We were at an EIRMA conference last week at Manchester Business School called 'Open Innovation – How does it work in practice?' Present were Unilever, Nestle, EDF, L'Oreal, Solvay and many university tech tranfer people. This confirms the pull of the open method, despite such basic practical questions still being asked. Some of the other themes which emerged during the day were:
-Isn’t OI just another word for collaboration orpartnership? If it is not then what is the difference?
-What kind ofsoft skill is needed by an organization to be successful in OI? What kind ofpeople do we need to hire to enable an organization to be successful in OI?
For now, I'll confine myself to addressing the first and often asked question concerning the definition of open innovation. The others are key cultural issues which we have investigated elsewhere.
In 2003, Dr.Henry Chesbrough coined the term open innovation to describe the ways in which companies include external ideas to create innovations aswell as exploit external paths to market in order to advance their own technologies.
What's interesting is what this misses out. Yes this concept covers collaboration and as such programmes like Dell's ideastorm would qualify as open innovation. But does it cover partnership? As Wikipedia note, "According to Dell Ideastorm's Terms of Services, a posted idea willgrant Dell royalty free license to use and implement it (withoutcompensation to the originator). Participants should be beware of thisbefore posting any ideas."
What we've discovered in programmes like the P&G Open Innovation Challenge, Oracle Open Alchemy and VJAM with Virgin Atlantic is that you do indeed have to move beyond collaboration towards a true business partnership. In each of these cases there have been new commercial relationships developed between very unequal partners and in order for these to prosper and make sense there has been a very clear sense that the ideator retains rights to the IP. This is why to our eyes, the Ideastorm and many similar 'open' initiatives don't make the grade. They're great for producing insight, feedback and new ideas but in terms of business relationships they are, essentially, free research.
Because open innovation is usually between those with much power (corporates) and those with little (SMEs, consumers, suppliers) this distinction is not trivial. Real, sustainable open innovation needs to properly share the risk and the rewards and must therefore create a trade between the partners.
There are many types of partnership that can be created. Virgin Atlantic now have consumers who have become suppliers. P&G licences many proprietary technologies from small companies. Oracle is entering new innovative partnerships with its corporate customers. Tesco, through TJAM, are co-innovating with programmers through their API.
One of the learnings from NESTA's corporate open innovation programme therefore is to 'start at the end'. Before you embark, investigate what sort of business relationships you are aiming for and what sort of commercial basis your partnership will have. In this way, real lasting value will be created in spite of the many barriers there are to this emerging method.