What Is Open Innovation?
Simply put, Open Innovation means that your company is open to sourcing innovation from anywhere, not just from your own employees. There is a huge world of innovators outside any single company. Even the largest, most successful multinational corporations have realized that they produce only a tiny fraction of the innovation in the world that can be useful to them.
Connecting with Others
The innovations you need can come from many different sources: academia, suppliers, other companies, individuals and even your competition. Finding what you need requires a disciplined strategy for seeking innovation and inviting innovation to come to you. It also requires a mindset shift in your company from “Not Invented Here” to “Proudly Found Elsewhere!” There are many resources that can be used to help find innovation, including search companies like NineSigma, innovation marketplaces like www.yet2.com and many others. In addition, your whole company should know what you need and be looking for it. While serendipity does happen, you can significantly improve your odds of serendipity by training people where and how to look.
A 2-Way Street
Not only can you find innovation externally, you can “sell” or license your innovations to the world. Why do that? Beyond the potential financial gain from royalties, you can also build relationships that might uncover innovation you need.Furthermore, there are often cost synergies by increased volume of more businesses using a technology – so you may get cost savings AND royalties. Outbound licensing may be a way to syndicate risk of new technology. In addition, licensees often improve technologies – you may get back a better technology for you own use. Finally, building relationships by outbound licensing often creates opportunities and willingness of other parties to license technologies to you. As you get to know other entities you frequently learn surprising facts about their capabilities and additional opportunities to partner together on innovation.
Does open innovation mean you must outsource R&D efforts? No, not at all.Open Innovation is a way to multiply the effectiveness of your own innovation capability. You still need technical capability to (a) evaluate external innovation, (b) determine your innovation needs; and (c) modify or “tweak” inbound innovation to fit into your product(s). The best OI companies are also great innovators in their own right.
Can I do it myself? Yes and no. Open Innovation requires a commitment to it. But development of the strategies and executing quality licensing relationships is best done by working with those having experience in Open Innovation and Licensing.
Open Innovation & Licensing are much bigger topics than covered here.
About the Author and Cincinnati Consulting Consortium
Harry’s 29 year career with P&G included leading edge External Business Development (EBD) organization where he was one of the leaders in practicing open innovation and licensing.He personally negotiated dozens of intellectual property transactions.He specialized in complex, unusual, new-to-the-world situations.He also has 20 years experience in P&G R&D, giving him firsthand experience with the product development process. More info: email@example.com