How to Begin the Process of Open Innovation: A Primer
Open innovation is the process by which organizations use both internal and external knowledge to drive and accelerate their internal innovation strategy in order to fulfil existing market needs or to access new market opportunities.
It takes significant cultural change for an organization to embrace open innovation thinking.
The concept of open innovation implies that an organization has the willingness and desire to source and utilize external knowledge, ideas, intellectual assets and technologies, in addition to its internal capabilities, to identify solutions to problems, capitalize on opportunities, develop new technologies, create new products and services, improve processes, or design new organizational systems and business models. However, in practice it is still difficult for organisations to understand how to embark on an open innovation journey and begin implementing the concepts of open innovation. It takes significant cultural change for an organization to embrace open innovation thinking.
A simple approach for organizations to begin to implement an open innovation strategy is to focus on their key challenges or problems facing the organization. A key question could be, “How can the organisation solve a significant complex problem utilizing external expertise or knowledge (that is, assuming internal attempts to solve the complex problem were not successful)”? One way of answering this question is to use a crowdsourcing approach.
Crowdsourcing refers to the outsourcing of tasks and activities, traditionally performed internally by an employee or an external contractor, to a large group of people (a crowd), through an open innovation approach or an open call.
In their book Wikinomics Don Tapscott and Anthony Williams discuss how mass collaboration can impact big changes in business. They also present a number of case studies of successful outsourcing and collaboration, including Goldcorp and Proctor & Gamble.
In the case of Goldcorp, a Canadian gold mining company, after internal reports and advice from technical staff indicated that the gold mine had run out of gold, the CEO placed all the geological studies, surveys and reports related to the gold mine into the public domain via the Internet and offered a sum of money to whoever could come up with new information or leads for new gold deposits. The CEO’s strategy was successful. New computer modelling technology located in another small organization was able to predict the location of new gold deposits using the existing geological survey data.
By utilizing an open call to an undefined group of people (generally through the Internet), the call brings together people who are in the best position to be able to solve complex problems, provide new ideas and develop new opportunities.
Crowdsourcing has a number of advantages, however, it can also result in intellectual property (IP) issues, including ownership issues and confidentiality of IP. An appropriate governance process is required to ensure the disadvantages of crowdsourcing are minimized. Some of the advantages of using a crowdsourcing approach can include:
Appropriate governance process is required to ensure the disadvantages of crowdsourcing are minimized.
- Reducing transaction costs of organisations
- Finding new business opportunities
- Building appropriate teams by finding the right external people
- Re-using previous work
- Building user defined products and services
- Solving difficult and complex problems
A number of online sites are available that specialise in bringing together different parties or groups to work on a particular project or solve a specific problem. Alternatively an organisation can also ask a question through one of its online networks such as Facebook or LinkedIn. A selection of crowdsourcing sites of interest are outlined below:
- Chaordix – Business innovation – Engaging crowds through the web to solve your business problem
- Kluster – Brainstorming / feedback – Harness the power of your own hand-picked crowd to brainstorm ideas
- Namethis – Brand names – A 48 hour competition site to find a suitable brand name for your venture
- Innocentive – Problem solving – Brings together seekers who have a problem together with solvers from around the world who may be able to help
- Rent A Coder – Software development – International marketplace to locate software coders
- Global Ideas Bank – Social innovation – A site which collects social inventions that can change the world, which are rated by online voters.
Crowdsourcing as a strategy for open innovation has huge potential, including the ability to provide organizations with an open innovation access to a wider variety of expertise, resources and technology.
Open innovation has the ability to identify solutions to complex problems, capitalize on opportunities and develop new technologies which would not have been possible if the organization had merely looked internally for ideas.
Using external knowledge also brings with it the potential to create new products and services, improve processes, or design new organizational systems and business models that simply would not have transpired if the organisation had not looked externally for solutions.
By John Kapeleris
Dr. John Kapeleris is Director of Commercialisation and Deputy CEO at the Australian Institute for Commercialisation (AIC) and was responsible for establishing and running the AIC’s TechFast Program – “Accelerating Technology Transfer and Diffusion using a Market-pull Approach”. John has over 17 years experience in the Biotechnology Industry having held a diverse range of roles including R&D Manager, Quality Manager, Business Development Manager, VP Sales and Marketing and Deputy CEO at Panbio Ltd. In his current role he has assisted numerous organizations achieve commercial outcomes from their ideas and product opportunities.
John is the co-author of the book titled “Innovation and Entrepreneurship in Biotechnology, an International Perspective” which was released in early 2006 and has written numerous publications on innovation, knowledge management and biotechnology.