Since the term was first coined in 2003 by Henry Chesbrough in his book 'Open Innovation: The New Imperative,' many organizations and governments have implemented Open Innovation programs to tremendous success. In a recent PwC survey, 61% of respondents said that their company deploys an open innovation model. Furthermore, companies that use more collaborative approaches to innovation were twice as likely as their counterparts to expect growth rates of 15% or more.
Open innovation works so well because it puts the emphasis on diversity and serendipity. The more diverse the input, the more relevant the solutions. We are increasingly breaking down expertise silos, and increasingly realizing that all roles are connected. The best ideas don’t come from experts alone, they also emerge from the random collision of different perspectives.
However, while there are clear advantages to employing Open Innovation, there are also many challenges to overcome and some are still reluctant. We asked seven experts from best-in-class organizations why they thought it was a risk work taking.
James Millar, Director of Partnerships at MassChallenge UK
I think the right question is whether a company can afford not to practice open innovation. The average lifespan of a company listed on the S&P 500 index has decreased by more than 50 years in the last century, and it is estimated that by 2020, more than 75% of the S&P 500 index will be companies we have not heard of yet.
In our recent study, 82% of corporations now view interactions with startups as somewhat important to very important, and 23% said it was 'mission critical'. Innovation efforts are no longer 'nice to have' programs within corporations.
Ultimately, it is worth the effort if partnerships between corporates and startups are seen as just that - a partnership, rather than a quick one-off transaction. More often than not, there is a lot more to be learned and developed together from both sides.
Christoph Huels, Chief Innovation Officer at Merck
Open innovation is a great tool to crowdsource solutions for innovation. It is absolutely worth to try, especially in areas where hard nuts of innovation are to be cracked, or you may not have so much experience as a corporation.
Stephan Altman, Head Of Innovation Excellence At BASF
Yes, continuous evaluation of open innovation options is a must - risk increases if open innovation is not sufficiently integrated/combined with into internal innovation activities.
Annalisa Gigante, Board member at ZIS, former SVP Innovation and R&D at LafargeHolcim
How about the risk of not doing open innovation? What then?
As long as the aims are clear and the Intellectual Property situation has been assessed and planned for, open innovation can bring new opportunities and accelerate time to market. Of course, the process does not guarantee results, but we always learn from it and make new valuable connections.
Vanessa Balouzet-Uchansky, Head of Innovation Acceleration Team at Nestle
Yes, when it's well done. We need to commit on the means to make it work: opening to the outside for the right project at the right moment, learning how to adapt to the size of the partners, following up on commitments.
Julian Harris, Head of Innovation, Department for Work & Pensions (UK Government)
For most areas, yes. Even where it’s assumed it’s a bad thing such as the stock markets, it’s proven that new levels of innovation happen when data is combined from disparate sources (see Numerai’s case study) and made open for others to innovate upon. However, many organisations have data that is sufficiently sensitive that the risk of unintended consequences from open sharing many consider is too high.
Tim Sharpe, Head Of Design & Innovation At Speedo
I think it is far harder to innovate within a completely closed model. Great ideas can come from anywhere, so the more we are open to looking beyond internal expertise and knowledge, the more likely we are to deliver an innovative solution.