The popularity of open innovation is a two-way street. It is not just an increasingly popular option for solution seekers; it is also a great opportunity for solution providers—entrepreneurs, inventors, and researchers who can provide technologies, solutions, and ideas to help these bigger corporations grow faster.
There are benefits for both sides. In today’s competitive environment, companies want to accelerate the time to market for new products, and they’re looking for new technologies from the outside to speed the process. That translates to new opportunities for entrepreneurs to be matched with organizations that need their solutions and are willing to pay for them.
It’s a match made, not in heaven, but increasingly through the strategy of open innovation, which involves “reaching out to the world” for new solutions beyond a company’s four walls. Many organizations have made this strategy a permanent part of their day-to-day processes. They’re looking outside their region or their industry for technologies or ideas. They may orchestrate a Grand Challenge like the Ansari X Prize of $10 million for a civilian spacecraft, but more often it is a technology search broadcast through open innovation platforms, and distributed by innovation companies like NineSigma, which has a worldwide network of millions of solution providers from virtually every sector.
For entrepreneurs and other inventors, this can mean money in their pocket much more quickly. In fact, a recent NineSigma survey shows that solution providers consider revenue growth to be the number-one benefit of open innovation for them. By joining these networks, solution providers also benefit from access to organizations with an explicit need for their technologies and solutions, and a transparent process that ensures protection of their intellectual property.
In a nutshell, the process is based on performing solution searches in a non-confidential manner. At NineSigma, for example, program managers work with clients to state their technology need in a very precise way that removes the application and industry.
For example, Procter & Gamble was looking for a solution to wrinkles in shirts coming out of the dryer. We described the problem as “relaxing surface tension of an organic material,” and the eventual solution came from a computer chip expert who had developed a polymer that could be applied to this need. The solution providers, too, submit their innovations in a non-confidential manner so that IP leakage problems are avoided. Open innovation firms act as IP buffers and broker these communications between solution seekers and providers.
Entrepreneurs are enthusiastic about the results of this matchmaking. Andreas Hofenauer at PTS, a German research group specializing in paper and fiber innovation, says his firm has made new connections on five projects, including an innovative paper with resistance to very high temperatures and residual material utilization in sustainable packaging materials. “Completely new and unusual ideas, innovations, or projects can be put into practice with little acquisition expenditure, and that is a great advantage,” Hofenauer says.
Kevin Joback of Molecular Systems, Inc., which specializes in using computational techniques to design chemicals with specific physical properties, credits two project awards to the open innovation process. “Both were with companies we were not marketing to, in technical areas we were not previously focusing on,” he says. “If not for NineSigma, there was no way we would have known such opportunities existed.”
In addition to the financial rewards, researchers enjoy the chance to put their solutions into practice. For example, NineSigma recently connected the International AIDS Vaccine Initiative (IAVI) with top biomedical researchers and helped identify two scientists who will receive a total of $875,000 to develop solutions for generating stable protein complexes for use in HIV vaccines.
Increasingly, these are not one-off deals. Established companies have come to recognize that they need entrepreneurs as much as the entrepreneurs need them. They are finding it to their benefit to become a “partner of choice” so that innovators want to keep coming back.
Specifically, this means putting a fair reward on the needs they put out to the global community, and making deals that are mutually beneficial. It also means understanding what is core to their company's business—where they must own IP versus more peripheral needs that can be handled with a simple license deal. This makes negotiations and contracts much easier and ultimately creates better outcomes.
This innovation process becomes embedded in the corporate culture. Global industry leaders like Kraft, AkzoNobel, or L’Oréal now routinely use open innovation to solve immediate challenges, fill product pipelines, integrate new knowledge into their organizations, close development gaps, and improve financial performance. They want to develop a reputation in the marketplace as a partner of choice.
As Graeme Armstrong, corporate director of research for AkzoNobel, puts it: “To remain competitive, today’s organizations must continually innovate. AkzoNobel’s ability to foster innovation is critical to our growth and our worldwide market leadership.” AkzoNobel also does this by encouraging collaboration across its business units all around the globe.
Developing a culture of innovation isn’t easy; for some executives, it involves a real “sea change” in the way they choose and reward their people and organize their teams. Innovation teams are often comprised of brilliant and strong-minded people, many of whom prefer individual contributor roles to being part of a group. It takes a special kind of leader to turn them around and encourage a different kind of thinking, and new ways of working.
For these solution seekers, the benefits of open innovation are well worth the “growing pains” of a shifting culture. After all, getting a product to market three to six months faster can be worth literally millions of dollars. Open innovation, especially through an established network or partners who “get” it, means not wasting time going down blind alleys or dead ends in research.
The same kind of “vetting” benefits solution providers, too. Rob Brooks at the National Physical Laboratory in the UK describes how joining an open innovation network increased awareness of NPL’s world-leading advanced materials expertise, thermodynamic modeling capability, and high temperature exposure testing and led to a connection with a major international energy company. “Engagement with this client on the first project led to further opportunities and a more strategic relationship,” he says.
Open innovation will have a significant impact on America’s financial reboot as well as the global economy. For entrepreneurs of all sizes, it is becoming clearer that it is time to join the crowd of solution providers who are finding new opportunities to enjoy rewards for their innovations.