BDU DS0101EN Module 1 Reading
BDU DS0101EN Module 1 Reading
BDU DS0101EN Module 1 Reading
OPEN INNOVATION
A PRACTICAL GUIDE
MAY 2016
TECHNICAL NOTE #07
MAY 2016
The EBN Technical Note is a publication designed to inform Business Innovation Centres
(EU|BICs) around Europe about the trends shaping their markets.
The publication is also intended to create awareness among policy-makers at European and
national level on the value of EU|BICS in creating a dynamic and entrepreneurial spirit in
Europe.
© EBN, Brussels - Belgium 2016. Reproduction is authorised provided that the reference is
acknowledged. www.ebn.eu
Introduction 3
What’s next? 20
Credits 21
133
The Ideon Open team at work
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Introduction
The concept of Open Innovation was first introduced by Dr Henry Chesbrough in
2003, in his award-winning book, ‘Open Innovation: The New Imperative for Creating
and Profiting from Technology’ (Source: Harvard Business Press, 2003).
“Open innovation is a paradigm that assumes that companies can and should source
innovation from external actors as well as their own internal R&D departments”.
Alternatively, it is “innovating with partners by sharing risk and sharing reward.” The
boundaries between a firm and its environment have become more permeable;
innovations can easily transfer inward and outward.
In simple words, engaging in Open Innovation means that the company is reaching
out far beyond its own internal boundaries in order to innovate, involving external
players, working with customers, suppliers, partners, startups, universities, academic
research, private institutions and other players in the ecosystem. This enables the
company to harness external ideas, gain access to bright minds and ideas outside its
own enterprise, from different parts of the world, and as a result, dramatically
increase its own ability to innovate.
Other Firm’s
Market
Our Current
Internal/external Market
venture handling
Adapted from: Open Innovation: The New Imperative for Creating and
Profiting from Technology, Chesbrough, 2003
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Open Innovation represents a paradigm shift from a ‘closed’ to an ‘open’ innovation
model. Why & how has this happened? Several important market forces led to the
erosion of the ‘closed’ type of innovation.
In the past, innovation and R&D mainly took place within the company boundaries.
Big corporations like IBM, Siemens, Philips or AT&T used to rely on R&D investment
capabilities as fuel for strong, strategic competitive advantages. They could afford to
invest considerable resources in their R&D labs as opposed to smaller companies in
their industry sectors, therefore creating formidable barriers to entry by competitors
and benefiting from greater success in many markets.
1. With the advent of globalisation, the world became more competitive even for
bigger companies, as they began facing strong competition from young
startups. Enterprises realised that they were not capable of sustaining high
levels of top-line growth with their internal R&D and innovation budgets started
facing increasing pressure.
2. It was also becoming very clear that no matter how big or resourceful a
company was, it could not effectively innovate on its own, as valuable
knowledge exists outside the R&D labs of companies and is widely distributed
across the world. Leaving those areas of knowledge untapped would lead to a
competitive disadvantage.
3. It is also well understood that, while internal R&D divisions are extremely good
at incremental innovation and even radical innovation at times, they are not
generally positively inclined towards disrupting their own products and creating
new markets.
4. Most importantly, it is clearly recognised that all the companies involved in the
value chain, including suppliers, customers, research institutions and others
play an increasingly important role in the whole innovation process, and
contribute directly to the success of innovation in the market.
Over the past few years, many companies have adopted a new mindset on how to
generate new ideas, and bring these to market. There are several examples in the
industry that show that a good percentage of innovation in the consumer goods, bio-
pharma and high technology sectors has been propelled through an open innovation
approach, bringing a significant positive impact on the economy.
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A highly successful example is that of Procter & Gamble, who established their
Connect & Develop Open Innovation programme roughly 12+ years ago, following
serious business issues and unsuccessful product launches. The results were
compelling. According to a 2006 Harvard Business Review article, Connect & Develop
delivered 35% of all successful innovations already in the first 2 years of the
programme. Several breakthrough products and well-known brands like Febreze and
Tide Total Care have come out of their Open Innovation programme.
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products and services to their customer base, offering them a less risky way of
benefiting from these state-of-the-art innovations.
Startups also stand to benefit handsomely by collaborating with larger companies and
corporates. They gain access to market research and knowledge, often get free access
to several tools and technology platforms (at least during the joint development
phase), access to technical training, marketing support, enabling sales, and brand
image by association. Working with large businesses can bring an important go-to-
market advantage for startups, and help them scale up their business a lot faster.
An Executive Survey Report on Open Innovation called “Managing Open Innovation in
Large Firms” published in 2013, jointly by Professor Henry Chesbrough of UC Berkeley
and Sabine Brunswicker of Fraunhofer, provides key facts on the extent to which large
firms are practising open innovation. These figures show that Open Innovation is here
to stay!
• 78% of firms in the report practiced open innovation
• 71% report that top management support for open innovation is increasing in
their firm
• 82% report that, compared to three years ago, open innovation is practiced
more intensively today
• No firms abandoned the practice of open innovation
The concept of Open Innovation has continued to evolve over the years and what we
mean by Open Innovation now is much broader than its original definition introduced
by Dr Henry Chesbrough.
Open Innovation now includes new, open forms of collaboration, partnerships, co-
creation and crowdsourcing, making it a more effective and powerful phenomenon,
bringing bigger and faster benefits to all parties involved. The industry is moving
towards Open Innovation 2.0, an era of Open and Collaborative Innovation which
takes place in a true ‘partnership’ mode.
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The Innovation Ecosystem
Two-way results
An ecosystem consists of two parts; an internal one and an external one. Sometimes
the ecosystem also requires an intermediary in order to really excel, e.g. an EU|BIC.
Both actors in the internal and the external part gain tangible results from engaging in
OI.
Different tangible results may be achieved from an OI project. For different
departments these may range accordingly:
• Human Resources benefit from a boost in cultural transformation in line with a
more open and collaborative entrepreneurial organisational behaviour
• R&D gains access to external ideas and development capabilities
• Marketing department acquires suitable arguments for their own value
proposition
• Customers become involved in the right solutions, solutions to problems which
might have previously seemed impossible to solve
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• Suppliers strengthen their relationship with customers
• Retirees gain additional professional purpose
• Universities gain insight into what society regards as important or access to
advanced industry machinery/processes
• Society as a whole engages in a more efficient use of resources
Open Innovation impacts many different layers of society and it works by involving
several diverse stakeholders and providing each one a unique value. The focus for an
EU|BIC should not be on the ecosystem itself, but on its potential clients. EU|BICs
have an important role to play in both public and private ecosystems, very often as
intermediaries between other actors such as startups, corporations and public
bodies.
EU|BICs must clarify their own value proposition from the get go in order to position
themselves in the ecosystem of others and tap into significant opportunities.
EBNopen launch
Realising the uniquely advantageous positioning it holds with its ecosystem of
around 150 EU|BICs and 3,000 startups/SMEs spanning most countries in Europe and
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beyond, EBN has decided to act and fully play its part to help fulfil the promise of
open innovation to create more jobs, skills and economic wealth in Europe.
With this clearly stated objective, EBN launched its new Open Innovation service -
EBNopen - at its 2015 Annual Congress. The service is aimed at helping innovative
startups & SMEs in its ecosystem. At the launch, enthusiastic support was given by top-
notch industry leaders and world-class organisations such as The World Economic
Forum, Microsoft, SAP, Continental, Eureka/Euripides and the Open Innovation
Institute.
EBNopen aims to help the thousands of innovative, high potential startups & SMEs in
its ecosystem of innovation centres (EU|BICs) across Europe, to develop tailored
partnerships with large companies and corporates in a systematic & programmatic
manner, in order to scale up faster and accelerate their business growth.
CONNECT
EBNopen is available now and is already being delivered, starting with the digital and
information technology sector, with early adopter customers SAP, Microsoft France,
and other large companies in the process of joining. The intent is to extend to other
sectors such as cleantech, robotics, biotech and other new technology sectors, after
the first year of operation and a few good success stories.
Vasu Briquez, Senior Advisor Open Innovation, EBN, a former senior corporate
executive who is leading this programme for EBN, comments “Corporates and large
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companies find our service interesting and attractive because it is flexible, simple,
just-in-time, and gives them a continuous inflow of the latest and brightest
innovations from all countries across Europe, with only a small effort from their side.”
While the needs of startups/SMEs and large companies are different, they are actually
quite complementary. The large company/corporate is driven by objectives such as
time to market, competitive advantage, new products/new markets/ business
growth. And this is indeed also to the advantage of the startups/SMEs who are
interested in increasing their customer base and accelerating their business growth.
Industry/corporate partnerships can and do work well when approached intelligently,
with proper expectations and goals set on both sides, without any undue notions of
magical success suddenly landing at the front door.
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large company or a well-known brand can be an enormous opportunity for the
startup. Nevertheless, they may encounter several challenges during the actual
undertaking of such a partnership.
This is especially the case if the Open Innovation process is not well implemented in
the large company/corporate, then the startup ends up:
• Having the need to work with several different groups in the organisation to
raise visibility about its innovation and technology/products, with a serious risk
of getting no real payback for the effort spent, or
• Being directed towards Corporate Venture groups who tend to have heavy due-
diligence and competitive processes for making investments or acquisitions,
which may require a lot of time and effort, and ultimately may not lead to any
results
• And possibly, encountering difficulties in defining clear scope, deliverables,
budget, IP ownership, licensing, legal etc.
Clearly, the level of understanding, commitment and preparation of the corporate/
large company is a critical success factor for the partnership. Therefore, an essential
aspect of operating this service is that of giving preference to those large
companies/corporates that have put in place the right processes to work together with
the startups/SMEs. There needs to be a well-defined, well-structured, budgeted, Open
Innovation process, in order for the collaboration to be sustainable, ensuring focus on
win-win objectives.
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This chart summarises a few industry partnership scenarios which are particularly
beneficial for startups/SMEs in terms of helping them scale up and grow their
business. Therefore, EBN will focus on targeting these kinds of partnerships with its
EBNopen offering.
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Startups
and SMEs
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Technology domains Industry Sectors
Digital, Info Technology, Aerospace, Aviation,
Software, Telecom, Cloud, Agriculture, Automotive,
Big Data, Analytics, Apps, Banking, Finance, Insurance,
Mobile, Web, Social, Retail, Transport, Travel,
Multimedia, Animation, Telecom, Manufacturing,
Connected Objects, Internet of Construction, Engineering,
Things, Hardware, Robotics, Consumer Electronics,
Sensors, BioTechnology, Clean Healthcare, Pharma, Energy,
Tech, Green Technology, 3D Food Processing & more
Printing, Creative Design &
more
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both in a specific case and in a general platform. This also includes the financial value
gained once the pain is solved. When both the level of openness and pain are clear,
one can begin to evaluate the extent to which the EU|BIC can assist in order to enlarge
and make the openness bigger and contribute to a solution on the pain.
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The neutrality can be used in three ways:
1. The client can trust the EU|BIC to suggest the best OI way forward for the client
(even if it means the EU|BIC will not be involved in next step)
2. The EU|BIC can use the neutrality when inviting participants to join an OI
initiative. The dialogue created with an inventor, university professor or small
startup is very different if developed during a workshop rather than a large
multinational corporation doing it themselves
3. Thirdly the intermediary role between the solution owner and solution
receiver can be of legal importance when one party wants to limit information
spread. The EU|BIC will act as a guarantee and ensure that the right and
needed info is shared, and nothing else
David Uhlíř, Deputy Director of JIC in the Czech Republic (an EU|BIC) reflects on
David Uhilir,itDeputy
how long Director
took them of JIC intheir
to unleash the Czech Republic
role as an Open(anInnovation
EU|BIC) reflects on how
facilitator in
long it took them to unleash their role as an Open Innovation facilitator in their
their ecosystem: “We at JIC have been working with corporate clients on the basis
ecosystem: “We at JIC have been working with corporate clients on the basis of open
of open innovation for the past four years. Actually, it took us some time to realise
innovation for the past four years. Actually, it took us some time to realise how
how valuable asset we have in our client startups and SMEs, including our alumni.
valuable asset we have in our client start-ups and SMEs, including our alumni. And
And even more time to find the best way how to capitalise on it. I believe open
even more time to find the best way how to capitalise on it. I believe open innovation
innovation can be a very effective, win-win concept that can be useful for all
can be a very effective, win-win concept that can be useful for all EU|BICs. The access
EU|BICs. The access to large corporations clearly adds value to the services we
to large corporations clearly adds value to the
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Case study - The Ideon Open experience
Everything starts with an idea. Ideon Open’s birth was an idea from a soon-to-be client
that came to Ideon Science Park for assistance: “Our latest breakthrough innovation is
30 years old, you are famous for new ideas, your environment is innovative…can we
not do something together?”
In the spirit of the lean startup way of working we offered a process to solve the
company’s pain. We accepted from day one that we are small and most smart people
work somewhere else, as Bill Joy inspired us to think: “Most of the bright people don’t
work for you. No matter who you are”.
Ideon is a well-established, semi-
public innovation hub in the south
of Sweden, in the city of Lund, 45
minutes from the Danish Capital
Copenhagen, with 30+ years in the
innovation industry. We do not
want to compete with the fully
private innovation agencies, but
rather complement, invite and
work together. The first job was
done together with a consultancy
firm, Implement Consulting Group. Today, four years later, now with eight people
working in a department called Ideon Open, the winning strategy is still the same:
work together with others.
One of the challenges that stems from being successful in delivering value to others is
that we risk to forget that our strength is not ours alone, but it is a collaborative
strength. It is tempting to run assignments by ourselves, just because we can, and
turning a blind eye when those results improve when linking up with others.
Reasons for not wanting to share assignments can be an over-confidence in our own
capability or the desire to keep all the money or turn all the spotlight and prestige of
big clients onto ourselves. One needs to remember that, regardless of how successful
you are, the world of smart people is always greater outside your own organisation.
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Another challenge emerges when carrying out visible work, people in the same
industry tend to have an opinion on it. Being a semi-public organisation we need to
balance out what and how we deliver the Science Park’s value. Criticism can come on
the same assignment from two completely different and contradictory views. “You
act too much as a private consultancy firm” or “You behave too much as a public
organisation”. These comments are valuable given that they highlight true views on
the operation, even if the same assignment can be criticised in both ways depending
on what pre-conceived ideas the person has. One should constantly be involved in
the task of assuring the public-private balance in the way the OI platform is run.
Ideon Open has used the funding principle that if enough value is created for a larger
external organisation, in terms of open innovation, entrepreneurship and lean-start-
up thinking, then the client will pay for it. No tax money should be needed.
Nonetheless, exceptions apply to small/micro companies that do not have the funds
to pay even if they aim to prioritise this. SMEs have the ability to pay part of this and
only some tax money is needed to lubricate initiatives.
• Large public and private organisations = fully pay the investment to use Ideon
Open
• SMEs = pay part of the cost, the rest is publicly funded
• For any organisation, independent of size, pro bono work is done, financed by
the profit from assignments with the larger organisations
• Public projects (national, EU etc) only play a minor part, <5% of the funding
At the year-end, no profit is given out to owners. Everything is run not-for profit.
Micro companies are not the target audience in terms of the products offered, but are
the main beneficiaries and the main stimuli that push Ideon to create and manage a
department like Ideon Open. In the case of Ideon, the purpose varies from: wanting
to boost and spread the Ideon brand to make it easier to attract startups to leverage
that they are ‘an Ideon company’. The more awareness is increased, the easier it will
be for the startups to use its context with the Ideon brand as a door opener. Secondly,
the amount of contacts being built at Ideon Open is offered to startups for them to
build a faster relation with a larger organisation, a matchmaking of contacts with
startup needs.
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The guiding principle in the funding arena is to follow the priorities of the larger
private industry. When that is secured, then all other funding possibilities can enlarge
the budget. But the initial investment shall be from the private side. This way of
thinking secures:
a) What Ideon Open offers in its portfolio of products is the right one
b) How it is delivered in terms of both successful results and effects
c) That it really can create high enough value (a value >100 times the investment).
What’s next?
The need to innovate has reached all businesses, in all sectors, being a buzzword in
most workplaces and an essential element for growth and expansion. It seems to be
inherently built in to startup and SMEs ecosystems, whereas big corporations are
lagging behind due to their established and structured operational flow.
The last decade has witnessed the adoption of a more collaborative approach to
innovation on behalf of large companies as they have begun merging their internal
and external resources to welcome ideas from individuals not working within their
own organisations. Nonetheless, before we can start thinking of what will come next it
is essential for all parties within an ecosystem to fully grasp the benefits of working
together. The right approach and attitude needs to be adopted by all actors. EU|BICs
have the imperative role of finding their place within the ecosystem and serving as a
bridge to bring all players together and exchange ideas.
What will come next is definitely intriguing. If large companies are gradually removing
internal barriers and considering consumers, suppliers and researchers on the same
level and equally able and qualified to provide innovations, it will be interesting to see
how they will evolve to safeguard their competitive advantage.
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Credits
Authors
Vasu Briquez
Open Innovation Expert, EBN
[email protected]
Mats Dunmar
Manager, IdeonOpen
[email protected]
Special thanks to
Giordano Dichter
Head of EU|BIC Services, EBN
David Tee
Head of Membership Services, EBN
Clarelisa Camilleri
EU|BIC Services Assistant, EBN
www.ebn.eu | [email protected]
David Uhlíř
Deputy Director, JIC, Czech Republic
www.jic.cz | [email protected]
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