Open for Innovation: Why engaged firms are more creative

Staying innovative is a formidable challenge for companies. In our era of accelerated innovation cycles, industry-, discipline- and sector-spanning collaboration become imperative for staying on top of societal- and market trends, let alone for solving regional or global challenges. Conventional cooperation with startups, research institutes and universities is a well-worn strategy. Civil society partnerships are also a promising – but much less used – path towards novelty. Corporate citizenship (CC), especially if it involves a company’s own personnel, increases the likelihood of discovering new ideas outside the core business. If external expertise is properly harnessed, soft CC knowledge flows enrich the hard business of innovation. Firms‘ process, service or product range and -market applications, even their very business models can be expanded, improved, reinvented. This report focuses on this nexus where CC meets open innovation (OI).

Based on representative data for Germany, challenges and benefits are outlined, for instance in healthcare. CC encompasses own social or ecological projects but also paid employee leaves of absence, sabbaticals or corporate volunteering, among other activities. Many transcend sectoral boundaries between the private economy and civil society. This can be invaluable from an innovation perspective: in bridging sectoral silos, goal-oriented, well-designed CC represents an often large untapped value added for innovating. Based on our data, we observe this especially as an avantgarde strategy among large companies in Germany, which seem most adept at harnessing this underappreciated virtue of the so-called “business case” for CC. We argue that engaged firms, as corporate citizens, run a higher risk of having innovation-stimulating insights.

This arguably fits Germany’s coordinated and social market economy particularly well, where instead of artificially separating business and societal interests into two allegedly conflicting camps, a tradition of businesses‘ regional and societal engagement persists. Engaged firms potentially profit from a full bundle of benefits, we argue, from smarter reputation building to better employer attractivity, employee motivation and -skills all the way to innovation impulses vital for business success. This last point is still often a happy but unintended consequence of CC. CC-Survey data points are explored which, taken together, suggest both small- and medium-sized enterprises and large corporations in Germany are well-advised to genuinely open up their innovation pipelines to “unusual partners”. In particular, they stand to gain from

1. moving from closed-up to genuinely OI processes, partnering up not only with startups and research organizations but with fitting civil society actors as well,
2. discovering how CC activities, notably those involving the workforce, enrich firm ideation, innovativeness and ultimately more purpose-driven business success,
3. tapping into the potential for boosting employees’ motivation and future skills, including problem-solving and collaboration, through their integration in corporate engagement.
   

In our tumultuous times of digitization, for many companies the motto, or reality, already is „innovate or die“. Focusing on customer needs and societal values is crucial for many German firms to survive and to thrive. It is where the slogan “from product to need” comes in: How can firms successfully tap into the business innovation potential of integrating societal perspectives? Data and literature on the relation of OI and CC is still sparse: first volumes address, for instance, how CSR and innovation management work together for competitive advantage. Rather than clinging to handed-down product or process-oriented principles, can an OI logic even help solving societal challenges? Many German firms find value stability crucial. CC offers a way to innovate responsibly. It helps to link innovation to societal needs – so as not to lose one’s compass, which has carried so many companies through the decades, even centuries.Recommendations for action include the encouragement for businesses to not only open up existing innovation processes to other industry players and academia, but to more systematically involve expertise, knowledge and takes of civil society experts and NPO contacts as truly „unusual partners“. In a nutshell, the concept of OI is itself opened further here, to encompass CC activities as a key innovation-relevant process. Much can be learned and discovered from this practice – for purpose and for profit.

Summary

Active corporate citizens are at higher risk of having good ideas. Based on international literature and representative German Corporate Citizenship (CC)-Survey data, this report discusses how soft knowledge flows from businesses‘ CC activities – say social projects or corporate volunteering – can enrich the hard business of innovation. Beyond conventional Open Innovation (OI) partnerships with start-ups, suppliers or universities, business-civil society partnerships with local clubs, associations or international NGOs are promising pathways to novelty. Opening up OI to broader civil society is most common among large firms in innovation-driven industries, we find, as with global pharma firms. Successful innovation impulses (new business, product or service ideas) through CC activity are most frequently reported by the largest as well as among „younger“ firms (founded after 2010) in Germany. Better harnessing the potential where OI meets CC comes with challenges but also a bundle of benefits: Aside from innovation rewards and societal benefits, active corporate citizens can reap improved employee motivation and -future skillsets. Much can be learned and discovered from being open for innovation in this way, for purpose and for profit.