Many organisations are beginning to embrace more open and collaborative approaches to innovation. Inspired by the success of open source products such as the Apache web server and the Firefox browser, many multinational companies such as Procter and Gamble, Orange and IBM have made ‘open innovation’ – the sharing of the risks and rewards of the product development process with partners – a top strategic priority.
This article will focus upon how open innovation is having a much wider effect both within commercial companies and other institutions. In particular we will look at how academic and research communities are influenced by, and influencing, this shift towards creating new value through greater openness and sharing.
Based on our experience of designing and running innovation programmes over the past four years, we have observed three important changes within organisations that embrace an open innovation approach, namely:
From ‘what?’ to ‘who?’
The cost associated with finding new knowledge is falling fast, to a point where in the not too distant future we can reasonably assume that all knowledge will be in principal accessible – quite possibly violating various intellectual property rights and other constraints – but nonetheless available. In this scenario our knowledge will no longer differentiate us as individuals or organisations. Rather it will be our network, and our reputation within it, which will be the key to innovation.
Open innovators therefore must ask more ‘who?’ questions instead of just ‘what?’ questions. In other words, focussing as much on who we should innovate with, as much as what specific innovation needs or opportunities we have. For example, we worked with Virgin Atlantic on a project called V-Jam to develop new social media applications by first engaging their frequent fliers and actively seeking to buy (services & ideas) from them as well as sell to them. This is a significant shift from the traditional product-led approach to innovation and resulted in 8 new innovations being developed quickly and at a fraction of the cost of a traditional in-house innovation process. Similarly IDEO, the legendary design company, are famous for recruiting ‘T-shaped’ people, namely those who can demonstrate both depth of expertise and breadth of interests/networks. And ultimately, all organisations will have to become more ‘T-shaped’ than they are right now in recognition of the fact that their next big innovation opportunity, or competition, increasingly comes from outside of their core domain of expertise.
This shift from what to who also has implications for our academic institutions who are deeply rooted in expertise to such an extent that many academics feel a greater allegiance to their discipline than to their institution. There is much demand for more cross-disciplinary networks within and across academic institutions and yet the traditional disciplinary hierarchies are very difficult to overcome. One approach is NESTA’s Crucible programme that actively seeks to build and incentivise cross-disciplinary network relationships amongst researchers. Whilst still relatively small scale, it has had significant impact on the individuals and institutions who have participated and represents one way to connect the dots within and across institutions.
From discovery to detection
The core skill-set of the open innovator is less about creative or inventive ability, rather it is about the ability to make connections between people and knowledge. In other words innovation is less about discovery and more about pattern recognition and detection. And in such an environment our single best asset is a good reputation.
One large organisation that is learning this lesson is Oracle. As the world’s largest enterprise software company, it had a reputation for having a focussed sales led culture. It has connections into a wide range of different sectors and supply chains and they were keen to tap into in a deeper way. We worked with them to create programme called Open Alchemy, which brought together some of Oracle’s largest clients together with many of their leading software vendors and smaller suppliers to co-develop new service innovations. This led, amongst other things, to a major partnership between Oracle, Pfizer, the NHS and BT called Wellbe which launched recently. Most importantly, it has helped to shift the perception of Oracle as a sales-led organisation to an innovation partner of choice which has significant commercial value in its own right.
In terms of what this means for academia, I recently heard a senior HR Professional from a major multinational company comment that they don’t necessarily want to recruit straight-A students any more. They look for students who beg, borrow and steal from others to help them pass their exams, as they can have some of the core skills they are looking for. Many institutions are now grappling with how we can better embed some of these social skills into our education system. With regards to research, it remains true that most funding goes to professors and not the students. The biggest lesson I learned from doing a PhD is that there is no right answer in the back of the text book and the whole point was to figure it out for myself (better late than never I suppose). The history of science has shown us that it is often young people who are the most innovative so it is essential that we free up the young people to explore and experiment.
From ownership to access
Traditional economics conform to the laws of supply and demand where the dominant mode of consumption is through ownership of scarce products and services. However in a world where our core asset is our knowledge and ideas, there is no such scarcity. Here, the most efficient mode of consumption is through access to products and services where the revenue streams come usually from a combination of usage, donation and advertising.
For example Streetcar offers a pay-as-you-go car service in urban areas, as a more cost effective alternative to car ownership. Similarly the music industry, a reluctant trailblazer in reinventing business models due to the web, has seen the rise of access based business models such as Spotify (the music streaming service) or artists such as Prince and Radiohead who give away their music for free, and derive their income by other means such as concerts. Finally Professor Paul Romer at Stanford University who gives the example of a really valuable idea – oral rehydration therapy – which is essentially just water and glucose – which is an amazing idea which saves millions of lives and who’s value lies precisely in the fact that it isn’t protected.
Academia is of course underpinned by weak intellectual property rights where knowledge is traded for peer recognition. And it is perhaps surprising that the public sector is arguably leading the way with opening up access to public data through initiatives such as the Open Data movement. Also, given that most organisations still default to secrecy and only ever open up when they absolutely have to, legislation such as the Freedom of Information act, are slowly forcing public bodies to default to a more transparent mode of operation where access to certain information is only restricted (at least in theory) in exceptional cases. There is a lot that private sector organisation can learn from their experience.
How Open Changes Everything
In summary, open ways of working are facilitating a much wider shift in the way organisation innovate and operate. The open source software movement has been a pioneer in product development which many others have sought to emulate. Like the open source movement, academic institutions have laid the foundations for a model of shared knowledge and incentives based upon reputation rather than ownership.
All organisations are responding to these changes in different ways, but in our experience the primary transitions that are occurring are: from what to who, from discovery to detection, and from ownership to access. These transitions require new skills and structures that we are only just beginning to fully understand.
With the pervasiveness of the internet, I believe that we have long since passed the tipping point towards a more open economy and society. And so we are forced to rethink our academic institutions so that they are as much about networks as expertise, to reflect the reality of an exponential increase in connectivity that shows no sign of slowing any time soon. After all, and in the words of Howard Rheingold:
“More people, sharing more resources in new ways, is the history of civilisation.”