One of the activities that we do is run public open innovation calls so that businesses can find each other and collaborate. Like in Colombia CO4, we create and publicise an ‘interesting question’ in the form of a challenge and then we help filter and judge the proposals from new potential suppliers and partners. We usually do this for big companies who have specific needs and who are normally very satisfied with the results.
A recent discussion with Michel Fruhling at BFS Innovations has prompted us to re-examine this open innovation approach and compare it to relying on a company’s existing relationships and supply chain. He asks whether open innovation could in fact undermine existing business relationships in which clients can benefit from the knowledge that a long term supplier/partner can bring. A good question. Here are our observations.
Start with your inner circle
We always advise to start by making sure that your existing partners are part of any innovation network that we create. In many cases it makes sense to contact important partners in advance of issuing a challenge both to protect the relationship and also to find out if they have already been working on an answer to your problem. Quite often we find that the answers are found close to home…
Consider all angles
Open innovation is not the answer to all your business challenges. In practice we find that many clients come to us when they have already tried the traditional approaches of relying on their R&D teams or existing suppliers. So we tend to get challenges that appear insoluble within a reasonable time-frame and budget.
Outside the comfort zone
Sometimes open innovation is perfect for new areas or radical innovation. It is less likely that your existing supplier network will be able to rise to the challenge of a totally new technical approach or a new line of business. Similarly if you are innovating outside your core capabilities then it often makes sense to acquire new skills from the outside. A couple of years back Lego asked us to find ways to reduce static on production lines using open innovation. The company is great at designing and making toys but of course not a specialist in atmospheric electromagnetism!
Similarly, open innovation can be useful when you need a solution fast. It is a truism that many companies can save themselves a lot of time by seeking market-ready solutions that already exist and ‘adopting’ them rather than investing years of research and development.
Collaborate or bust
There are circumstances where collaboration with new partners is essential to innovate effectively. For example we have worked across the water and energy sectors recently where new cross-sector collaborations were the only way to bring about significant change. Similarly, we helped Interface source recycled plastic from beaches in the Philippines using many new and diverse partners such as ZSL.
Spread the risk
We’ve learned that it’s important to share the risks and rewards of innovation so that potential new suppliers are motivated to engage with open innovation challenges. If all of the risk and expense of innovating sits with the supplier, who has a low chance of success, then the programme will not fly. It’s important, in our view, for challenge holders to make public their offer or business model as part of the challenge process. This instils confidence and build trust.
Finally it’s worth noting that open innovation often leads to new long-term supplier and partner relationships. Indeed our brand of open innovation aims to leave the protagonists in a stable state for at least the first project and then hopefully more. So open innovation isn’t really business infidelity in our view. More like enlarging the circle of your friends.