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Why every company needs its shepherds – steering external ideas to become internal innovations

“Knowledge is of no value unless you put it into practice” – Anton Chekhov

Tapping into the brains of scientists and innovators around the world makes sense for multinationals. Gone are the days when companies relied solely on the expertise of internal research and development departments – with today’s rate of innovation, it’s nigh impossible to do everything in-house.

An automotive company might want to seek inspiration for environmentally-friendly new materials, or a pharmaceutical company may require novel external solutions for new medical technology. Sometimes firms don’t know what they’re looking for. Capturing fresh ideas through ‘open innovation’ gives blue-chip companies – from consumer goods through to pharmaceuticals – access to ideas more original than they could ever generate themselves.

But while many companies have invested heavily in formal open innovation practices, some good external ideas still fail to reach or make an impact on the market. What’s going wrong? In our research we’ve looked at how individuals can play a vital role in shepherding fresh external ideas through corporate obstacle courses and turning them into successful innovations.

Anyone who wants to introduce innovation from the outside often encounters major roadblocks. Sometimes companies say one thing while their legal departments – ever-protective of intellectual property – say another. Or there may simply be too much friction in the system, with big companies often creating bureaucracy and stifling communication. External wisdom isn’t always welcome or understood. Sometimes companies haven’t thought through the systems and processes required to usher in new intelligence from outside, and employees within may not know what to do with the new information once they have it.

We’ve examined practices in a wide variety of science-led firms and focused on a leading firm strongly oriented towards open innovation. After unpicking the progress of external ideas at a personal level, what we’ve found has been surprising.

Gatekeepers and shepherds

First and foremost, knowledge from outside won’t find a suitable home within a company, no matter how innovative it might be, unless the firm puts significant effort into training individuals to integrate it and champion it onwards within the organisation.

We’ve defined two main roles that are essential to making the most of open innovation: ‘gatekeepers’ and ‘shepherds’.

It’s not enough simply to charge knowledge scouts to pass on fresh external ideas to users within the company. ‘Gatekeepers’ need to help the firm to assimilate the new knowledge, acting not only as providers of external ideas but also as ‘translators’ who communicate these ideas in ways that will strike a chord with their colleagues. Companies also need ‘shepherds’, who further modify external ideas and blend them with internal knowledge to ensure safe passage through corporate processes of idea selection, to ensure that their potential for internal innovation is realised.

So, what’s stopping individuals from assuming these roles? The barriers are many and various, even amongst the most enthusiastic corporate adopters of open innovation. Research shows managers are often sceptical and unsupportive of the value of external ideas if they don’t have direct and immediate merit for their department. Hunting for external new knowledge is time consuming, and sometimes seen as a distraction with no guaranteed returns.

If not everyone values external collaboration and knowledge – in other words, if everyone isn’t “on message” – individuals within a company won’t be motivated to pursue it. Sometimes “not invented here” attitudes prevail. I’ve come across an employee who was offered membership to a prestigious professional society, but their line manager didn’t rate this as worthwhile or important to include in their performance appraisal. But it is indeed relevant if an organisation wants to be more open.

Value and reward

How can companies nurture the culture and build the systems that encourage individuals to steer external ideas through and make open innovation a successful strategy? Managers need to understand how to value and reward insights that don’t have an immediate impact on their own business, but may sow the seeds for the big ideas of the future.

Say you go to a conference and learn about the potential of a new technology or medical development. Your job is to find a suitable home for this information within your company. You’ll need good networks and knowledge of who’s working on what in order to mould the idea to appeal to receptive colleagues, who could pick it up and apply it in their ongoing innovative efforts. But if you think, “That’s interesting, but this doesn’t apply to my work,” the knowledge ends there – as unrealised potential.

Companies need to build internal systems to encourage the sourcing, integration and championing of new knowledge. If a company really wants to promote a culture where someone says, “This isn’t relevant for me, but it might be for someone else,” there are ways of creating the right rewards. Most employees respond to incentives. Some institutions have created systems in which individuals are associated with a project from start to finish; even if all they did was to just drop a kernel of knowledge in the beginning, they are still rewarded for it.

However, if the employees who scout for fresh knowledge have no further part in the process – if their job is merely to introduce the information and move on – then that knowledge is most likely to be lost. But if individuals play a role in integrating and championing these new ideas, the more likely it is that they will take root.

This article draws on findings from Coping with open innovation: responding to the challenges of external engagement in R&D by Ammon Salter, Paola Criscuolo & Anne LJ Ter Wal (2014), published in California Management Review 56 (2): 77-94, and Making a marriage of materials: the role of gatekeepers and shepherds in the absorption of external knowledge and innovation performance by Ter Wal, ALJ & P Criscuolo, A Salter (2017), forthcoming in Research Policy.

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About Dr Anne ter Wal

Dr Anne ter Wal joined the Department of Innovation and Entrepreneurship at Imperial College Business School in 2009. Most of his research focuses on the role of social networks in innovation, with a particular emphasis on networks in geographical clusters, and networks of scientists and engineers within and between companies.

Anne is also Senior Researcher at the Department of Management, Technology and Economics at ETH Zurich and, prior to joining Imperial College, was a doctoral researcher at the Section of Economic Geography at Utrecht University.

His work has been published in leading journals such as Administrative Science Quarterly, Organization Science, Journal of Economic Geography, Economic Geography, Regional Studies, and Industry & Innovation.

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Written by Dr Anne ter Wal Published 4 July 2017 Categories Entrepreneurship & Innovation Topics Corporate Strategy, Ideas, Innovation, Leadership, Management, Organisational behaviour Share Download as PDF