as it may promote technological development, but, at the same time, tensions may arise, as protecting our ideas can be hard and they can easily be misappropriated.

The paradox

The paradox concerns the fact that to co-create value, we have to disclose our internal knowledge and our resources, yet both parties in the collaboration strive to make a profit in the end.

“To co-create value, we have to share resources and ideas, but to be able to make a profit at the of end of the collaboration process, we have to split up the value of what the two partners achieved.”

Sharing your idea too early

Often, people share their ideas at such an early stage that they are unable to patent those, Ioana says. In such agreements, it is very difficult to be specific about the result.

“We have to predict the future, and we all know that this is very difficult, and regardless of how hard you try to protect your assets with methods available, your partner can get away with stealing your idea if they want to.”

Another difficulty might be that you have secured a patent for your idea but only in Sweden, and you are collaborating with an international partner with access to other markets.

“Your partner will then be able to reproduce your patent and your innovation in other countries, as these patents are restricted to the country in which they were granted.

When the product is the solution

To decide what you can disclose and what you cannot, you need to be aware of the knowledge embedded in the product. Ioana points out that this decision depends on if the product and its solution overlap very much or very little. Regarding Coca-cola, for instance, there is very little overlap between the solution (the recipe) and the product, so it is safe to show to potential partners.

“But if you have a different product, for instance a technical innovation, it means that if you show the product you show the solution. You only disclose such information to a potential partner or if you have a patent.”

Innovation intermediaries

One way to protect yourself, Ioana suggests, is to involve neutral partners, so called innovation intermediaries. These will match solution providers to solution seekers, combining a substantial network of businesses with wide experience. Innovation intermediaries become neutral partners who can ensure safer collaboration processes. This is especially advantageous for smaller businesses looking for a partner with a good reputation.

Understanding the pitfalls

A possible pitfall that Ioana discerns is if one of the partners focuses too much on either creating value or capturing value. If they focus too much on capturing value, they risk forgetting to protect the knowledge created. But if they focus too much on capturing value, they may become overprotective regarding their knowledge, which may result in a loss of opportunities.

“If you protect your knowledge too much, you won’t be open to new ideas and partners. Such an approach is unproductive and leads to anything but a win- win situation.”

The importance of trust

A possible recipe for a successful collaboration, is, according to Ioana, a moderate amount of trust combined with a well-defined contract. Her research shows that a fear of theft may result in a very negative outcome.

“If you are afraid, you are reluctant to trust your partner and hesitant both to share information and sign an agreement. So, fear in itself may result in a situation where no one gains anything from the collaboration.”

One example from her study is a collaboration in which a larger company presented a very complicated and long contract. The smaller business, lacking legal competence, thought that they might be tricked by this 50-page contract that they did not understand. As a result, they refused to sign the contract.

“The larger company then had to simplify the contract in order to gain its partner’s trust. The point here is that even if there is no misappropriation, fear itself can lead to a situation in which both parties lose.”

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Ioana Stefan is employed by the Department of Industrial Engineering and Management at the University of Gävle. She defended her doctoral thesis Knowing the Ropes in Open Innovation: Understanding Tensions through a Paradox Lens at KTH on 23 November.

Supervisor: Professor Lars Bengtsson, University of Gävle, Professor Mats Engwall, KTH, and ScD Camilla Niss, University of Gävle.

Ioana says that she can see herself working with businesses to solve their challenges, but she would rather stay in academia.

“My doctoral dissertation is just the beginning. It would be interesting to look at this from an individual persepctive to how it affects the decisions we make,” Ioana Stefan says.

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For more information, please contact:
Ioana Stefan, PhD, Department of industrial engineering and management, University of Gävle
Phone: 073-643 16 42
E-mail: ioana.stefan@hig.se

Text: Douglas Öhrbom