CREATING AN OPEN INNOVATION STRATEGY

Research is costly and risky – it is about the unknown. No organisation can afford to rely only on its own expertise and intellectual property alone. Being able to access others’ IP, facilities and complementary assets, and gaining wider value from ones own IP, are fundamental to any long term success.

Open Innovation is as much a way of 'being' as it is a set of formal skills and processes, and depends upon each organisation’s needs. Factors to consider in creating an Open Innovation Strategy for a business, or business unit include:

• Fostering engagement with the best sources of IP (where IP could be specific patents, designs, sub-systems, solution concepts, deep expertise, advice, facilities). Well networked people are the principal asset here, and the strategy should identify how such networking is promoted. Examples include:
• Participating in formal network structures such as Knowledge Networks which meet to share ideas in defined areas of technology or market activity. How does an organization decide which to be a member of?
• Presenting at major conferences relevant to the organisation. Providing material to conferences exposes areas of interest , generates leads and follow-up, and enthuses external people to want to work with the organisation. Is there a coherent approach to involvement of this kind, is it supported, is it bottoms up driven?
• The role of professional Blogs and other forums now overlaps with the role of conferences, are these being used effectively?
• Being part of a collaborative research programme (eg EU Framework Programme). As well as gaining pre-competitive funding, the visibility and relationship formation these programmes provide can be an efficient way to gain insight into relevant IP and develop relationships for related opportunities (these 'soft' benefits are sometimes the most valuable benefit from such programmes). This is especially true if a collaborative consortium includes partners at different levels in the (putative) supply chain, including end-users. How does an organization develop and approve its participation in such schemes, how does this leverage business development?
• Is there a way to recognize the contribution of people who engage with external IP in a way that creates value, are such people allowed the headroom to do so?
• Long term relationships with leading academic teams gives quality access to their networks. Mechanisms include a long term funding commitment, participating in university exploitation Centres, awarding visiting professorships, recruiting best university researchers (perhaps part-time)?
• As a customer, maintaining a transparent statement of needs and devoting resources to stimulating innovation in the supply base. Is there a defined approach to working with suppliers to help them innovate to add value to your organization?
• Engaging with end users to capture their ideas. Many major companies have put in place formal arrangements to bring end users into the innovation process. This is covered in the Engaging End Users dimension?
  
  
• Innovative developments may have much wider value-creation opportunity than implied by their original objective (as a classic example, the World Wide Web was developed to help scientists share their research documents more effectively – it has transformed virtually every aspect of our lives). An innovation in one part of the supply chain can have major impact on other parts. An organisation should look beyond direct opportunities from its ideas, and how it can appropriate value from external supply chains.  Aspects include:
• Is there someone with responsibility for harvesting IP that is not relevant to the organization but which has opportunity elsewhere, and is there (limited) resource available to package the IP into a value appropriating offer?
• Is there a favourable environment for teams to spin-out new companies with different positioning? It is worth noting that many of the most successful Silicon Valley companies were carved out of existing large businesses, sometimes with carried interest, sometimes after a strategic disagreement. Many companies have a policy to help internal entrepreneurship of this kind to their benefit.
• Making IP available to competitors weakens the appropriability that strong IP confers, but can create a much larger and faster growing market, especially where a licensee has stronger complementary assets. This means value can be raised by pooling IP, or in creating market confidence through standards. Is there a soundly based decision-making structure in the organization to decide whether to hold, license out or release IP?
• If there is a customer for innovation (as in government funded R&D programmes), is the existence of innovative advances made by research suppliers promulgated to enable maximum contribution to value creation in other areas of the economy? For example, the US Department of Defense has a well established structure of oversight committees that seek wider exploitation of defence research.
  
  
• Recognising when to protect ideas. Protecting intellectual property is a key driver of value appropriation, so there is a clear dilemma in taking an open innovation approach at all stages in a development. An open innovation strategy should assess whether such a closed stage is necessary, and if so be explicit about when and how it should be conducted. For example, many advances depend upon integrating intermediate capabilities that involve risk, investment and time that is suited to a cooperative, open style; but the integration development is tautly market driven, rapid and while considerable investment is still required, the risks are much better understood. This is the stage where a 'thicket' of patents around the integrated ideas is relevant, or where proprietary know-how is held tightly within the organisation.
  
  
• Open architectures are an extremely powerful way to generate value from innovation, both for the originator and players who ride on the platform produced. For example, the PC and Microsoft Windows have provided a platform for massive innovation in software applications and hardware devices, creating huge value in all aspects of the supply chain as well as for the architecture creators. Audio and video standards like JPEG and MPEG have had a similar effect. The iPhone AppStore is another. Does an organization have in place the ability to review and revise its approach to markets, and its business models, so that architectural opportunities are discovered and optimised?