Excellent new collaborative book about the Future of Innovation where hundred of authors give their views. Here’s the link. The plan is for this to grow into a kind of innowikki so why not submit your own thoughts? To save you hunting high and low, here are mine!
Let’s ignore the difficulties and problems of collaboration for now. There are many factors driving businesses large and small towards corporate open innovation (COI) at the dawn of the 21st century: Innovation is expensive and outsourcing promises lower overheads; Innovation is now global and even the largest multinational corporations (MNCs) realise that their knowledge has limits; Innovation is slow and often incremental and MNCs are attracted by the possibilities of quickly side-stepping disruptive competition or colonising new markets in a kind of corporate lateral thinking; Innovation is a group endeavour and some businesses have been quick to recognise the potential of the new web based networks as humanity wires itself together.
It is fair to say that most writing on COI is from the MNC standpoint. Most small companies are not familiar with COI as a concept and don’t know where to start or how to engage with MNC’s even if they do. From the perspective of SMEs or start ups the motivations are quite different. NESTA’s P&G Open Innovation Challenge has shown us that what many small businesses need above all is a customer. And if that customer is also a business or development partner rather than a pushy venture capitalist who insists on owning a large chunk of the business, so much the better.
So what about those difficulties and problems? The solutions to the problems of intellectual property are almost as numerous as the business partnerships themselves. One solution NESTA noted in its Corporate Connections programme was to ‘keep the lawyers out of the room’ for as long as possible. This approach resulted in a profitable and unlikely partnership between McLaren and NATS and contrasts with the ‘sign first, ask questions later’ approach of most MNCs. For more unequal ‘David and Goliath’ partnerships, more creative approaches to intermediation can be beneficial as can the plethora of web based idea matching services that is now emerging. The one common element here is that establishing trust among actors in the innovation process will become a much more deliberate part of innovation strategy. A side-effect of this will be the necessity for more empathy between very disparate organisations. Partnerships will only succeed if everybody can answer the question ‘why bother innovating?’ on behalf of their external partners.
Just as the extreme sports such as wingsuit flying or BMX racing are more exciting and rewarding than their more conventional counterparts, extreme collaboration can get you further, faster. NESTA and Virgin Atlantic’s current experiment in user-led innovation in which we are encouraging users to take a stake in the outcome is in stark contrast to the usual situation in which companies get away with paying nothing for ideas. Initial indications are that this approach is paying off and that treating customers as potential business partners can work. Of course with conventional companies this sort of innovation is tough. A recent paper from Cambridge’s Institute for Manufacturing notes that implementing an open innovation strategy presents many challenges for management. Many MNC’s have a decent strategy but are struggling with attaining the more operation capabilities to match. Some large companies will also have to be culturally reprogrammed in order to enable openness and cooperation rather than encourage secretiveness and competition. They will have to look hard at how they achieve the high levels of personal commitment to a project that open innovation requires.
To conclude, I feel excited about this new phase in innovation. As open innovation moves from the margins to the mainstream it has the potential to reinvigorate all R&D and NPD activity in companies. If you’re old enough to remember how marketing became essential in the boardroom in the 1980s then perhaps like me you’ll predict a similar resurgence as innovation gets a pace a top table.