Enabling Open Innovation: Lessons from Haier

Abstract

Open innovation has become a dominant innovation paradigm. However, the actual adoption of open innovation organizational designs and practices remains elusive, and ongoing examples of large companies practicing open innovation in mature industries or beyond R&D activities are rare. Despite the continuing interest in open innovation and the surging research on the topic, not much is documented about how, in particular, large companies interpret and implement open innovation or develop and sustain an innovation-enabling culture. This paper reports on a study of Haier's adoption of six radical innovations as it implements an open innovation organization over a period of seven years. The study is unique in that the cases reveal how open innovation is enabled by the socially enabling mechanisms developed under Chairman Ruimin Zhang's leadership. These varied enabling mechanisms open the organization to serendipity at every level, from the bottom up to suppliers. Most importantly, the mechanisms imprint and sustain an open innovation culture recognized as important—yet often left unarticulated in terms of how it is practiced—in the prior literature. The paper contributes to and highlights the centrality of socially enabling mechanisms underlying an organization's innovation absorptive capacity.