These Are 3 of the Biggest Hurdles to Overcome in Co-Innovation

Shohreh Abedi
4 min readJul 16


The term co-innovation refers to two or more companies collaborating on a novel solution that no party could achieve independently. With co-innovation, truly unique products and services can be created in a fast and efficient manner. This drives the bottom line of all contributors. Furthermore, all the teams involved gain new insights and expertise for continued innovation, whether in collaboration or independently.

However, co-innovation is challenging, and many attempts fail. This tends not to have anything to do with the strength of the idea, but because of the challenges of collaboration. Within the tech field, collaboration is especially challenging. Success depends on recognizing the potential roadblocks in the partnership and developing strategic ways of handling them before they become a real problem.

Some of the most significant challenges involved with co-innovation include:

1. Competing Financial Responsibilities

One of the biggest challenges in co-innovation is financial. While the companies involved are working toward an aligned goal, each has its own larger aim and financial responsibilities. This includes boards and investors with different expectations. Financial tensions may occur when the investment from the parties differs. In addition, expectations for continuing the collaboration may diverge. Both organizations ultimately need to do what is best for their individual futures, so there are always competing priorities involved in partnership.

The best way to deal with this issue is for all parties to be open and upfront about intentions and expectations, which includes acknowledging when these things change. Companies should seek out partners with missions that align with their own to minimize the effect of fiduciary responsibility on the partnership. This mitigates the chances of conflict, but of course, does not eliminate it.

Both parties should enter the partnership with an agreement about the length of time it will last and the contributions each will make, financial and otherwise, and then revisit the agreement as necessary. Situations necessarily change in a fast-paced business environment, so keeping the channels of communication open is critical to success. When there is a change, a conversation and potential negotiation should occur. Keeping secrets leads to major problems down the road.

2. Expectations of Privacy

Another significant challenge in co-innovation are routines around privacy. For the most part, businesses operate independently and behind the cloak of corporate secrecy to develop products and services. Any leak of proprietary information, ideas, or intellectual property could be disastrous. Thus, collaboration often feels unnatural since it means sharing thoughts and work with outsiders.

As a result, sometimes companies approach co-innovation by independently developing and then exchanging messages with each other about their progress. This approach defeats the purpose of co-innovation, which is about putting the brightest minds together to expand on each other’s ideas. One solution to this problem is getting all the teams together physically. It can still feel confidential, rather than like sharing work electronically. Whenever possible, this approach is preferred, at least in the beginning and at regular intervals.

Other tools meant to encourage collaboration in the work-from-home era can also facilitate collaboration, from video conferencing to screen sharing. Certainly, all teams may be bringing information to the collaboration that has not been shared before and this can make people nervous. However, it is important to remember that sharing information is the point of the collaboration. The feeling of vulnerability is shared.

3. Shared Risk Management

Risk management is always an important topic when developing a new product or service, especially in co-innovation. For the most part, co-innovation involves taking on a lot of risk for the chance at a big upside, so it is important that the risk is shared among the involved parties. Too often, companies enter these partnerships with a focus on risk aversion rather than management. In these cases, innovation almost never happens.

Great ideas come when people are allowed to take risks, so the focus needs to be on management. Otherwise, there will not be much value in the partnership. Risk aversion tends to ease once teams have been successful together. Thus, partnerships often benefit from setting easy goals in the beginning. Of course, co-innovation should aim for a deeply integrated and truly groundbreaking offering. At the same time, building trust is part of the process.

When partners see that these small steps have been achieved with little risk on their part, they gain more confidence in the partnership and are willing to invest more. In other words, they become willing to take on more risk. With each new move toward the ultimate goal, it is important to ensure that all parties are appropriately exposed to risk. Then they all share the same motivation to succeed.



Shohreh Abedi

Shohreh Abedi serves as executive vice president and chief operations and technology officer for The Auto Club Group.