8 Mar 2019

Debunking the Myths of Open Innovation


The barriers to open innovation are lower than you think
Here are five common misconceptions associated with open innovation and why they are untrue.

Coined by American organisational theorist Henry Chesbrough in 2003, the term ‘open innovation’ (OI) became a rallying call for enterprises to look beyond their four walls for ideas and expertise. Yet, sixteen years on, some business leaders still view OI with scepticism—perhaps they are concerned about the costs associated with OI, or have their qualms about sharing problem statements and technical solutions with external parties lest they lose their competitive advantage in a particular industry.

We’re here to debunk some of these myths surrounding OI and highlight how an OI approach to business growth is more accessible and implementable than you think.


Myth #1: A small company can’t reap the benefits of OI

Many success stories of OI involve large companies such as Shell and Proctor & Gamble, giving the impression that OI is only possible or useful on a large scale. However, it should be noted that these large conglomerates actively seek out and form strategic partnerships with start-ups and SMEs to spur innovation.

Oil and gas company Shell, for example, actively collaborates with hardware and deep tech start-ups in Singapore that are involved in the energy sector. Its launch programme helps very early-stage start-ups bring their innovations to the market, while its pivot programme explores more mature, proven technologies and adapts them to solve industry pain points. What this means is small, local enterprises that are agile and have creative ideas or inventions can catch the eye of multinational companies and engage in OI. SMEs can also tap on IPI’s Online Marketplace to connect with other technology solutions providers—many of which are start-ups or SMEs themselves—and implement OI in their business.


Myth #2: OI costs too much

Research and development (R&D) costs time and money, hence smaller companies may shun OI because they think they cannot afford it. Yet, by tapping on an innovation partner that already has a minimum viable product that meets an organisational need, companies can in fact save on R&D expenditure and bring new products or services to the market more quickly.

For instance, Liquinex Group, a Singapore firm that specialises in the engineering of wastewater treatment systems, managed to add UV disinfection capabilities to their product range by collaborating with Sweden-based Lightlab. In this case, Liquinex Group avoided having to bear the costs of R&D in mercury-free UVC tubes but was still able to deliver greater value to their clients.


Myth #3: Intellectual property disputes could arise with OI

Secrecy and control are necessary when it comes to protecting intellectual property (IP), hence at first glance, OI appears to threaten a company’s competitive advantage. However, it should be noted that a company does not have to disclose all aspects of its internal workflows or development processes when engaging with external partners.

Well-drafted non-disclosure agreements and confidential disclosure agreements can also help protect any IP that may emerge from collaborative R&D projects. Orchestrated correctly, IP management can result in a win-win situation for companies and their innovation partners, where one party has the technical know-how while the other can offer a path to commercialisation of a product or service based on that IP.


Myth #4: OI is only good for R&D

Beyond granting a company access to the R&D capabilities of an innovation partner, OI can provide opportunities in terms of market access. For example, Singapore-based wireless solutions provider 1RWave collaborated with Global Interface Wireless Technologies to bring its real-time location tracking systems technology to the Japanese market.

Yet another advantage of OI is access to a partner’s business networks. Being able to meet with other entrepreneurs and business owners, either locally or abroad, could result in further collaborations, stronger IP and even greater market access. Therefore, cultivating relationships is a less quantifiable but equally important aspect of OI.


Myth #5: OI is too risky to implement

In a fast-changing business landscape, the successful strategies of today can become non-viable overnight. Maintaining the status quo is an almost certain route to obsolescence, so companies with the view that radical innovation is risky should rethink their long-term survival strategy.

Certainly, innovation comes with an inherent risk of failure, but this risk can be diluted among stakeholders that have a vested interest in solving a common pain point. The pooling of resources and expertise can also create a longer runway for R&D, eventually resulting in better products or services. For SMEs with limited resources, OI may very well be their best chance of thriving in a climate of disruption.

With this, we hope to have convinced you that the entry barriers to OI are really low, and companies of any size can stand to gain from OI. Eager to get started with an OI strategy? Reach out to IPI today.

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