Rethinking Innovation:
IP, Policy, and the Path to Industry Revival

Interview with
Dr. Thomas Leiber and Dr. Hans-Jörg Feigel

01.12.2024

Dr. Thomas Leiber

Linkedin

Dr. Hans-Jörg Feigel

Linkedin

Introduction

In today's fast-paced and increasingly globalized market, innovation is not just a key driver of economic growth but a necessity for survival - especially for established companies facing mounting competition and disruption.

However, many large corporations struggle to unlock their full innovative potential despite having the resources at their disposal. A complex interplay of organizational inertia, cultural resistance, and outdated business models often holds back progress. Meanwhile, smaller startups, usually more agile and risk-tolerant, continue to push the boundaries of technological advancements, particularly in sectors like automotive, energy, and manufacturing.

This series of three articles delves into the critical relationship between innovation, intellectual property (IP), and the evolving role of both industry players and governments in fostering a sustainable and dynamic innovation ecosystem. Drawing on insights from two distinguished experts - Dr. Thomas Leiber, an entrepreneur and innovator in automotive technologies, and Dr. Hans-Jörg Feigel (former SVP at Continental and former President at Mando Europe), an industry veteran with deep expertise in automotive policy and IP protection - we explore how businesses and governments can create the right conditions for nurturing breakthrough innovations, protecting valuable intellectual assets, and navigating the challenges of a rapidly changing global landscape.

Dr. Leiber brings a wealth of experience in technological development and market strategies, particularly in the automotive sector, where his work in brake systems and autonomous driving is helping to shape future markets. Dr. Feigel, with his extensive background in product development and innovation strategy in large corporations, including knowledge and experience in policy and regulation, offers a keen perspective on how innovation culture, intellectual property laws and government policies can either facilitate or hinder industry transformation.

Together, they provide a comprehensive look at the current state of innovation, the challenges faced by established companies, and the strategies that can help both large firms and startups thrive in the face of crisis and disruption.

Part 1:

Innovation in Crisis:
Why Big Companies Struggle
and What Startups Know

In the first part of their conversation, Dr. Thomas Leiber, a startup founder with extensive experience in the innovation sector, and Dr. Hans-Jörg Feigel, a seasoned expert with decades of experience in large corporations, explore the challenges of fostering innovation within established companies.

Summary :

The discussion highlights why large organizations often struggle with rigid structures, risk aversion, and a focus on short-term financial goals, which collectively hinder innovation. In contrast, startups thrive due to their agility, clear vision, and willingness to take risks.

Dr. Leiber shares his perspective as someone who has worked closely with both startups and large firms. He emphasizes the struggles startups face when collaborating with big companies, such as internal resistance, lack of trust, and slow decision-making processes. Meanwhile, Dr. Feigel provides insights into the internal dynamics of large companies, identifying organizational inertia, middle management resistance, and a siloed approach to innovation as key obstacles. Both experts agree that fostering innovation requires proactive investment, collaborative cultures, and strong leadership.

The conversation also highlights the growing importance of emerging markets, such as China and India, where agile innovation and cost-driven solutions are transforming industries like electric vehicles and brake systems. Both Dr. Leiber and Dr. Feigel emphasize that companies must adopt new approaches, embrace risk, and strike a balance between protecting existing business models and investing in future growth to stay competitive in an ever-evolving global landscape.

The key innovation challenges identified by Dr. Leiber and Dr. Feigel can be summarized as follows:

CHALLENGES

▪ Large organizations are often structurally rigid, bureaucratic, and overly reliant on existing business models.
▪ Success with current products creates a false sense of security, leading to neglect of disruptive innovations.
▪ Innovations frequently face internal resistance as employees and managers fear that the “new” will replace the “old,” jeopardizing their roles or careers.
▪ This resistance is especially prevalent in middle management, where power struggles hinder innovation.
▪ Leadership often focuses on short-term financial gains rather than long-term innovation and growth.
▪ This mindset prevents investments in forward-looking projects
▪ Innovation is often demanded during crises, when resources are already limited. However, innovation requires lead time and should be proactively pursued in stable times.
▪ Many innovation projects fail due to a lack of cross-functional cooperation within organizations. Departments work in silos, slowing progress.
▪ Collaboration with external partners, such as startups, can suffer due to mistrust and an imbalanced, one-sided approach.
▪ Innovations are frequently delayed by bureaucratic hurdles and slow decision processes.
▪ Unclear responsibilities and multiple stakeholders stall progress.
▪ Especially in established companies (e.g., in Germany), a risk-averse culture prevails. The fear of failure inhibits bold, innovative moves.
▪ Innovation is not embedded into the organizational culture. Without strong leadership support and structured processes, innovation becomes inconsistent and lacks direction.
▪ Partnerships are often transactional and short-term, rather than trust-based and long-term, such as “partnership-embedded licensing.”
▪ Innovation is hindered by homogeneous thinking and a lack of diverse teams. New, creative ideas are often overlooked due to narrow mindsets.

In summary, the primary barriers to innovation include organizational inertia, resistance to change, a short-term focus, bureaucracy, risk aversion, and a lack of collaboration and innovation culture.

In their conversation, Dr. Leiber and Dr. Feigel highlight several key strategies to enhance collaboration between large companies and smaller innovators, such as startups:

SOLUTIONS

Move beyond transactional, short-term collaborations with innovators and entrepreneurs. Build trust-based, long-term partnerships such as partnership-embedded licensing, which ensure continuous communication and mutual benefit.
Encourage entrepreneurial leadership within large organizations. Introduce success-based rewards (e.g., stock options or performance bonuses) to motivate individuals to take risks and pursue innovation.
Simplify bureaucratic processes and establish clear decision-making authority to eliminate delays and make collaborations more efficient.
Avoid excessive caution from departments like legal and finance. Find the right balance between protecting existing assets and enabling opportunities for innovation.
Create a common vision and establish clear, shared goals for both partners from the outset. Effective collaboration requires alignment on expectations and outcomes.
Follow the WIN-WIN-WIN strategy, where both parties benefit, and the third “win” focuses on building a long-term, trust-based relationship.
Large companies should embrace speed and agility by adopting best practices from startups. Project-based collaborations can highlight areas where large organizations need to improve.
Break down silos within organizations and encourage cross-departmental collaboration, ensuring that innovation projects receive support across all relevant areas.
Tap into the innovation potential of emerging markets by collaborating with local partners and adopting their agile, solution-oriented mindset.
Encourage multicultural and diverse teams to foster creativity and new ideas. Innovation thrives when people from different backgrounds and experiences collaborate.
Management must actively champion innovation, providing support and resources while fostering a culture that encourages experimentation and growth.
Large companies need to adapt their structures to work effectively with smaller, fast-moving innovators. Remove barriers that slow down cooperation.
While protecting existing products, companies should also create room for disruptive innovations that drive future growth.
Acknowledge and reward employees or external partners who contribute to successful innovations. Recognition motivates further collaboration and risk-taking.

INTERVIEW

To begin, why do so many large, established companies still find it difficult to innovate and stay ahead of the curve despite having vast resources at their disposal?

Feigel: That's an important question, especially in the context of the ongoing economic crisis in Germany. Innovations can be a way out of a crisis, but they are often not available in time to overcome a crisis because, in stable times, many large companies do not feel an immediate need to drive innovations.

As a result, the development of innovative products is not pursued consistently enough, particularly if the company is doing well with existing products. They succumb to the illusion that the current path will continue to succeed. However, the business processes of those companies are optimized but rigid, the business models are proven but unsuitable for disruptive changes in the market environment, and the organizations are highly encrusted, offering great resistance to necessary adjustments.

“In short: large companies are usually accustomed to success, sluggish, structurally inflexible, and bureaucratic. This makes it difficult for them to adapt when the market changes.”

– Hans-Jörg Feigel

When companies are thriving, there's a reluctance to innovate. Many companies set up innovation or research departments, but often with low expectations. If promising ideas are generated, delays and blockages can already occur in the subsequent selection process if it becomes apparent that budget shifts and contributions from other organizational areas will be necessary for implementation. It becomes particularly difficult when existing business models must be changed. The selection phase is the most challenging hurdle an idea must overcome internally. The more disruptive the idea, the higher the probability of failure. This is often because the product architecture does not align with the existing organizational structure, making cross-departmental collaboration both crucial and challenging.

So, how does a company deal with an idea whose feasibility has still to be proven and for which there is no clear responsible business area? This becomes even more critical when cooperation between business units is required to develop a product. In this case, a company-internal entrepreneur is needed - but they are rare and often lack the power to drive the innovation forward. Resources may technically be available. Still, potential innovations are frequently suffocated by internal wrangling over responsibilities, slow bureaucratic processes, and the inability to organize low-conflict cross-organizational cooperation. This is compounded by fears triggered in managers and employees when the "new" threatens to replace the "previous," jeopardizing their career or job security. An understandable reaction, which requires far-sighted and empathetic leadership to overcome.

Leiber: As a startup founder, one of the most significant challenges I faced was overcoming internal resistance within large corporations. Despite securing key connections, we often encountered significant pushback. We had to prove the viability of our ideas using our own resources before these companies would consider investing.

For one project, we found it easier to collaborate with a smaller competitor eager to innovate. However, after building a promising partnership and seeing early success, they suddenly cut ties, accusing us of misleading them. Years later, the technology we developed became a cornerstone of the market, yet the collaboration ended in frustration.

It wasn’t until much later that I understood the true motive behind their exit. The CEO’s short-term focus was on maximizing financial returns in the face of a merger and acquisition, which led them to step away from the innovation space. In contrast, our initial partner, undeterred, continued to innovate and ultimately emerged as the market leader.

Large firms' primary obstacle to innovation is their heavy investment in existing technologies and competing goals. A Senior Vice President may want to be a pioneer, while the CEO may focus on short-term financial gain. Startups have a clear, unified vision and flexibility, while large companies often prioritize maintaining the status quo and protecting existing assets.

Large corporations typically view innovation as risky, especially when it threatens their established products. Startups benefit from being nimble and having a clear goal. However, collaboration with large companies can sometimes be a one-way street, where startups provide value but are later discarded or undercompensated. The best collaborations are those that involve continuous, two-way communication, as seen in “partnership-embedded licensing.” Unfortunately, the automotive industry often practices "standard licensing," which ends after fulfilling basic obligations and rarely leads to lasting partnerships. Trust is often broken, making future collaborations difficult but potentially stronger if repaired over time.

In conclusion, large corporations need to rethink their approach to external innovation, seeing it as a crucial part of the R&D value chain rather than a threat.

Feigel: I agree with that. The situation is even more challenging when you look at the mindset in Germany. There’s a general reluctance to take risks, especially in established companies. In fact, the fear of failure is so ingrained in the culture that many businesses focus more on maintaining the status quo rather than investing in future growth.

“A management that consistently demands "something new" from all employees across all hierarchical and functional areas actively vitalizes the culture of innovation. This keeps the company agile and encourages the establishment of new business models and processes.”

– Hans-Jörg Feigel

Many large companies, especially in the automotive industry are facing a crisis. How can innovation serve as a solution during times of crisis, and can it risk making the situation worse?

Feigel: Innovation should be proactive, not reactive. Companies must invest in innovation before and not during a crisis when resources are already stretched thin. In times of economic stability, many businesses cut back on future-focused investments to focus on day-to-day operations, so innovation is often overlooked until it’s too late. The problem with this approach is that the resources needed to innovate are no longer available by the time a crisis strikes.

Innovations need lead time to develop. When companies wait for a crisis to demand innovation, they cannot implement the necessary solutions. During stable times, however, the resources needed for innovation are easier to secure. It’s during these times that companies should prioritize innovation, using it to drive growth, expand market share, or open new business areas.

The issue with relying on innovation solely in times of crisis is that it fosters a passive, reactive mindset. Startups often thrive in such periods because, while larger companies focus on maintaining the status quo, startups are driven by a strong desire for growth. However, if larger companies adopted a culture of continuous innovation, they could navigate crises more effectively and stay ahead of the competition. Innovation should not be seen as a reactive measure but as a proactive approach for long-term growth and resilience.

Leiber: I often think back to when my father worked in the automotive industry, where there was a strong culture of collaboration between suppliers and manufacturers. He always emphasized that innovation often comes from suppliers and that by giving them the space to grow, the entire ecosystem benefits. But today, with the prevailing "cost-cutting" mentality, companies focus on securing the lowest price rather than building long-term partnerships, ultimately stifling innovation.

A “win-lose” negotiation tactic that focuses solely on short-term results is common and often taught in negotiation courses. This approach ignores the values of honesty and integrity.

“Personally, inspired by Kirk Kinnell, I follow the WIN-WIN-WIN tactic, where the third "WIN" element focuses on fostering a long-term relationship with continuous mutual benefit. A long-term, trust-based relationship that transcends company boundaries will require a paradigm shift in the industry.”

– Thomas Leiber

Feigel: You're absolutely right. The "cheaper is better" mindset still dominates, making it difficult to form partnerships that prioritize long-term value. Now, with rising geopolitical tensions, we're seeing the risks of being too dependent on a single market, like China, for supply chains. If we don't adapt, entire industries, such as automotive, could face significant disruption.

Leiber: In China, businesses operate with a vertically integrated structure, which contrasts with the fragmented supply chains in Germany, as highlighted by Ford CEO Jim Farley during an interview. During times of crisis, many industry players have recognized that the old business model is no longer effective, especially as European car manufacturers face competition from lower-cost Eastern suppliers and advanced software technology from the West. For Tier 1 suppliers and OEMs to remain competitive, closer collaboration is more critical than ever. However, not everyone shares this view, as evidenced by a recent unprecedented lawsuit between a German supplier and its customer(s). Ultimately, no company will survive in isolation. Speed and cooperation are crucial, and startups, mid-sized companies, and established players must unite and set common goals to succeed.

Having established how vital innovation is, why do so many companies struggle to implement a real innovation culture?

Feigel: Creating an innovative culture is a complex and long-term process that doesn’t happen overnight. Innovation must be embedded in the company’s DNA, starting at the top. Both employees and managers need to see innovation as an integral part of their roles. While generating good ideas is the easier part of the task, moving beyond the feasibility stage to secure the necessary resources for further development is where challenges arise. The real difficulty emerges when selected ideas need additional resources to achieve sufficient maturity. At this point, conflicts of interest often become visible, particularly among middle managers who may fear that supporting innovation could undermine their position of power.

Despite the existential importance of innovation, many companies struggle to create an environment where it can thrive. Employees and managers should feel that innovation is desired and expected. When the middle management is unwilling to fully support innovation projects - often due to self-interest - it can stifle progress. This is where leadership from the top becomes crucial. Clear, entrepreneurial leadership is needed to navigate internal power struggles and ensure innovation remains on track. While defined processes can help, they are not enough alone.

“A strong culture of collaboration, driven by management’s active involvement, is essential for fostering innovation and successfully driving ideas to maturity.”

– Thomas Leiber

Leiber: For me, the solution was to bring in people from diverse backgrounds and nationalities. Our team includes 15 nationalities, and these varied perspectives often lead to more creative and innovative ideas. Sometimes, the best solutions are already there but are overlooked due to a feeling of superiority or a narrow mindset.

“We’ve seen in China that others have caught up with us and surpassed us in some areas of innovation. We should be open, even eager, to learn from them.”

Though the multicultural approach may create communication barriers, it also offers excellent opportunities. This demonstrates openness to new perspectives.

Feigel: You're absolutely right. The more you work on creating something new, the more you realize it requires both creativity and structure. When you have a small, motivated team passionate about a new product, things move quickly in the early stages. However, once the product moves into the development phase, it needs to be integrated with existing teams. The real challenge comes when the product shows the potential to be a huge success - a "million-seller." Suddenly, everyone wants to get involved, but that's when bureaucracy can slow everything down. If leadership doesn’t act quickly to streamline processes, it can become much harder to move forward efficiently.

Dr. Feigel, with your decades of experience in large, established companies, what are the five key tips you would give to any organization looking to build a truly innovative culture?

From my experience the most important elements would be:

Innovation thrives in environments where collaboration is prioritized. Achieving this overnight is challenging, so start with actionable steps and build from there.
Companies should create room for employees to take ownership of ideas and bring them forward.
Allow people to bring their ideas forward and give them the freedom to experiment without excessive oversight from management.
Encourage deeper product ownership by setting up dedicated teams not hindered by bureaucratic structures.
Reduce unnecessary processes and bureaucracy. Companies need to prioritize speed and flexibility to stay agile and competitive.

Leiber: I fully agree, and I think a key challenge is the balance between different departments—lawyers, engineers, and salespeople. Lawyers often get in the way of innovation because they focus too much on risk; finance people, by nature, only see current costs, not future benefits. The company needs to find the right balance between risk-averse groups and those more willing to take a leap and reward risk with successful participation, e.g. business unit options.

Taking this discussion a step further what can established companies learn from newcomers in the market, and what does effective collaboration between industry veterans and young innovators look like?

Feigel: Established companies can learn the most from newcomers by opting for project-based collaborations. What they will learn from these collaborations is speed and agility. On the downside, there will be the painful realization that internal processes are incredibly slow and cumbersome; this only becomes blatantly evident when working with startups.

To make collaboration effective, an organizational structure that works well is essential. Typically, it involves having a startup representative and a larger company counterpart for each competence area driving the project forward. What’s crucial is establishing clear goals and agreements from the outset. Otherwise, conflicts will arise later due to different interests and timelines. It’s also vital to have pre-agreed terms for handling inventions. The key to success is a fair, cooperative collaboration style that emphasizes understanding and compromise.

Leiber: From the perspective of a smaller company, trust is essential when collaborating with larger firms. It’s important to have open dialogues with someone you can speak freely with. In a large organization, there are often many stakeholders with different goals, and if there’s no decision-maker with clear authority, the process becomes slow and cumbersome.

“It’s all about having a shared vision, and that’s where trust plays a huge role. Small companies are fast; large companies can scale and industrialize. Together, we can combine strengths to achieve common goals.”

– Thomas Leiber

I also believe that to drive innovation and collaboration, there should be a reward system for entrepreneurial individuals in large companies. If you think about it, a pioneer at a large company faces all the risks. Success has many fathers, but failure is an orphan. In smaller companies, there’s the opportunity to benefit from stock options and to truly be part of something big in the long run, which isn’t the case in large corporations. Success-based compensation could encourage more people in large firms to take risks, innovate and seek collaborations.

Feigel: I agree; innovation must be recognized. If you don’t take risks, you’ve already lost.

EMERGING MARKETS

Let's dive into emerging markets' role in driving future innovation, particularly in high-tech industries such as brake systems and electric vehicles. How do you see the balance between established companies and emerging markets in fostering innovation?

Feigel: The unique need for innovation in emerging markets stems from the requirement to make products affordable. If a company wants to be a player in these regions, it needs to involve local development organizations or make them even wholly responsible. Sometimes, simplifying the product and reducing specifications can open up new solutions. However, while this may work in emerging markets like India, the expectations might even be higher in China, which requires a presence in this region as well.

Lower cost structures and faster implementation also support global innovation, which helps to get internal approvals more easily.

Leiber: From my experience, especially during my latest visit to China (Auto China, 2024), I realized that the priorities in these markets are different. From an outsider’s perspective, comfort and multimedia are paramount, and German cars can seem outdated for the younger generation. There are entirely new concepts that aren’t yet present in the German mindset. I remember seeing long queues at a brand-new Lotus Eletre and being inspired by people's excitement about innovation.

In India, the key is understanding what customers really need. And when it comes to electric vehicles, the focus is on the range — because the range is money. In places like India, the swapping system for batteries is a huge advantage, something that many Europeans haven’t yet considered.

Additionally, in emerging markets, there’s a multi-cultural dynamic. India, for example, has a well-educated and knowledgeable workforce. If we don’t listen to them, we miss out on a wealth of ideas.

Feigel: I agree entirely. It’s also important to understand that there is a strong desire to protect jobs in the development areas of headquarters, which can lead to reluctance to move core development tasks to emerging markets. This results in untapped potential and slows down progress. These considerations are understandable, as you need to balance the interests of your home organization while also seizing opportunities in emerging markets. In a growing environment, this balance is easier to achieve. Generally, it's essential to recognize that true innovation often requires letting go of the old to embrace the new.

Leiber: For smaller companies like mine, this is an opportunity. I have become an interesting partner for emerging firms in countries like India because I help them develop and compete with European companies. We can build partnerships and be enablers. For instance, when I talk about a joint venture, it’s something that gains attention — that would be almost impossible in Germany. There’s a difference in mindset; there’s openness to collaboration in emerging markets. This approach offers more speed. Large companies often close themselves off in Europe, making it harder to innovate.

Feigel: That’s true. This potential would also be there for large companies, but they need to be willing to tap into it. More leaders need to see emerging markets as enablers of innovation. And this doesn’t have to be limited to Asia; there are countries with lower wage levels within Europe, like Romania, where there are brilliant engineers. It’s right on our doorstep, and companies should leverage this potential to benefit their entire enterprise while also ensuring job security at home.

Leiber: Absolutely. Also, in Europe, there’s a lot of innovation potential for startups and SMEs. However, large companies tend to shut themselves off.

Feigel: True, but I believe that once the situation becomes unsustainable, even large companies will be forced to open up due to limited financial resources. When they cannot afford in-house innovations and stagnate, there will be internal pressure to open up to collaborations.

Conclusion

For large companies to succeed in the future, they must embrace a culture of innovation that encourages collaboration, risk-taking, and agility. As Dr. Feigel and Dr. Leiber both emphasize, innovation should be a proactive, continuous effort, not a reactive response to crises. Large companies can overcome the internal barriers that currently prevent them from innovating by learning from startups, fostering a collaborative environment, and streamlining processes.

Ultimately, embracing innovation is not just about keeping up with the competition; it’s about staying relevant and resilient in a rapidly changing world.

Outlook

Next week, we’ll release Part II of the interview, where Dr. Feigel and Dr. Leiber explore in greater depth how Intellectual Property (IP), Artificial Intelligence (AI), and Blockchain are shaping innovation and the innovation culture in today’s globalized world.

Rethinking Innovation:
IP, Policy, and the Path to Industry Revival