What Are the Benefits of Disseminating Innovation?

What Are the Benefits of Disseminating Innovation?

In today’s fast-moving landscape, disseminating innovation within the corporation is key to capturing opportunities and turning them into business value. That’s how you will truly manage to make the best out of your external ecosystem.

In a previous article, focusing on Open Innovation, we identified the difference between Open Innovation and Closed Innovation. What it uncovered was that Open Innovation should be handled on two different levels: both externally and internally

However, if partnering with external partners in your ecosystem has a clear advantage, there is more controversy when it comes to internal decentralization of innovation. 

Yet, disseminating innovation within the corporation is key to capturing opportunities and turning them into business value. In contrast, restricting innovation to R&D and innovation teams will hinder the corporation’s innovation potential.

All collaborators should be implied in all Open Innovation approaches (even though with different levels of priority, importance, and implication): that’s how you will truly manage to make the best out of your external ecosystem.

Capitalizing on Collaborators Expertise Will Increase the Quality and Accuracy of Your Innovation

Within a large corporation, there are thousands of employees in hundreds of teams, each one allocated to a department  (digital transformation, finance, marketing, operations, etc.) This results in numerous fields of expertise. Some employees are technical experts, dedicated to integrating IT solutions, and others are on the ground, and thus closer to the business’ need and market realities. 

Disseminating your innovation will enable your company to capitalize as much as possible on these different fields of expertise. Teams will have the possibility to express their business needs and raise market pain points. It will feed the the company with relevant insights, making innovation more accurate.

In addition, calling on transversal teams (e.g. Finance, IT, Legal) will enable an expert judgment of the different solutions, making your final decision better.

In a nutshell, brainpower is disseminated throughout the organization. You should look for it all along your innovation process to increase your chances of success. As well as, to ensure that your innovation is truly creating value for the company.

Empowering People Will Accelerate Your Innovation and Will Drive Engagement

Conducting experiments should not be exclusive to the innovation team. In fact, its role should be to increase all teams’ independence when it comes to innovating. As well as, to communicate on innovation priorities at the corporate level and to provide a clear process so teams are empowered to innovate on their own. 

This decentralization will lead to faster experimentation and better chances of survival in a fast-moving landscape. This was listed as one of the 5 Benefits of Decentralized Innovation Management, according to Jagan Jami in his article for Acuvate.

Furthermore, empowering collaborators will also raise their responsibility while fostering internal initiatives. This will increase the engagement of employees, who will feel valued and engaged. It will result in more idea generation while improving chances of success: empowered teams have a better understanding of their own need.

Employee empowerment should become part of your corporate culture. For instance, Four Seasons was awarded Fortune’s 2017 “Great Place of Work Legend”. Ed Evans, its Executive Vice President and CHRO, reacted claiming that “by empowering employees […], they, in turn, carry our values forward, connecting deeply with our guests […]”.

Sharing Information Transversally Will Reduce the Risk of Missed Opportunities

Innovation decentralization must be accompanied by information centralization.

Last but not least, one major facet of Open Innovation is to make it participative and collaborative. Concretely, this means that all teams should share their knowledge with one another.

In order to avoid creating silos, innovation decentralization must be accompanied by information centralization. In other words, disseminating your innovation implies that information is spread between different teams. Therefore, cross-team communication will reduce the risk of missed opportunities and inadequate innovations.

Indeed, while some teams are facing innovation opportunities, other teams are facing market reality. If both teams communicate, it will reduce the risk of making the wrong decision.

Linking Open Innovation to the DNA of your Company Will Help Build an Innovation Culture

All things considered, achieving success by decentralizing your innovation strongly relies on people. They are your main strategic asset when it comes to creating value out of opportunities (expertise, empowerment, collaboration).

Therefore, it is all about diffusing the right mindset. Disseminating your innovation should go beyond principles and a checkbox approach. As explained by Henry Chesbrough in his webinar, every corporation willing to succeed should make it part of its DNA.


If You Don’t, You Will Fail: Why You Must Implement Open Innovation

If You Don’t, You Will Fail: Why You Must Implement Open Innovation

Between rapid technological change, new tech giants, and ever more demanding consumers, companies are facing a steep battle. Alone they will fail, together they will conquer.

The rapid change in technology in past decades is well known, as well as, the rise of new innovators from unlikely places. New tech powerhouses like China (think of Shenzhen) and solo inventors are intensifying competition in all industries.

Not only is the innovation landscape more competitive, but consumers are more demanding. With a war brewing on multiple fronts, companies are relying more on innovation from outside their company to stay competitive.

Corporations have been forced to implement different aspects of open innovation. 

Get All the Help You Can Get

It’s no coincidence, companies of all sizes are developing new strategies to increase innovation. Most of – if not all – new innovation strategies rely on an open approach. 

Two recent surveys found that 78% of large companies were implementing at least some elements of open innovation. In reality, open innovation makes a lot of sense. 

Think about it this way. Would you prefer having one team, or perhaps having thousands of teams working to solve your problem? This is what open innovation promises. Appealing, right? 

The business world has realized this phenomenon and is ready to work together. You should take full advantage of it.

Open innovation is not restricted to product or service innovation. Thanks to your innovation ecosystem, you can find innovations in manufacturing, supply chain management, marketing, and much more.

It’s important to tap into the expertise of members in your ecosystem and see what they have to offer.

If Not, You Will Fail

If your company isn’t co-creating with others, you’re falling behind. It’s like playing a one-on-one tennis match, with two players on the opposite side. Not fair, right?  

Companies with more innovation teams will result in more (and better) innovation. To combat this, your company should do the same. Create partnerships with outside collaborators. 

You will not only gain valuable new innovations, but you lower financial risk while speeding up the innovation process

A real win-win all around.

It Starts With the Right Mindset

Open Innovation is all about the right mindset. Your corporation must embrace the exchange of knowledge, be comfortable with using technology from outside your four walls, and with letting shelved innovations be used by others.

The most successful examples of open innovation fully embrace the process and culture.


4 Reasons Why Your Open Innovation Strategy Is Failing

4 Reasons Why Your Open Innovation Strategy Is Failing

If you don’t adapt open innovation, you risk affecting its performance. When changing your innovation strategy, pay close attention to, how you will process new knowledge and how you will capitalize on new innovations. 

Like with any process, open innovation needs to be modified to fit your corporation’s organizational structure and culture. Your workflow and innovation process will have to change. Your new process, should include an additional step. A step for collecting knowledge from outside your company. As well as, a set procedure on how to treat and implement new innovations. 

If you don’t adapt open innovation, you risk affecting its performance. Think of your new innovation strategy in a holistic way. 

Here are the four most common reasons why open innovation fails:

1. You Are Not Spreading Knowledge to the Right People or to the Right Places

Knowledge can get stuck with certain people, departments or locations. You must make it as easy as possible for knowledge to travel in your organization. One way is by making labor mobility as painless as possible. 

Encourage people to transfer to different departments or business units. This will enhance knowledge transfer and sharing. Don’t allow a lack of communication to create a Valley of Death – where innovations go to die.

2. You Are Outsourcing Innovators

To make full use of the knowledge you acquire through open innovation, you must have the qualified people in your corporation to manage the information. They are key in taking innovation and turning it into real business. 

It’s a mistake to think of open innovation as a substitute for internal R&D. You must keep internal R&D teams in place. These teams will be essential for when you have external innovations that must be adapted to meet your organization’s requirements. 

Even if the innovation is coming from another department in your organization, it will still need to be adapted. This is where having innovation teams in different business units becomes useful.

3. You are Losing New Business Opportunities Because You Won’t Allow Innovation to Leave Your Company

Some collaborators might feel threatened to allow shelved innovation (e.i. technology that’s been developed, but isn’t being used) to leave your organization. These collaborators prefer keeping the innovation in your organization – even though it’s not creating value – in fear of not being the ones to find its purpose.

In other words, your collaborators want to be the ones to find the right market opportunity for the shelved innovation. This practice, results in your company not exploiting your technology to the fullest.

4. You Don’t Have the Right Process in Place to Sort Outside Knowledge

One important aspect, that is often overlooked is how you will process outside knowledge. If you don’t plan for this you will have a bottleneck situation in your hands. 

More knowledge means more work. Planning accordingly is crucial. Plan on how you will filter through all the additional information, as well as, plan on how you will implement additional innovation projects.

Get the Right People, Funding, and Senior Management Support

To avoid the mentioned four potential pitfalls, you should align the right people, funding, and senior management in your company. This includes people in innovation, purchasing, and management roles. Without their full support, you risk affecting the potential performance of open innovation.

The information in this article came from Open Innovation Results: Going Beyond the Hype and Getting Down to Business by Henry Chesbrough.


How To Build Long-Lasting And Successful Collaborations With Startups

How to Build Long-Lasting and Successful Collaborations With Startups

As the rate of technological change accelerates, corporations have had little choice but to build long-lasting and successful collaborations with startups.

As the rate of technological change accelerates, corporations have had little choice but to build long-lasting and successful collaborations with startups. Due to their tech-savviness, startups have been a natural partner for corporations in this age of technology.

As we’ve previously discussed on this blog, startups bring many benefits to corporations. However, due to their inherent differences, startups pose a set of particular challenges to corporations

Not only does organization structure pose a challenge, but so does differences in culture. When starting a collaboration with a startup, corporations must keep these two points in mind. 

We believe there are five key aspects of the corporate-startup partnership that both corporations and startups should pay close attention to.

Effective and Frequent Communication: Setting Yourself Up for Lasting Success

A good predictor of a long-lasting and successful partnership is how strong communication is between partners. Undoubtedly, there will come a time when the partnership faces challenges, and having effective communication will ensure partners will be able to work through the challenges effectively.

It’s imperative the partnership takes the time to build an effective communication channel because communication is the backbone of your collaboration. 

This shouldn’t be left to chance, establish and agree on a specific procedure for communication (e.i. weekly meetings). 

Effective and frequent communication will also facilitate other aspects of a long-lasting and successful collaboration.

Be Transparent: Build Trust Between Partners With Transparency

One sure way to break-up a partnership is by losing trust. Many startups see corporations with a cautious eye. According to KPMG, startups fear: losing their culture, technology, and autonomy. All these fears are well-founded. 

Time after time, we’ve seen corporations eat the little guy up. To ease a startup’s fear, large firms should establish a policy of full transparency from the beginning.  

This policy of transparency will affect all aspects of the partnership: intentions, goals, timelines, contracts, and working procedures. 

Both corporations and startups should be transparent on their strengths and weaknesses to build long-lasting trust.

Only when there is complete trust, will the collaboration reach full working potential.

Share Information: The Good, the Bad, and the Ugly

Hand-in-hand with transparency is the notion of having an effortless mechanism for the exchange of information. For the collaboration to reach value creation, partners should share both the good and the bad. 

By sharing information, the collaboration opens the opportunity to find the coveted innovation gap, and allows them to exploit this gap for meaningful innovation.

The exchange of information should not stop at the minimum required information. Sharing information regarding thoughts, experiences, and industry insights will greatly increase the innovation potential of the collaboration. 

The more you share, the more fruitful your collaboration will be. This will also strengthen your relationship with your partner.

Understanding Their Methods and Processes: Don’t Embark on Your Journey Blind

Frustration can arise when not understanding the methods and processes of your partner. Since corporations and startups behave very differently, this can lead to many complications. 

To avoid this, the corporation and startup should take time, at the beginning of their partnership, to learn about each other’s methods and processes. 

After, the collaborators should agree on and establish a common approach. This will ensure they work in the smartest way possible. 

Corporations should be careful to not impose too many of their own methods and processes on the startup. Remember, a key advantage of working with startups is learning how and why they do things

Don’t miss out on this learning opportunity.

Set Clear and Achievable Goals: Laying Out the Journey Ahead

A strong foundation needs to be set before the partnership can be fruitful. This should be done by setting clear and achievable goals. Corporations should be aware of the strained resources most startups operate with.

Many startups don’t have the capabilities to mount large and expensive projects. 

Keeping this in mind will result in establishing realistic goals. This also relates back to establishing full transparency. Both partners will need to be frank with what is possible and what is not.

The goals set should be mutually beneficial. Yes, the corporation will have set needs, but the startup should also be benefiting from this partnership (other than in monetary ways).

The Corporate-Startup Paradox: Don’t Be a Control Freak

One of many paradoxes in the business world is the desire of corporations to work with startups and incorporate their culture, while simultaneously encouraging (or sometimes forcing) startups to assimilate and fit better with the corporation. 

This paradox can lead to many problems with the corporate-startup partnership. It can strain your relationship, if you force or coerce a startup into working the way your corporation does.

As your partnership progresses don’t lose track of the benefit of learning from and adopting certain structural and cultural aspects of the innovative startup. 

Don’t be the controlling parent that most startups fear corporations are.


6 Corporate Collaborative Open Innovation Websites

6 Collaborative Open Innovation Websites

In this article, we will showcase companies who have integrated this strategy for fostering open innovation and discuss why it might be the right strategy for you.

How can your company externally promote open innovation? This depends on many factors, including your company’s culture and structure. However, one popular implementation strategy is through dedicated collaborative open innovation websites.

In this article, we will showcase companies who have integrated this strategy for fostering open innovation and discuss why it might be the right strategy for you.

Société Générale Collaborative Innovation Websites

Société Générale: Win-win Approach to Fintech Innovation

Société Générale is looking to work with ambitious startups who develop disruptive technologies. For this reason, they launched a platform for their open innovation efforts. The platform showcases different ways to collaborate with Société Générale – Société Générale Ventures, Global Markets Incubator, Internal Startup Call, and others.

It has two main objectives: offer Société Générale’s expertise to Fintech startups while benefiting from the startups’ technology and methods.

Claire Calmejane, Chief Innovation Officer at Société Générale, illustrates how the bank works with startups:

Our new strategy is based on 3 pillars, in line with the Transform to Grow plan: strengthen relationships with startups, support the business lines’ digital strategies, and create new business models. 

The new strategy has been effective, Société Générale ranks as the 26th most innovative company in France, according to Forbes.

General Electric’s platform, GENIUSLINK Collaborative Innovation Websites

General Electric: Linking Collaborators

General Electric’s platform, GENIUSLINK, has a different spin on open innovation. The American conglomerate created a community-oriented open innovation website where innovators can gather to crowdsource resources, expertise, and solutions for General Electric’s (GE) “challenges”. Currently, GE has 22 challenges, ranging from aviation to health.

The platform connects innovators and experts with GE’s own business and technical experts to get “business done” as GE proudly says. Through the platform, GENIUSLINK offers a range of services linked to product development.

The platform’s key differentiator is the size of its community – in the millions, and its speed to market when putting chosen technologies into production.

Procter & Gamble (P&G), Connect and Develop website General Electric’s platform, GENIUSLINK Collaborative Innovation Websites

Procter & Gamble: A No Secrets Strategy to Open Innovation

Procter & Gamble (P&G) launched Connect and Develop, with the hopes of finding solutions to P&G’s most important innovation needs. These range from Oral, Personal and Family Care Innovations to Digital, Business and Retail Innovations. Today, there are 17 areas of “needs”. An interesting comparison between P&G’s approach and others is its detailed and open approach to addressing corporate challenges.

Potential partners immediately discover what the company is looking for – saving everyone time. This transparency makes the whole innovation process that much more beneficial for P&G and its innovation ecosystem.

Don’t take our word for it – Connect and Develop has brought to life an impressive line of products, such as the Swiffer Dusters, the Crest SpinBrush, and the Mr. Clean Magic Eraser.

Philips' SPICE platform Collaborative Innovation Websites

Philips: SPICE-ing up Open Innovation

Philips’ SPICE platform engages in the “outside-in” form of open innovation, meaning it draws information, technologies, and expertise from outside its four walls to solve its innovation challenges.

The platform connects innovators and their solutions with a range of Philips’ business categories and teams. Innovators can propose their solutions to Philips and voting takes place on the platform. The most popular solutions are invited to interact with the appropriate business category and continue along the process all the way to adoption.

In contrast to GE’s platform, Philips is mostly looking for solutions that are ready for implementation, the platform doesn’t offer product development assistance.

Ikea’s Co-create website Collaborative Innovation Websites

Ikea: Co-creating Tomorrow’s Home

Another example of an open innovation platform is Ikea’s Co-create. The platform has three pillars – Exploring life at home, Ideas and Prototypes, and Voting and Feedback. At each stage, Ikea encourages customers to participate.

All their projects start with asking customers a specific question – for instance, what are your living room storage needs? This is followed by a research phase, where customer insight is collected and taken into consideration. Only after this phase does Ikea build a prototype.

Customer participation doesn’t stop there, Ikea continues to ask for feedback during the testing phase. This is a great example of open innovation centered around customer insights.

When Ikea needs new technologies they also turn to open innovation. Ikea Bootcamp connects the company with leading startups, such as AdledeBeam Impact, and Bumblebee Spaces.

Samsung Next website Collaborative Innovation Websites

Samsung: Supercharging Innovation

Samsung Next, the company’s flagship open innovation platform, works with startups in various capacities to increase innovation. The platform is divided into three areas: Partnerships, Ventures, and Mergers & Acquisitions. In each area, Next is helping its partners to grow and innovate, while at the same time adding to Samsung’s ever-growing software and services portfolio.

A key take away from the Next program, is its mission to connect its existing Next partners to foster even more open innovation. This strategy assures that Samsung achieves the highest RIO possible from investing in open innovation.

Why are websites a good medium?

Collaborative open innovation websites are a popular way to democratize innovation as they focus and centralize your efforts, provide wide visibility to your innovation needs, and are cost-effective.

In the spirit of open innovation, websites are borderless and unbiased. Allowing innovation to be open, fair, and opportunistic. The websites’ sole purpose is to promote open innovation.

So, what are you waiting for?


5 Companies Leveraging Open Innovation

5 Companies Leveraging Open Innovation

Let’s explore 5 companies leveraging open innovation. These companies showcase how building efficient external innovation ecosystems can bring tremendous technological advances and business opportunities.

Building upon our previous articles where we defined open innovation and discussed its various forms, let’s now explore 5 companies leveraging open innovation. These companies showcase how building efficient external innovation ecosystems can bring tremendous technological advances and business opportunities. The key to their success has been adapting open innovation to their corporate DNA and current innovation needs.

Shell: GameChanger accelerator program for startups in the energy industry

Shell’s accelerator program, GameChanger helps startups break through barriers. The program’s “fail fast” mindset means the startup, together with technical and business experts from Shell, solve the most pressing issues first, such as manufacturability or scalability.

The GameChanger program is the definition of a mutualistic relationship: Shell equips startups with all the necessary tools for success, allowing startups to grow quickly. The startups in return provide Shell with new technologies to move its business forward.

Michelin & General Motors: Reinventing the tire

Michelin and General Motors (GM) have teamed up to solve a very real challenge in the automobile industry – flat tires. The duo wasted no time and ambitiously set out to reinvent the wheel. Their new 21st-century tire named Uptis (Unique Puncture-proof Tire System) is puncture-proof.

Uptis was only possible thanks to the collaboration and exchange of information between Michelin and GM. The new tire benefits from a powerful go-to-market strategy. Thanks to General Motors, the tire can be factory installed on new vehicles. 

This greatly reduces the risk of commercialization for Michelin and brings a unique innovation to GM vehicles.

Masisa & Ennomotive: Teaming up with inventors for new sustainable solutions

Masisa, a manufacturer of wooden boards, sought to implement a circular economy model to its manufacturing process, however, lacked the necessary expertise. Masisa reached out to Ennomotive, a platform dedicated to connecting companies with engineers, to help solve its manufacturing challenge. Together, they conducted a challenge to solve Masisa’s dilemma. 

The winner was a British engineer named Michael Ankobia. His solution consisted of transforming the woodcut-offs into wooden tiles to replace metal roofing. 

This example varies from others in one key way – it did not involve a company but rather one savvy innovator. One bright mind might be all you need.

Capgemini & Agrics: Applied Innovation Exchange - innovation’s matchmaker

Capgemini’s Applied Innovation Exchange is another great example of open innovation. The program aims to gather startups and their innovative solutions to solve real-world challenges. One success story has been Project FARM (Financial and Agricultural Recommendation Models). This AI-powered platform simplifies complex data for farmers, so they can make better-informed decisions regarding crop production and yield optimization. 

The platform was co-created with Agrics, a social enterprise operating in East Africa. The exchange of technical and local expertise between Capgemini and Agrics was essential for the success of the platform. Without the collaboration, Capgemini would have lacked important insights on African farmers and their local needs.

Microsoft & University of Cambridge: Boosting research in Artificial Intelligence

In the race to beat Silicon Valley to AI dominance, Microsoft is doing everything in its power to stay ahead. Microsoft Research, the in-house R&D department at Microsoft, is teaming up with the University of Cambridge to fund more AI researchers in the United Kingdom. 

The partners will be working closely together to develop machine learning algorithms to tackle obstacles in healthcare, education, and transport. This corporate-academic partnership, not only benefits Microsoft but also academia. Without the funds from large corporations like Microsoft, academic research would lag far behind.

Closed innovation, a thing of the past

These companies are proof that we are in an era of collaborative innovation. Even internal innovation powerhouses such as General Motors and Microsoft have turned to external models. They know from experience that collaborating externally allows them to innovate more quickly, stay more competitive, and ahead of market trends.


Types of Open Innovation

Types of Open Innovation

In this article, we will delve into the types of open innovation and the key differences between them, followed by classic example of each and lastly, a word of advice for managers.

You are sold on open innovation and ready to implement it into your corporate strategy. However, before you can start, let’s clarify the difference between internal and external open innovation.

Both play an important role in your overall open innovation strategy. And although both are forms of open innovation, they are implemented differently.

In this article, we will delve into the key differences between internal and external innovation, provide a classic example of each and lastly, a word of advice for managers. 

Internal open innovation: Let your employees’ creativity run free

Internal open innovation is the idea that all your employees can be a part of the innovation process – not just your R&D teams. Each of your business units understand your company and the challenges it faces differently, and by allowing everyone to participate in innovation, you welcome creativity. You never know what will come from opening up your innovation process. 

For example, employees on your sales floor should be encouraged and able to participate in identifying new business challenges, proposing new solutions, and giving feedback. This can be true for all departments (marketing, legal, etc.). Your innovation process should give ample opportunities to all employees to think creatively and to explore new ideas and ways to improve your business. In the long run, this will lead to a higher ROI and will help safeguard your place on the market. 

Having a smooth internal open innovation process and a strong innovation culture will be necessary for external  open innovation.

External open innovation: Your silos are only slowing you down

As the name suggests, the first type of open innovation is external. As the name suggests external open innovation is exactly that, external: collaborating with outside partners to share information, technology, and business opportunities. These external partners form your innovation ecosystem. This ecosystem will mostly consist of startups, but can also include: rival companies, universities, research labs, ad consultancies.

By having the freedom to pick your innovation ecosystem, you are able to pick well-suited partners, thus enabling you to do better work. In this logic, even your fiercest competitor can be an excellent collaborator.

A classic example of this is the Renault-Nissan-Mitsubishi Alliance. All three vehicle manufacturers are competitors. So, why have they decided to work together? The answer lies in the added value of co-creation. Alone, they might bring incremental innovations to the market. Together, the sky’s the limit- and supercharging growth and performance is the goal.  

Combining their different expertise, resources, and know-how has led to tremendous success. By forming an alliance, they can better tackle future technological disruptions from competitors, while innovating in areas such as electric and autonomous vehicles and  connectivity.

However, this type of alliance is not easily done. Having an adapted process for external collaboration is the key to success. You’ll need to think about how to stay in contact with external collaborators and have the appropriate tools in order to identify and qualify new potential collaborations.

Related Article: What is Open Innovation?

Google Types of Open Innovation

Google’s philosophy: Disrupting from the inside out

Google’s founders Larry Page and Sergey Brin saw the importance of internal open innovation early on, making it an integral part of Google’s DNA as early as 2004. 

What did Google do? Larry Page and Sergey Brin’s 20% rule gives Google employees one day per week to work on company-related projects. These side projects can be almost anything that interests the employee. These side projects allow employees to collaborate, and network, while building a strong culture of innovation.

Some of Google’s most successful products have stemmed from these efforts, such as Gmail, Google Maps, and Adsense. Google’s 20% rule is a great example of how creative and innovative employees can be, if they are set free. 

How is Google benefitting? Google’s side projects represent a large share of the company’s profits. They also have helped create a “Google ecosystem” that contains the majority of tools customers need. The benefit of simplicity is invaluable for Google and has created a loyal customer base. 

On top of monetary benefits, its Internal open innovation strategy has various other positive side effects: empowering employees, fostering a sense of responsibility, employee retention, and a strong culture of innovation. 

Nestlé & Starbucks types of open innvation

Nestlé & Starbucks: Brewing profits

These two multinational companies can be seen as potential rivals in the coffee industry. Regardless, they have decided to team up to create new products for Starbucks’ Consumer Packaged Goods and Food Service Division. A prime example of how large corporations can come together for collaboration and for external open innovation

What are they doing? In August 2018, Nestlé and Starbucks announced a new global alliance. They will now work on a new range of roast and ground coffee products, under the Starbucks brand. But, they aren’t stopping there. They will also capitalize on the expertise and knowledge of both companies to innovate new products for coffee lovers. This means using Starbucks industry knowledge of coffee harvesting and customer insights, and Nestlé’s extensive food production and distribution networks, and financial resources. Add to that their speed to market, and together they form an unstoppable duo.

The partnership quickly launched new products, starting with Starbucks branded Nespresso pods. More recently, the partnership launched a new line of creamers inspired by Starbucks drinks. This is a first non-coffee item for Starbucks, and it would not have been possible without Nestlé’s support. 

How are they benefitting? Nestlé has expanded its premium coffee portfolio, while also acquiring a perpetual global license of the Starbucks brand. This means Nestlé can focus on creating new products – by taking advantage of its existing production lines. The Swiss company can also profit from Starbucks customers, by rebranding already existing Nestlé products under the famous mermaid logo. Starbucks, on the other hand, is benefitting from Nestlé’s global presence and greater exposure on supermarket shelves – the coffee at home category.

It’s easier said than done

As we’ve seen, open innovation can take many forms, through internal or external means. But, which should your company invest time and resources in? Well, the answer is both. Companies big and small should view their employees as necessary resources for innovation, and, when obstacles arise, turn to external partners to reach their innovation goals.

However, you need a well-running machine before being able to start collaborating with your innovation ecosystem. The simplicity of just walking over and speaking with a colleague is lost when working with external innovators. This added layer of complexity (NDAs, communication, workflow management, etc.) should not be underestimated. In fact, this should be your number one concern when restructuring your external open innovation strategy. 

Before implementing an external open innovation strategy, it’s imperative that your internal innovation process and company culture is aligned with the principles of open innovation. If not, external open innovation will undoubtedly be harder to execute.


Open sign for Open Innovation. What is open innovation?

What is Open Innovation?

What is open innovation? Learn all about it, who coined it, and some classic examples. 

Do you remember AOL and their CD-ROMs sent by mail? Where has the one-time online juggernaut gone? This company like many others in the past failed to innovate. It’s unfortunate to see companies rise so high to then just fall. So, what can be done to avoid failures like AOL? The answer lies in open innovation. But, what is open innovation?

Businesses in the past relied on Closed Innovation. A strategy that depended on internal R&D teams, patented technologies, and mergers and acquisitions. This type of innovation strategy was successful. Companies were able to hold onto their competitive advantage due to their superior technological supremacy.

However, as product cycles shorten and technology advances at an even quicker pace, companies of all sizes have had to think outside the box. They were forced to rethink their innovation strategies and processes. Now relying more than ever on partnerships with outside collaborators to keep innovating. The days of confiding just in Closed Innovation are long gone.

From closed to open

In 2003, Dr. Henry Chesbrough, a professor from the University of California Berkeley and founder of the World Open Innovation Conference, coined this new type of innovation process Open Innovation. He defined Open Innovation as the following: “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.”

Dr. Henry Chesbrough who coined open innovation.

This encompasses looking at the innovation process from a completely different lens. Open Innovation is centered around collaboration, participation, and a decentralization of the innovation process. Companies no longer depend on just their internal R&D teams, but source ideas, knowledge, and even technology from outside their organization. This strategy allows for a shorter innovation process, because instead of creating new technologies at every step, companies use existing technology from partners.

Cisco, with a much smaller budget and less expertise, counted on partnerships and collaboration to stay competitive.

Is Open Innovation a new concept? Not really. An early adopter of it was Cisco. Early on, Cisco did not have the resources or talent to develop disruptive innovation. An additional barrier the company faced was the dominance by the likes of AT&T Bell Laboratories (now Nokia Bell Labs). AT&T and others had impressive research labs and patents to show for their research efforts. Cisco, with a much smaller budget and less expertise, counted on partnerships and collaboration to stay competitive.

For example, in 1995 AT&T spent $732 million in R&D, while Cisco spent $96 million in purchasing R&D (licensing technology from partners and entering partnerships or ventures). While AT&T was busy spending time and money on developing new technologies, Cisco was busy buying and acquiring what it needed. This difference in strategy allowed the much smaller Cisco to stay technologically competitive. Cisco’s gamble paid off, now they are a leader in the telecommunications industry, with yearly revenues exceeding $49 billion. Not bad, huh?

Open Innovation today

The concept and definition of Open Innovation is continuously evolving as the world around us changes. Joel West, a professor at the Keck Graduate Institute of Applied Life Science gives us a modern definition. He states:

“open innovation employ [s] markets rather than hierarchies to obtain and commercialize innovations.”

Joel’s holistic definition encompasses other actors in innovation, such as universities, research institutions, consumerscompetitors, and not only the market.

As global markets have changed and intensified, businesses have realized they can no longer innovate on their own. Competition is too steep and moving too quickly to be closed off to the outside world. You can’t do it all on your own.

Related Article: Types of Open Innovation

Not only does Open Innovation accelerate the innovation process, but it also reduces costs, decreases risk, and creates new revenue streams for firms. Due to these benefits, companies from all industries are now confiding in Open Innovation.

No one can do it on their own

Now, that we have defined Open Innovation, and why it has become an important innovation strategy. We will highlight examples of how Open Innovation can be used to disrupt industries and boost revenues. The following companies have shown how opening up can bring in new innovations and business opportunities.

Beer on a bar table, Heineken open innovation.

Heineken: Brewing new ideas through crowdsourcing

Heineken believes that great ideas can come from anyone. The Dutch company’s Innovators Brewhouse is an innovation space for entrepreneurs, investors, universities, and other stakeholders. Its goal is to solve some of Heineken’s most pressing issues. Their current challenge is their cleverly named Drop the C Challenge. Here, Heineken is aiming to reduce its carbon footprint. To accomplish this, the company has set its eyes in crowdsourcing ideas. The brewer is not limiting potential innovations. It’s searching for innovations in materials for packaging, eco-friendly sources for brewing products, reuse of brewing byproducts, solutions for cooling and distribution models, and solutions that drive societal change.

In return for brilliant solutions, Heineken is offering access to its global network, advising via a 3-day workshop, access to Heineken coaches, and lastly, a pilot contract. This demonstrates the high level of understanding that Heineken has towards Open Innovation. The company understand that Open Innovation must be mutually beneficial for it to succeed.

Food on the table, Accor Hotels & Too Good To Go open innovation partnership.

AccorHotels & Too Good To Go: Reducing food waste

An unusual partnership between French hotel giant AccorHotels and Danish food app Too Good To Go has resulted in both increased revenues and less food waste for AccorHotels restaurants. Before this partnership, food prepared in AccorHotels would end up in the trash, now, thanks to Too Good To Go, users of the app can buy hotel restaurant food at a fraction of the regular price. A win-win, right?

Today, there are more than 500 participating hotels in Europe. This is both increasing revenue for AccorHotels, while simultaneously increasing users for Too Good To Go. We can’t forget about the environmental aspect, as of today, more than 13,000 meals have been saved so far in the UK alone. In this partnership, the technology developed by Too Good To Go is being used by an unlikely industry, the hospitality industry. Benefits are plentiful for both companies.

cybersecurity with wavestone, open innovation

Wavestone & Alsid: Securing the web

Wavestone, is a Paris based consulting firm with 2,800 employees. The firm is dedicated to business transformation. Through its experience in consulting clients, Wavestone has understood that Open Innovation is not just for large companies. It is also key for its own organization. The company is a firm believer that the consultancy industry must continuously innovate – just like all others. To spur up innovation, the firm established an accelerator program for B2B startups named Shake’Up.

This program aims to both enrich Wavestone’s value proposition by becoming more knowledgeable of the startup environment and trends. As well as, help startups in the Shake’Up program by providing expertise and business opportunities. With this aim, the program has already accelerated 12 startups.

One of them is Alsid, a cybersecurity solution for companies using Active Directory. This collaboration improved Wavestone’s knowledge of the cybersecurity industry, and at the same time, it also provided valuable product development consultation to Alsid- a win-win partnership. Thanks to this collaborative partnership, Alsid has defined its services and is well underway to conquer the cybersecurity industry. Just this past April, they raised $14.7 million to continue expanding its offering.

Open innovation – open to interpretation?

As seen, Open Innovation can be executed in many different ways. Depending on the industry, the size of the company, and your overall strategic goal. Open Innovation can also take many different forms. A startup might see Open Innovation as a way to increase revenue by licensing its technology to larger firms, or they might see Open Innovation as a way to partner with companies with more resources and expertise.

Large companies might see Open Innovation as a way to shortcut the innovation process or a way to shift their corporate innovation culture to one that is more dynamic and agile. However, what doesn’t change, are the fundamentals of Open Innovation. These are: easy exchange of information, knowledge, and innovations with external collaborators, a mechanism to accelerate internal innovation, and a collaboration that leads to mutual benefits for all partners.

Without partnerships and collaboration, future business opportunities will be untenable.

All companies need to understand the power of open innovation. If not, at the very least, they risk missing business opportunities or in the worst of cases, becoming obsolete. As innovation exponentially increases, businesses can’t forecast what opportunities lie ahead. Without partnerships and collaboration, future business opportunities will be untenable.

Remember, no one wants to be left out of the club and by not joining now, that could be you in the near future.