Here are three steps your organisation can take to start walking the path to open innovation.
Even with an understanding of how open innovation can benefit your organisation, it isn’t always clear where and how to start. Depending on the needs of the company, approaches to open innovation can differ—from large companies like Lego leveraging their popularity and gathering ideas from fans, to start-ups putting their capabilities to the test and taking part in innovation challenges.
Getting started is no small task, but we’ve narrowed it down to a three-pronged framework to help you determine what works best for your organisation. Check out these steps to achieve open innovation mastery.
Step 1: Find innovation blind spots in your current business
From creating a whole new product to streamlining processes with new corporate mindsets, there is always space for innovation—it’s just a matter of finding it. A good place to begin is to start with a robust overview of the products, services and technologies your company currently has in place and to identify any innovation blind spots. For instance, is your firm missing out on any technology necessary to maintain or increase market share—and have competitors already developed it?
Admittedly, this process is not without its challenges. As the saying goes, majority of the time, we don’t know what we don’t know. Unless there is deliberate usage of thought frameworks such as design thinking principles or support from external sources such as IPI, it could be difficult to identify gaps in your business.
For example, food commodities and ingredients supplier, Par International Holdings’s revenue was hit by the pandemic and it sought to explore new revenue streams to diversify their business portfolio, while remaining eco-friendly and relevant to the industry it serves. By tapping into the expertise of IPI’s Innovation Advisor, Dr Rebecca Lian, the company embarked on a project to convert food waste and by-products into higher value products.
The trial results from repurposing spent grain from its leading food manufacturing partner have been promising. With this innovation, the company’s revenue is projected to double at the group level over the next three years.
Step 2: Review relevant technologies with external experts
Once companies have identified projects suitable for open innovation, they can proceed to review external technologies they may like to harness. This process, known as outside-in open innovation, aims to utilise solutions and knowledge from other relevant organisations—government agencies, industry experts, institutes of higher learning (IHLs) and more—to improve internal processes. For small and medium enterprises with limited resources and expertise, working with external partners like IPI is one way to fast-track growth and commercialisation.
For instance, it took thorough analyses of both market trends and existing product offerings with external experts before ERS Industries, a manufacturer of electronic equipment racks for use in data centres, committed to the open innovation process. Noticing an emerging need for green data centres, IPI encouraged ERS to develop a roadmap for producing the next generation of energy-efficient racks. Consulting experts in thermal management and embarking on technology collaborations facilitated by IPI, ERS successfully rolled out its next-generation racks within months.
As ERS’ example illustrates, working with external partners or experts outside one’s organisation can be advantageous. You will have to decide which new projects and technologies to develop in-house or outsource. So-called “stale” projects may benefit from an outsider’s perspective, whereas more novel ones may be carried out internally. Firms may also choose to collaborate with external partners on innovative projects to accelerate time-to-market.
Step 3: Decide on a collaboration model
Once companies decide to pursue open innovation, the next step is to understand how to best go about it. Depending on factors like time-to-market and risk appetite, firms might require different collaboration models to achieve their unique goals.
For those looking to quickly enter new markets or launch new services and products, external licensing may prove most effective. Those looking for speed may want to explore solutions with higher technology readiness levels (TRLs) as they typically require less time and financial investment before they can be commercially licensed. Companies with a longer runway, however, might want to consider solutions at lower TRLs, given the transformative potential of these novel technologies.
Aside from external licensing, joint ventures, which involve businesses coming together under a contractual agreement to work on specific projects for specified periods of time, may also be considered. Under a joint venture, partner firms pool resources and technologies, and share accountability to make the project profitable for all parties involved.
While external licensing and joint ventures fall on the lower end of the risk spectrum, strategies such as acquisition are riskier—but can be useful when a company is looking to outperform competitors, or gain access to technology it would like to further develop in-house. Finally, there is venture investing, where a company takes on additional risk to back a start-up with promising technology, especially where it has identified existing needs in the market unmet by established industry players.
Every company has its unique journey with open innovation. With a variety of technology experts, companies and collaborators just a click away, contact IPI or explore its Innovation Marketplace to build your open innovation roadmap.