Open Innovation (Part 3/4): What are examples of Open Innovation models?
This is part of the Open Innovation series dissecting:
1. What is open innovation?
2. When is open innovation successful? What are its advantages and disadvantages?
3. What are examples of Open Innovation models?
4. What are the keys to implementing Open Innovation?
Xerox PARC is simultaneously known as one of the most successful and one of the worst failures in corporate innovation.
In short, Xerox PARC (Palo Alto Research Center) was a research center established by the Xerox Company in Palo Alto in the 1970s to avoid the fate of many technology companies that had come before it: failure to innovate leading to its demise.
PARC was certain successful in that it created technologies that ended up truly changing the world, including many of the features of the modern day computer such as the GUI (Graphical User Interface), the Ethernet networking protocol that is the base of the internet, PostScript for font rendering, document management software, and web indexing technology.
Unfortunately, Xerox failed to see the goldmine upon which it was sitting and most of this revolutionary technology was never commercialized by Xerox. In fact it was small startups like Apple and Microsoft which legally appropriated and took a lot of these technologies to market.
Many attribute this lack of value-capture on Xerox's part to corporate managements ignorance or internal politicking, but careful study by Henry Chesbrough leads to another conclusion — Xerox was stuck in a Close Innovation paradigm.
Xerox saw little potential to apply the technologies it had developed internally, so it let newly formed startup companies take these to market. Many of these companies failed along the way, but others (3Com, Adobe, Documentum, Apple, Microsoft) made it as big as it gets. Although some of these technologies made it big, it is unlikely that Xerox would have been able to commercialise these alone even if it recognized how much value they would create. The truth is all of these technologies underwent significant development and transformation when taken to market.
Xerox could have captured a lot of this value, however, if it were operating in an Open Innovation paradigm — working with partners that could help exploit technologies that it wasn't able to fund, develop, or take to market singlehandedly.
Many other corporates have since embraced the Open Innovation paradigm.
We knew that most of P&G’s best innovations had come from connecting ideas across internal businesses. And after studying the performance of a small number of products we’d acquired beyond our own labs, we knew that external connections could produce highly profitable innovations, too. Betting that these connections were the key to future growth, Lafley made it our goal to acquire 50% of our innovations outside the company. The strategy wasn’t to replace the capabilities of our 7,500 researchers and support staff, but to better leverage them. Half of our new products, Lafley said, would come from our own labs, and half would come through them.
It was, and still is, a radical idea. As we studied outside sources of innovation, we estimated that for every P&G researcher there were 200 scientists or engineers elsewhere in the world who were just as good — a total of perhaps 1.5 million people whose talents we could potentially use. But tapping into the creative thinking of inventors and others on the outside would require massive operational changes. We needed to move the company’s attitude from resistance to innovations “not invented here” to enthusiasm for those “proudly found elsewhere.” And we needed to change how we defined, and perceived, our R&D organization — from 7,500 people inside to 7,500 plus 1.5 million outside, with a permeable boundary between them.
It was against this backdrop that we created our connect and develop innovation model. With a clear sense of consumers’ needs, we could identify promising ideas throughout the world and apply our own R&D, manufacturing, marketing, and purchasing capabilities to them to create better and cheaper products, faster.
The consumer goods giant has announced the creation of The Unilever Foundry, a new platform that unites and expands the company’s existing efforts to work with startups. The Foundry will serve as Unilever’s flagship, global tech collaboration and investment program, providing an accessible mechanism for startups to interact with the world’s second largest advertiser, and gain access to the company’s marketing expertise, massive global scale (Unilever products are used by 2 billion people daily), and, potentially, funding.
Together, more than 10,000 international researchers, developers and business people at the Campus create a huge amount of knowledge and dynamism. They have turned High Tech Campus Eindhoven into one of the global hotspots in the areas of Health, Energy and Smart Environments.
At the Campus, you will find everything you could require to translate technology innovation to business. 45,000 square metres of R&D facilities, collaborative efforts for developing new technologies, IT and HRM support, patent agencies and close connections with investor networks will support fast innovation and business development from day one.
Researchers, developers and entrepreneurs can join existing international networks and innovation projects, led by leading R&D institutes such as Holst Centre and Solliance. The Solliance institute brings together global innovation and solar power knowledge. Business people can easily join the international networks which are incorporated into these projects. This accelerates the time-to-market for new technologies and helps high tech entrepreneurs more rapidly reach their goal: Turning Technology Into Business.
An open innovation program from Telefonica and our key partners, the initiative connects entrepreneurs, investors, public and private organizations worldwide across all our innovation and investment initiatives (Wayra, Amerigo and Telefonica Ventures, among others) into a single program.
It’s designed to support talent and bring value to the whole ecosystem rather than view each part as a different mechanism.
GE understands solving the world’s toughest problems through advanced manufacturing techniques and processes requires collaboration. By crowdsourcing innovation — both internally and externally — GE is improving customer value and driving advancements across industries. By sourcing and supporting innovative ideas, wherever they might come from, and applying GE’s scale and expertise, GE’s approach to open innovation is helping to address customer needs more efficiently and effectively.
We believe openness leads to inventiveness and usefulness.
We also believe that it’s impossible for any organization to have all the best ideas, and we strive to collaborate with experts and entrepreneurs everywhere who share our passion to solve some of the world’s most pressing issues.
We’re initiating a fundamental shift in the way we do business — this is what we’ll stand for in our open collaboration efforts and how we will operate.
For Samsung to evolve its software and service presence, and continue building compelling consumer experiences, GIC is cultivating deep relationships with startup ecosystems in Silicon Valley, New York City and around the globe. GIC builds these relationships through four vehicles: investments, partnerships, acquisitions and its Accelerator program in San Francisco and New York City. By working with startups at any stage of development, GIC engages with entrepreneurs in a variety of ways, offering them more opportunities than investments would alone.
With innovation at the heart of Deutsche Bank, purpose-built labs have been established to accelerate the Bank’s adoption of new technologies to compete more effectively in the digital age.
Jon Pearson explains that the accelerated pace of technology innovation that fuelled the rise of the Fintech phenomenon “now permeates everything that we do in banking; and with the advent of crypto-currencies, and particularly developments like Blockchain, it is essential we keep pace with this ever-changing landscape."
And we can go on and on with additional examples from every industry, from retail, FMCG and travel, to education, transport or health.
Next week we look at the keys to implementing Open Innovation in your organization.
If you missed the first 2 parts, you can find them below:
