Category Archives: Focus

Articles focusing on a particular aspect of Open Innovation or a company.

A VIDEO ON COLLABORATIVE INNOVATION: THE ROLE OF THE CONSUMER AND USERS

Charles Leadbeater, a researcher at the London think tank Demos, gave an insightful talk at TED TALK on collaborative innovation and the role of the consumers in it.  He starts his talk by giving an example of how the mountain bike, which is now around a 58 $ Billion business, was created by frustrated bike users from north California who mixed and matched parts from motorcycle and traditional bikes.

He argues that, when the internet  combines  with passionate consumers  who are knowledgeable, who have the incentive to innovate and have the right tools, you get an explosive collaborative innovation network.

Creativity is evolving from a place  with special people  in special places e.g RnD centers in the middle of nowhere who finally drop their ideas in a pipe line  to consumers who are passive.  Now the ideas are flowing back up the pipeline and are usually ahead of the producers. Most creativity, nowadays is cumulative and collaborative  e.g Wikipedia is a collaborative innovation network in itself.

There is a struggle between the closed organisational forms and the open organisational forms.  Before,  the old were doing everything possible to stop the open  organisational forms from proceeding  because they were threatened by them. But now  we see  many organisations moving towards the open model of collaborative innovation.

[tweetherder]Open models multiply the productive resources turning users into consumers, the  consumers into designers[/tweetherder].

Watch the whole talk at:  http://www.ted.com/talks/charles_leadbeater_on_innovation#t-840250

THE BOOMING OPEN INNOVATION PLATFORMS

A varied offer of open innovation platforms : from crowdsourcing of ideas to solutions search.

Open Innovation platforms can respond quickly and effectively to a problem or to generation of new ideas through the reuse of knowledge or external ideas. The time saving and new opportunities brought by this approach attracts more and more companies.

Invented in the 2000’s and powered up in 2010, the open innovation platforms experience a constant growth as testified by the twofold increase of the number of challenges published every year.

The open innovation platforms manage the search and intermediation between seekers and solvers, organized around a specific topic (a challenge) similarly to other marketplaces.

Most often the intermediation is between a company and either individuals (ideas crowdsourcing ), or specialists involved in scientific research or with a particular expertise (search for solutions).

There are specific open innovation platforms models that involve e.g. students (studyka) or start-ups (club open innovation). The offers can be grouped in two categories:

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Fig.1: the different types of open innovation platforms 

The ideation platforms aim at exploiting “collective intelligence”,

either with the largest audience, this we call “ideas crowdsourcing” (refer to  spigit, studyka, wazoku etc …) or towards  certain communities e.g the employees of a company (refer to social intranet solutions as jive)

These particular open innovation platforms allow to restrict or enlarge the targeted public for example the consumers of a brand ; Coca-Cola, Oreo or Patagonia are heavy users who organize idea competitions to improve their products, their advertising campaigns etc…The idea selected gives birth to project and the inventor gets rewarded.

The solutions platforms search for the best experts

The solution platforms on the other hand, aim at solving a given problem. These open innovation platforms publicize a specific problem to a number of persons who are targeted as potentially being able to solve it. They have a function of intermediary and  can provide an experts database, the project management and the option for the seeker to hide their identity.

We distinguish between two forms of solution platforms:

– the market places offer to experts the option to register themselves on their website and informs them when a challenge matches their skills

the expert search platforms propose to identify the best experts of the domain of the question and to submit it to these experts specifically.

The open innovation platforms marketplaces (innocentive, innoget…) are relatively simple to set up but have to invest in their notoriety to create their expert database (200k to 400k for the biggest). It is difficult for them to be versatile or to qualify the actual expertise of their members.

The expert search open innovation platforms, instead, are more complex to implement as they require means to identify and contact experts (using data mining techniques). But they can be applied to any subject, ensure the relevance of those contacted and also ease the confidentiality management as challenges are not necessarily published on the web but sent directly to experts.

FACTS AND FIGURES

To better understand the activity of these open innovation platforms, let’s look at some key statistics (study based on public data from ideXlab, InnoCentive, Innoget and NineSigma).

A continuous growth of 100% per year

[tweetherder]There is a growth of nearly 100% per year in the number of questions asked on open innovation platforms,[/tweetherder] with more than 500 in 2013 and a total of several thousands since their inception. Although this number is difficult to estimate, we think that about 5000 challenges were published by these players to date. This does not account for the challenges managed directly under the corporate brand with the help of intermediairies nor those that are confidential.

A significant increase of Challenges of smaller amount

Approximately 50% of challenges published on open innovation platforms include an explicit reward amount.

These prices have decreased by 25% per year over the last 3 years to reach an average value of € 20k in 2013. This decrease in average is largely dictated by the sharp increase of challenges with rewards below €10k. They represent half of the activity of open innovation platforms in 2013 but were inexistent in 2011. This follows a penetration of Open Innovation in more companies and product categories, including SMEs. Indeed, by making a more systematic use of open innovation platforms, companies are seeking for more solutions of smaller value. This is particularly true for Innocentive or ideXlab while NineSigma specializes in “grand challenges” worth hundreds of thousands to a million dollars.

Average resolution duration of 90 days

The average duration of a challenge is 90 days with a great variability depending on the open innovation platforms. Some favor the short time (~6 weeks) and other longer periods (24 weeks as Innoget). This difference is partly explained by the nature of the challenges. The requests for transfers of specific technology tend to be processed more quickly than broader requests for ideation.

The life science and computer science are in the lead

There are specialized open innovation platforms such as in social development as Open Ideo or the acquisition of patents as Yet2.com and many others. So the domains covered are very broad but the main volume of requests is hosted by the generalist open innovation platforms.

Of these, the most requested areas are in order: the life sciences, IT and electronics that constitutes 70% of the total, far ahead of health or agriculture which probably demonstrate a lack of knowledge of these tools in some industry areas and so an great additional market potential.

Open Innovation platforms challenges per domain

       Fig.2: breakdown of challenges by domains 

Contract research is the most popular collaboration format

The nature of partnerships varies depending on the maturity of the solution seeked, from theoretical ideation to actual supply agreements.

The most wanted category on open innovation platforms is contract research (53%), whereby a company enters into an agreement to finance the maturation or implementation of technology developped in previous research activities. This is a situation where the “innovation leverage ” is ideal as it benefits from existing knowledge and results while it still allows to acquire exclusive rights from the supplier at a reasonable cost. Next on list comes technology licensing (14 %) and joint developments.

Open Innovation platforms contracts by type

                       Fig3: Breakdown by contract types

 

As a conclusion, let us note that [tweetherder]the Open Innovation platforms offering is now well structured. The number of transactions has increased sharply in the past years[/tweetherder] and the practice is widely used for both large and smaller projects. However not all industry sectors have embraced Open Innovation yet and so there are promising untapped markets to enter into.

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Collaborative innovation: do we collaborate or cooperate?

The past couple of years have seen the concept of open innovation evolve in specific ways. With aspects like collaborative innovation being born today, enterprises have adopted these new trends and taken full advantage of them. Since ancient times, man has always realized that working together is something very valuable. However, one question that is still being deliberated when it comes to open innovation is whether to ‘collaborate’ or ‘cooperate’.

In the modern society, one thing that can’t be disputed is the importance of collaborative innovation. The stories of lone geniuses are rare as the majority of innovations that happen today are the result of collaborations. Most spectacular innovations are accomplished through collaborative innovation work, think of Airbus aircrafts involving three main companies in three different countries, of wireless technologies as 3G being designed by a forum of tens of companies or even the internet.

Collaborative Innovation Networks (COINs) were conceptualized and studied by Peter Gloor (MIT Mgt school) in an article in 2006. They are the principles of many national or transnational initiatives (as the European funded collaborative projects).

So what exactly is the difference?

Collaborative innovation is an iterative process whereby two or more parties that share similar goals combine their expertise to make their objectives come true. Goals are realized through knowledge sharing, learning and connecting pieces of innovation together.

Cooperation is different from collaboration as with cooperation, the parties involved act or work together while working on selfish yet common goals. Cooperations may take form of joint-ventures or shared R&D labs where the parties contribute mostly with similar expertise. It can also take the form of the incorporation of innovations from one party into the product of another (problem solving open innovation). The cooperating parties will often share the rewards of the innovation but through a single way to market and a single revenue stream.

While cooperation based open innovation is often a temporary situation where one party integrates contributions and controls the product and commercialization, collaborative innovation involves more than this. Since the whole idea with collaboration is about achieving a single goal, the relationship involves the entities putting in sufficient resources and competencies that are complementary rather than competitive.

Obviously, collaborative innovation projects are more complex to organize, control and measure but the results can benefit several companies businesses, multiplying the ROI. On the other side focused cooperations and open innovation projects serve a common goal, they are much easier to manage.

Regarding IPRs open innovation projects often involve one party granting licences or even selling patents to another, whereas colloborative innovation projects involve sharing new inventions between the partners and granting a right to use on the necessary background IP.

OPEN INNOVATION IN CHINA: TRANSITIONING FROM COPYCAT TO AN INNOVATIVE HUB

China’s own technology companies are now challenging market leaders and setting trends in telecommunications, mobile devices and online services. Companies like Seeed Studio, a global leader in open hardware innovation, has transformed into a new model of hardware innovation offering hardware kits to makers and offering personalized services to enable companies to move quickly from an idea to mass production by identifying moments of transition , where a company lacks the knowledge on how to scale up.  WeChat smartphone application, dominates China’s mobile messaging market with 272 million monthly active users from around the world clearly challenging WhatsApp. These are some but a few exemples of Open Innovation in China.

 So what exactly is encouraging this innovation ecosystem?

The rise of China’s tech industry is fueled in part by its growing investment in research and development. [tweetherder]According to a study by U.S.-based Battelle Memorial Institute, R&D spending in China will likely reach $284 billion this year, up 22% from 2012[/tweetherder].

The education has encountered a rise of Chinese graduates, from as few as 1 million graduates in 1999 to almost 7 million in 2013, with 31% of the undergraduates holding engineering degrees.

Other positive factors are the growth of a vibrant venture capital system in the country and an increasingly important market for multinational companies as Chinese consumers are increasingly more demanding of products that are tailored to their unique tastes and habits.

Indeed China still has its challenges such as perception of low-quality products, talent shortage due to graduates leaving to conduct research in richer countries, intellectual property rights issue but it is sure on the right path to becoming an innovative hub.

A recent paper (“How Chinese firms employ open innovation to strengthen their innovative performance” by Jin Chen et al) showed that Chinese firms start widely using open innovation:

1. Technology in-licensing agreements to obtain access to technologies

2. Long-term alliances with foreign partners to access state-of-the-art technologies

3. Collaboration with local universities and R&D institutes to broaden their technological strengths

4.  Collaboration with the local industrial community to deepen their technological skills.

We would like to ask you our reader, what role do you think open innovation has in helping China to accelerate its innovation? Who would benefit? We would like to hear your thoughts?

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Henry Chesbrough Open Innovation

Open Innovation is a paradigm promoted by Henry Chesbrough that expands on the ideas of interbusiness collaboration. Over the last decade or so it has been primarily attributed to Dr. Chesbrough from his position as adjunct professor and faculty director of the Center for Open Innovation at the Haas School of Business at the University of California and as the author of the book “Open Innovation: The New Imperative for Creating and Profiting from Technology” (Harvard Business Press, 2003).

Dr. Chesbrough recommends that companies embrace the idea of ‘Open Innovation’, which very simply means obtaining the required components or building blocks of the development and manufacturing process from any source available, whether it is domestic or not.  He further suggests that even though there is some risk of losing competitiveness because of the loss of a competitive advantage due to the sharing of potentially sensitive information with partners (and consequently competitors) in the manufacturing process, the overall gains far outweigh the risks.

The Chesbrough Open Innovation model incorporates such concepts as the ‘Collaborative Network’, which is a structured system that works as a unit to achieve a particular goal regardless of the locations, circumstances or ideologies of the constituent parts; ‘Innovative Networks’, ‘Data Networks’ and others.

Proponents of the system in the manufacturing sector suggest that development marketing, research and distribution costs may be greatly reduced by making use of facilities, knowledge and structures already in existence. Naysayers point out the risks to individual companies such as loss of such things as proprietary knowledge, competitive edge and even profit may render some business obsolete or defunct.

Dr. Chesbrough firmly believes that the overall gains to innovation, business and even humanity far outweigh these considerations.  Certainly, examples abound where this process has worked marvelously for all concerned; Case in point MS-DOS vs. Apple Macintosh for computer dominance.  Clearly the overwhelming profusion of developers and the size of the existing market share that Microsoft maintains smothered the Macintosh during the early skirmishes between the two giants.  Providing a working platform that enables developers to innovate and expand on existing structures enables better, cheaper and more reliable products for consumers and profits for all the parties concerned.

Another example of where Chesbrough Open Innovation has served well in the marketplace is the profusion of apps for Android and iPhones.  Whichever you prefer, there is no doubt that the ability of developers to create and innovate has been to the benefit of everyone who now uses a mobile phone.

All of which would tend to suggest that the Chesbrough Open Innovation model is a practical success.