The Seven Deadly Sins of Open Innovation Partnerships—and How to Avoid Them

Broken glass exploding around a broken light bulb, symbolizing broken innovation.

This is the essence of open innovation and ecosystem partnerships. But it is also where things often get messy. Especially in the fuzzy front end of innovation, that early, exploratory stage where ideas are raw, ambiguous, and fragile, bringing in outside partners can blur organizational boundaries. The potential upside is huge. But so is the risk of friction, disappointment, and failure.

Identifying Open Innovation Roadblocks

I know this firsthand. For 10 years, I led open innovation R&D partnerships at Unilever North America. Here are some top reasons I saw open innovation partnerships fail:

1. Lack of Strategic Alignment

Too often, corporate teams and external partners enter collaborations with very different visions of success. A corporation may want slower, incremental improvement, while a startup is looking for rapid, radical disruption funded by the corporate partner. Without clear alignment, projects drift into confusion or conflict.

2. Intellectual Property Fears

In early ideation, ideas are still forming. This makes questions like “Who owns what?” and “What happens if the partnership ends?” especially thorny. If IP boundaries aren’t clear, trust erodes and sharing dries up.

3. Cultural Misfit

A nimble startup accustomed to rapid pivots may clash with a corporate partner bound by compliance processes and hierarchical decision-making. Likewise, academics may prioritize publications over speed. These cultural mismatches often stall projects before they reach proof-of-concept.

4. Weak Governance and Coordination

Open innovation is inherently complex. Without clear governance—who decides what, how resources are allocated, how conflicts are resolved —ambiguity breeds frustration. The fuzzy front end already has enough uncertainty; adding more through poor management is a recipe for failure.

5. Misaligned Incentives

Partners come with different risk appetites and time horizons. A university may measure partnership success in number of publications, a startup in new logos to add to their client roster, a supplier in number of years of stable revenue, a corporate team in market launches. Without reconciling these differences, incentives pull partners apart rather than together.

6. Trust and Communication Breakdowns

At its heart, open innovation is about sharing ideas that are unproven and vulnerable. Without consistent communication and trust, partners hesitate to contribute their best thinking. Misunderstandings pile up, and relationships collapse.

7. Insufficient Resources

Perhaps the most common of all: Innovation in partnership requires dedicated time, talent, and funding. Too often, partnerships are launched with ambitious goals but starved of the resources needed to test, iterate, and refine ideas. Internal teams and external partners lose interest when they sense half-hearted commitment.

Planning for Success: Design Principles

Avoiding these pitfalls isn’t easy, but there are proven practices that increase the odds of success.

1. Align on Vision Early

Before diving into projects, co-create a clear “north star.” What problem are we trying to solve? What does success look like in one month, six months, or in two years and how will it be measured? What impact will it have? By articulating a shared vision and boundaries up front, partners reduce the chance of mid-stream conflict.

2. Establish Governance and Boundaries

Define decision rights, escalation paths, and ownership rules. Set ground rules for IP early, including who brings what into the partnership, who will own jointly developed ideas (arising IP), how licensing will work, and what happens if the collaboration ends. You do not need a lawyer to begin this process. A simple plain-English “heads of terms sheet” or memorandum of understanding can outline these basics, giving everyone clarity before moving to formal agreements.

3. Build Bridges, Not Walls

Invest in boundary spanners —people who understand both the corporate environment and the partner’s world. These individuals act as translators and relationship managers, smoothing cultural differences and preventing small issues from derailing projects. For example, I served as the MIT Media Lab liaison for Unilever for several years. As a former academic, I was able to build a lot of trust quickly with the academic community which made creating and managing partnerships run a lot more smoothly.

4. Align Incentives

Design reward systems that motivate all parties. This might mean royalties, equity stakes, co-branding opportunities, or milestone-based payments. When partners see a path to fair reward, they stay committed.

5. Resource Like You Mean It

Don’t treat open innovation as a side project. Dedicate budget, assign skilled staff, and give teams the time to explore. Provide access to labs, test beds, or consumer panels that external partners can’t easily reach on their own.

6. Build Trust Through Transparency

Hold regular joint workshops, share progress on open dashboards, and encourage colocation or immersion experiences. Trust grows when partners feel included and respected.

7. Start Small, Scale Fast

Pilot ideas with small experiments before scaling. Use early wins to build momentum and refine governance structures. Celebrate learning as much as outcomes. Not every experiment needs to succeed, but every project should teach.

Why the Front-End of Innovation Matters Now

The fuzzy front end is where the biggest risks—and biggest opportunities—lie. Research suggests that decisions made in this early stage can account for up to 80% of an innovation’s ultimate success or failure. In CPG industries where consumer tastes shift rapidly and sustainability pressures mount, managing partnerships well at this stage is critical.

Companies that master open innovation at the front end will be the ones that can:

• Spot emerging trends early by tapping into startups and universities.

• Prototype and test quickly with suppliers and consumers.

• Build credibility and trust by co-creating solutions with diverse partners.

In short, the firms that learn to manage blurred boundaries in the fuzzy front end will be the ones that innovate faster, smarter, and more sustainably.

Final Thoughts on Competitive Advantage

Open innovation partnerships don’t fail because the concept is flawed. They fail because they’re hard and challenging. They require intentional design, honest communication, and shared commitment. But when managed well, they transform the fuzzy front end from a source of frustration into a powerful engine of discovery.

In a world where no one innovates alone, that capability may be the ultimate competitive advantage.

Click here for more columns by Gail Martino; if you enjoy this content, please consider connecting with Gail Martino on LinkedIn.

Reigniting a Culture of Innovation

Blank piece of paper, eraser, pencil, with a light bulb—any ideas?

Reducing the Fear Factor

Innovation often fails for a reason, but it rarely just vanishes. Systemic issues include the fear of failure, rigid processes, burnout or the lack of autonomy.

The innovation community agrees that one element not to be discounted is to foster psychological safety so employees can share ideas without fear. Provide dedicated time and resources for creative work. Encourage collaboration across departments, empower employees to solve problems, and celebrate both successes and failures as learning opportunities.

In its blog, “Dealing With a Decrease in Innovation or Creativity,” the Fun Dept. outlines several steps to combat the innovation blues:

  1. Create a Safe Space for Ideas: Innovation thrives when employees feel safe to share ideas without fear of judgment. Host regular brainstorming sessions where all ideas are welcome no matter how wild or unconventional. Use anonymous idea submissions for employees who may be hesitant to speak up. Reinforce psychological safety by celebrating the effort behind ideas, even if they don’t work out.
  2. Encourage Cross-Functional Collaboration: Fresh perspectives often come from unexpected places. Bringing together employees from different departments can spark new ways of thinking. Organize cross-functional teams for big projects or brainstorming sessions. Host “innovation days” where employees from different roles collaborate on solving a shared challenge. Create informal networking opportunities, like lunch-and-learn sessions, to encourage knowledge sharing.
  3. Provide Time for Creative Thinking: If employees are bogged down with back-to-back deadlines, they won’t have the mental space to think creatively. Dedicate time in the workweek for creative projects or innovation-focused tasks. Encourage “20% time” initiatives, where employees spend part of their day exploring passion projects or experimenting with new ideas. Limit unnecessary meetings to free up time for deep, focused work.
  4. Foster a Playful Environment: Play and creativity go hand in hand. Employees who feel relaxed and have fun are more likely to think outside the box. Introduce playful elements to team meetings, such as games or icebreakers. Create a physical or virtual space for creativity, like an idea board or a shared folder for brainstorming. Celebrate humor and spontaneity—it’s amazing what a good laugh can do for the creative process.
  5. Reward Innovation: Employees are more likely to think creatively when they see their efforts are valued. Recognize and celebrate innovative ideas, even if they don’t immediately lead to success. Offer tangible rewards for impactful ideas, like bonuses, extra time off, or shout-outs in company communications. Include creativity as a metric in performance evaluations to emphasize its importance.

Enabling Transformation

How many times in a corporate innovator’s career have we experienced the initial excitement around new innovation initiatives, only to see them lose momentum and fade over time? The only solution to this is true, systemic change.

During FEI25, in the session, “Driving Systemic Change: The Playbook to Reignite A Culture of Innovation and Transform a Business,” Erin Faulk, President of The Garage Group and Sara Stabelfeldt, Vice President of Innovation at Schreiber Foods, shared an authentic, “behind the scenes” perspective on the five-year journey to transform Schreiber Foods into a culture of innovation. They transformed the culture to an environment that is resilient to change, committed to possibility, and always experimenting in service of sustained growth and impact.

The session also outlined what it called five key enablers for transformation:

1. Creating a Dynamic Shared Vision

2. The Snowball Analogy (Transformation isn’t linear. Like building a snowman, you start with a tightly packed ball but must allow it to take on a life of its own, following the contours of the ground.)

3. Demonstrating Vulnerability by Showing Work

4. Leveraging Sprints for Business Challenges

5. Building Post-Sprint Momentum

The transformation has created an innovation ecosystem at Schreiber that includes core innovation, adjacent innovation, digital transformation, startup partnerships, and a venture capital arm.

From Innovation Bust to Boom

Leadership is also critical in the race for innovation. Investing in development, expanding training programs and workshops, and taking part in innovation challenges can all reignite the culture of innovation and experimentation that can and should permeate the workplace.

At the FEI25 session, it was also noted to embrace non-linear transformation. Sometimes, the innovation journey is not shaped like a straight line. Like rolling a snowball, transformation follows an unpredictable path. Stay focused on the problem you’re solving while allowing flexibility in how you get there.

Video: “Driving Systemic Change: The Playbook to Reignite a Culture of Innovation and Transform a Business,” featuring Erin Faulk, President of The Garage Group and Sara Stabelfeldt, Vice President of Innovation at Schreiber Foods, courtesy of FEI25.

From Risk to Reward: Strategies to Derisk Innovation

Chalkboard with Plan A, Plan B, (crossed out) and then Plan C.

Preparing & Responding to Competitive Conditions

A certain level of risk is often unavoidable when it comes to innovation. There’s a core tension between innovation potential and risk while positioning derisking as the strategic solution that forward-thinking enterprises are adopting to improve their success rates.

Through testing, validation and market data such as consumer insights, companies can derisk the process. This involves early and frequent testing through methods like customer interviews, reviews, customer feedback, forums, fake door experiments, and building a business case with market data, which transforms assumptions into facts and reduces the chance of failure.

Itonics, in its article, “How to De-Risk Innovation Investments and Prioritize Opportunities,” outlines some core principles when it comes to the process of innovation, including prioritizing, transparency, and understanding internal capabilities:

  1. Prioritize with technology portfolios: The first step to de-risk investments in innovation is collecting evidence for expected changes in your company’s business environment, Itonics notes. Environmental scanning software reliably identifies trends, technologies, and developments in any market. Continuous foresight involves relentlessly monitoring change in an ever-evolving landscape and determining how to respond. Scenario planning is a strategic planning method to anticipate possible futures. By understanding future scenarios, organizations can mitigate risks that are likely to arise.

Itonics also notes that while prioritizing is key, that does not mean you should focus on one innovation at a time. A good way to minimize the overall risk of your innovation efforts is not to put all your eggs in one basket. Diversify your innovation efforts. Start with small initiatives and test and validate them before scaling up. One practical approach is to create a dedicated innovation lab, where the team can run quick pilots with a “fail fast” attitude.

  • Create transparency with technology roadmaps: Innovation management is interconnected throughout the entire organization. As a result, it can be complex and difficult to oversee. That is why it’s essential to have a single source of truth for all teams to see. If a company lacks transparency, resource planning and allocation may end up disjointed. To achieve consensus, you need to make it easier to inform stakeholders and allow input and overall visibility.

Roadmapping is also critical in consensus-building and crafting future business capabilities. It indicates where contingency plans need to be made. An innovation strategic roadmap enables a team to plot out the scenario events and work backward to develop a timeline of innovation efforts needed to take advantage of opportunities.

  • Understand internal capabilities: Imagine your business has a game-changing idea for a new service. However, the technology involved is very specialized—none of the teams know how to implement it. The concept will fail if your company does not have the internal capabilities to capitalize on it. That is why Itonics suggests that roadmapping also involves thinking about human resource requirements. To avoid the risk of pumping resources into developing a service that teams are unable to deliver, it is key to think through the people you will need to execute the vision. Build capability first in order to innovate successfully. Carve out those opportunities that the company is best placed to capitalize upon. You can also scout for a startup that already has the required skills and then acquire it. This can speed up your innovation efforts by assimilating the startup’s much-needed capabilities.

Testing Concepts Before Launch

During FE25, Narek Vardanyan, CEO at Prelaunch, held a session on “How to Create Breakthrough Innovations Risk-Free.” The session explored how brands can de-risk innovation by testing concepts with real buyers—people willing to put money down before a product even exists. It included learning how companies use data-driven validation to refine product-market fit, optimize pricing, and invest in R&D. Discover a proven framework for rapidly testing product concepts in real-world environments.

Key takeaways of the session at FEI included:

  1. Test before you invest – Learn how to validate product demand before committing resources.
  2. Real buyers, real insights – Discover how early adopters provide the most reliable market signals.
  3. De-risk innovation – Use pre-market validation to avoid costly failures and build successful products.

The Reality of Risk in Innovation

There will always be some risk in the innovation process, yet there can be tactics to mitigate this. Turning to and relying on such tools as AI resources, forecasting, data science, analytics, consumer insights and innovation management tools can help improve the innovation strategy and stages of the process, saving time and investments over both the short- and long-term.

As Itonics advises, “Build a culture of innovation at your company where transparency is valued, teams understand their own capabilities to deliver, and can prioritize ideas with the most potential and strategic fit. To decrease the risk of innovation investment, the ideal is to establish repeatable and scalable processes with a centralized repository for knowledge sharing. That way, even if an initiative fails, the stakes are lowered, and teams can learn from what has worked and what has not.”

Video: Narek Vardanyan, CEO at Prelaunch, on “How to Create Breakthrough Innovations Risk-Free,” courtesy of FEI25.