Open innovation in business: examples showing the mutual benefit to start-ups and large companies

The economic environment in which businesses operate is now changing faster than ever, and innovation in products and services, and in organisations and processes, is necessary, even vital, to achieve successful adaptation. But innovation requires time and skill, to say nothing of real resources, and is definitely not merely a matter of installing a suggestion box.

In these days of digital transformation, with new start-ups emerging every day, and as collaborative working becomes the norm, some companies are partly abandoning their secretive cultures and changing their longstanding habits to welcome the involvement of external organisations, including these start-ups. In so doing, they are rewriting the rules, to innovate more quickly and more efficiently, believing that a business that pushes its boundaries out can push its profits up. This idea of external involvement is referred to as open innovation.

Open innovation: a win-win partnership

Open innovation is a term that has been bandied around for a few years now, but what exactly does it entail?

Put (very) simply, open innovation consists of combining two aspects; the first being sporadic intelligence gathering on competitive, technological and strategic factors, and the second being a project management methodology appropriate to the transformation of ideas from the outside to deliver concrete change on the inside.

Businesses intent on innovation are consequently adding external skills to cultivate diversity in the viewpoints contributed and generate more innovative ideas. This falls under the philosophy of the “extended enterprise” as customers, suppliers, universities, laboratories and start-ups can all take part in the internal participative innovation process.

In this way, more and more companies are sealing open innovation partnerships with start-ups. Stimulating the perpetual generation of innovative ideas is of course the basic purpose of start-ups. In fact, start-ups have the agility to focus on one subject or project without being hampered by lengthy decision-making chains and/or overly-rigid procedures.

The stability of large firms, in exchange, gives start-ups a stress-free operating environment by allowing them to benefit from various services - provision of premises, access to working equipment and facilities, discussions with staff whose experience can help save valuable time, and so on.

The give-and-take of open innovation is therefore beneficial to all stakeholders involved, enabling companies to accelerate new product development to improve their growth, gain market share, or indeed reinvent their core businesses. The process does nonetheless still need to succeed, which requires best practice to be followed.

Open innovation: key success factors for the right project management

To help pinpoint the key success factors for an open innovation process, let’s start by mentioning two errors that are frequently seen:

• The first is when a company reduces open innovation to just “delegated innovation”, passing the buck to start-ups, students or suppliers, generating a plethora of projects that struggle to take root within the organisation and rarely get past the prototype or POC (proof of concept) stage, because the subsequent stages have not been incorporated into the organisation.
• The second mistake is the inclusion of these new stakeholders within existing processes in the company as regards working methods, procurement procedures or legal processes, which are always diametrically opposed from a cultural and organisational point of view. Initiatives are in such cases quickly snuffed out by the organisation and its inertia, and have little chance of amounting to anything.

Then comes the question of the participative innovation platform. Many of those of our clients who have implemented an ideas management system ask us if they could not simply open the platform up to their “co-innovators”. This is entirely feasible in principle, but is not sufficient to uncover their full innovation potential. It is in fact much more difficult for these outsiders to see the big picture and fully grasp the context or all of the implications, or indeed a company’s or a project’s specific constraints in transforming ideas into change initiatives.

The solution is to “spin off” in-house resources to work with co-innovators, creating gateways to the home organisation.

In open innovation, a company can despatch “missionaries” tasked with identifying opportunities and reporting them back to base, while the home organisation supports and guides them through every phase of the project. These in-house resources, given a global scope, continue to coordinate initiatives to keep control over deliverables that match the company’s requirements and align with its strategy. Additionally, such projects make use of the most appropriate processes, avoiding the burden of slavishly following existing systems. This is the key success factor in open innovation management.

Consequently, the following must precede any open innovation process:

• Determine those areas where the business intends to harness its ecosystem.
• Implement project portfolio management with suitable governance and methodology.
• Identify the in-house stakeholders able to coordinate these areas of open innovation, and any external parties able to contribute.
• Establish appropriate policies and procedures.

Three examples of successful open innovation in business

Open innovation therefore delivers practical benefits and there are many examples testifying to the success of the process.

Lego - the king of open innovation

With MindStorms, Lego Ambassador, Lego Factory and Lego Cuusoo to name just a few, Lego is probably the company that has taken open innovation furthest. Lego has launched many programs to involve its fans in product development, one way or another. After all, who is better placed to create new products that match consumers’ needs or wish-lists than consumers themselves?

Find out more about open innovation at Lego

Toshiba and its unbranded start-ups

Toshiba is regularly mentioned in the list of Top 100 Global Innovators which recognises the world’s most innovative businesses. The Japanese firm works hard on promoting technology in the broadest sense and on its image as a trailblazing brand. Besides the annual Toshiba Innovation Fair held in Japan to present the latest technological innovations, Toshiba regularly signs partnership agreements with innovative start-ups to take on existing new intelligent services, rather than develop them internally, and to build them into its products.

Find out more about open innovation at Toshiba

Orange Fab

Sealing partnerships within its many research programs (Start-up program, lab’Orange, lab’Explorers, Orange Fab, etc.) has been in the DNA of France’s leading telecoms operator for a long time now. Orange has therefore been increasing its participative innovation in-house, via its corporate social network, hackathons and other innovation challenges.

Find out more about open innovation at Orange

If you too would like to set up a greater innovation culture in your business, download our comprehensive guide: