OPEN INNOVATION

For most of us, innovation is becoming a relatively common concept and philosophy. Business magazines, newspapers and industry experts all extol the importance of innovation in business, government and academia. Given the rapid pace of c hange, the growth of competition in every quarter, the advancement of education in every country and the connected nature of the global economy, innovation is no longer a nice to have. It is a “must have”. Gaining experience and mastery of innovation, esp ecially in larger organizations and corporations, can take time. Teams that have in the past been focused on efficiency and profitability must now learn to balance efficient operations with divergent, creative activities that foster innovation. As organi zations and teams master the activities associated with internal innovation and begin to produce excellent ideas and innovations, they may next turn their attention to “open” innovation, which relies on good internal innovation processes and skilled person nel, but builds on these to incorporate and exchange ideas, technologies, intellectual property and even ideas from a wide range of external participants. Open innovation is merely the exchange of ideas, intellectual property, technologies and ideas with e xternal parties – customers, business partners, channel partners, inventors, universities, governments and research organizations. Since even the largest company or government employs only a small percentage of the available workforce, it’s evident that there are far more ideas, technologies and intellectual property outside the company’s structure than within. The key to developing and launching more products and services more quickly is to focus on finding the best ideas, regardless of their origin, and converting them to new products and services as quickly as possible. This supposition means that every company must become proficient at open innovation, and to do so they must first have some proficiency at internal innovation.

Potential Partners

Ideas can spring up from a wide variety of sources. Customers may identify better uses for your products or suggest ways to improve existing products. Channel partners can suggest methods to serve a larger market share or ideas to improve existing products or create new products. Universities, research institutes and government agencies may provide primary research that develops new intellectual property that can improve your existing products or provide the basis for new products. Each of these relationships can prove fruitful in generating new ideas and new solutions for open innovation. The key question is: which relationships should we develop and nurture, and what kinds of ideas or intellectual property can I expect?

 

Relationships and potential outcomes

The varied relationships will generate different kinds of ideas and solutions, and require different investments in order to manage effectively.

• Customers can and will generate ideas that suggest improvements to existing products and services. Since they acquire and use your products regularly, they are often very good at identifying what can be improved within an existing product or service. You can reach them through techniques like “crowdsourcing” or idea contests, and it’s often the case you can acqu ire reasonable ideas at very little or no cost
• Business partners/channels will often generate ideas that improve existing products or introduce them to new customers or markets. Interactions and exchanges of ideas or intellectual property are typically m ore involved with business partners than with customers, because business partners or channels may require compensation to help improve your products.
• Universities/Research Institutions often generate new research that can become the basis for entirely new ideas or solutions. Their primary research may become new patents or intellectual property that you can acquire and convert into new products or services. This activity is a more formal licensing activity and will require negotiation about the value of the intellectual property you’d like to acquire or license
• Inventors/Entrepreneurs often generate incremental and disruptive new products and services. The benefit of working with these partners is that they are often on the cusp of producing and marketi ng new product or already have a proven product in the market, but they sometimes lack the ability to fully realize and scale a new product or service.

 

Interaction Techniques

There are a number of tools or techniques to use to identify and acquire extern al ideas and intellectual property. Some of these have received a lot of attention. Crowdsourcing , for instance, has been popular for quite some time, but in many cases proves less than satisfactory. While crowdsourcing often generates a lot of ideas fr om customers, in most cases many of them are obvious or have been suggested before. Idea contests are another means to receive ideas from a wide variety of people, but in this case the ideas are more focused on solving a specific problem.

Technology scout ing is a valuable open innovation tool that seeks to find and identify important, emerging technologies that may already exist and acquire or license those technologies. Along with sponsored research or working with technology transfer offices at universi ties or research institutions, technology scouting is an important open innovation technique especially in fields where a lot of primary research is conducted, such as in the medical industry.

Blind requests for proposals (RFPs) are another means to gather interesting ideas and technologies. Using blind RFPs a company can request solutions to specific problems while also framing the request by defining key parameters or characteristics of the solution, and inventors, researchers and entrepreneurs can respo nd. If a match is found, then the requestor and submitter are connected and can begin negotiations about the use and value of the intellectual property.

 

Three key concerns

While open innovation has significant promise, it also opens the door to several im portant considerations. The first and most important is intellectual property. Your internal teams may be resistant to seeking ideas or intellectual property from the outside world, or even learning about these technologies, due to IP ownership. Second, it is difficult to arrive at an agreed price for intellectual property. Inventors and researchers often place a very high price on nascent technologies, not realizing the amount of work it takes to complete a new product and launch it. Third, identifyin g and developing the relationships you need in a timely fashion can be difficult and requires some guesswork. You cannot develop relationships with important contributors on the fly – you need to have relationships before you need ideas. This may mean in vesting in some relationships that don’t prove to be necessary

 

Conclusion

Customers and markets are moving rapidly, and their demands and expectations are always shifting, always accelerating. Relying on a purely internal idea generation methodology is e xceptionally risky when so many good ideas and so much research and intellectual property is generated outside of your organization. A well - conceived open innovation activity can open the door to a significant number of valuable ideas, technologies and in tellectual property and help your company improve its ability to bring the best new products and services to market before your competition.

 

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About the Author: Jeffrey Phillips is a lead consultant for OVO Innovation . Jeffrey has led innovation projects for Fortune 500 firms, the US government and academic institutions based on OVO Innovation’s Innovate on Purpose™ methodology. Jeffrey has expertise in scenario planning, ethnography, voice of the customer, lead user analysis, jobs to be done and the customer experience journey. He is the author of three bo oks about innovation: OutManeuver , Relentless Innovation , and Make us more Innovative . He has led innovation training and innovation workshops in Europe, the Middle East, Africa, Southeast Asia and Latin America