The promises of open innovation: what we’ve learned and what to expect

Bruno Rondani, president of Wenovate

Since the term was forged, in 2003, the concept of open innovation was largely adopted by innovation managers in the main companies of the world. The model brought some important promises. While some of them were fulfilled, others are still facing difficulties.

Among the fulfilled promises, there’s the general understanding that the open innovation model motivated a change of management paradigm – external collaboration started to be treated with more attention, discipline and, most of all, method. Only a few of the leader companies in innovation haven’t invested for the past 10 years in management models to deal with external collaboration. The effort has also allowed the strengthening of the collaborative innovation culture internally in the organizations.

Software platforms that facilitate internal collaboration became ordinary, as well as the use of mediators to help connecting with the external environment. Internal collaborative platforms, which encouraged collaboration through employees horizontally, regardless of their position or department, became popular. The same happened with the mediators, who promised to reduce the distance between challenges and solutions.

However, the main promises that open innovation practices brought were more pragmatic. Among the benefits mentioned by its believers, there were (1) the access to knowledge and external technologies that allow or reduce the time and risk for innovation development, (2) the sharing of knowledge and complementary resources between projects, mitigating the demands for new investments, (3) the monetization of inoperable technological actives through licensing or sale of patents, spin-off of new businesses or de-investment and (4) the creation of open business models capable of evolving to platforms in their most advanced stage.

Among the most diverse models companies have adopted to reach those promised objectives, there is the popularization of launching challenges through internal or external platforms. Today, they’re a part of the innovation system and respond well to incremental problems, but not to the development of new innovation strategies. The popularization of open innovation challenges, according to its practitioners, was very useful to raise awareness of external networks, though the most relevant collaborative projects come from closer relationships with strategic partnerships.

We saw partnerships between government, universities and companies more frequently, and saw the creation of environments, laboratories and management organizations dedicated to the cooperation between its maintainers and external communities. Universities re-organized many of its research groups around centers tackling society and industry’s challenges. Companies from different sectors joined each other to create organizations dedicated to management and execution of collaborative projects. Research labs built structures of technology demonstration in order to sell the results of their researches. Science parks created collaborative environments to integrate different actors and even countries united to create bilateral organizations to innovate.

Those initiatives produced great impact in collaboration for innovation development, but the public-private investment models and the negotiation of the shared intellectual property are still important aspects to discuss.

We also saw the multiplication of venture capital funds and corporative startups. Cooperative funds distinguish themselves from traditional venture capitalists (which only want to mitigate their investments) since they insert other objectives in the equation. Among them: the monetization of technological actives not used internally, the acquisition of relevant startups to the core business and the fomenting of external ecosystems. In general, those initiatives still don’t have results that in fact impact the strategy of the mother company, and there are already some cases of funds abandoning their strategic objectives for the purely financial model.

We also saw some companies radically redefining their structure and strategy to become platforms for innovation communities. As an example, we have Apple, P&G and Eli Lilly.

The legacy of open innovation

Today, open innovation still faces many challenges – but they’re aligned with the initial proposal rather than risking is, since they only exist because of the radical change the market has been through. Companies today compete for the innovation networks.

Ecosystems are complex and it’s increasingly clear that the connection between people is essential. For open innovation to happen, we need relationships based on trust. We’ve been increasingly creating partnerships involving different interests. The challenge now it to find balance when working as a team.

What we’ve learned in the last years was the effort for innovation is not limited to R&D, or any other department or even the company itself. The effort of innovation is distributed in many communities. We’ve been living a transformation of how individuals and institutions organize themselves to innovate. The open innovation approach helps companies to walk in this new environment.

External relations strengthen the importance of business models in order to guarantee competitiveness, and not only the technological dominance or product supply. It’s through open innovation that we advance in a new understanding about intellectual property, university-company partnership, sharing of resources and the application of knowledge generated dispersedly. Today, open innovation makes companies to reorganize its efforts around new global challenges, even in a competitive environment. It’s the new era of capitalism.

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