There’s something instinctive about the desire to keep innovation in-house. What if someone steals our ideas? Can we trust outsiders to transform our visions into launched solutions? Large corporations tend to follow this train of thought and keep innovation behind closed doors. In today’s fast-moving, agile environment, both customer needs and the capabilities of technology are changing so fast it’s nearly impossible to keep pace alone.
When trying to be disruptive and push boundaries, you’re likely testing new markets, using new technologies, selling to new customers or even exploring new business models. It’s unlikely that your organization will have the necessary knowledge and skills for all the optimal strategies and tactics, so your chances of success increase with outside help.
Start-up and scale-up organizations, for example, are often more open by default. They know they don’t have all the resources, answers and access they need to go it alone.
Large organizations often have a wealth of skilled colleagues with numerous ideas and answers to problems. Resources and funding can typically be obtained to support an idea or solution deemed worthy. And if the organization is a market leader, staving off your traditional competition may take priority over disrupting the status quo. Therefore, for large corporations the instinct for closed innovation tends to be far stronger than open innovation.
Professor Nick de Leon from the Royal College of Art and London Business school cautions that the current economic turbulence and waves of technological innovation require agility, speed of response, vision and the capacity to collaborate with others.
He notes that, “No single organization can have all the capabilities in-house. Open innovation requires you to rethink your business as a platform, one that operates within an ecosystem of partners and is able to integrate partner capabilities with your own to deliver solutions – solutions that help your clients fulfil their aspirations to transform for a world that is moving so swiftly.”
Based on our experience at WTW and with input from de Leon and Allie Laurent, Head of Innovation Programs at Grow London (a social enterprise and “super connector” organization helping corporations, scale-ups and start-ups forge the commercial relationships they need to thrive), we recommend practical actions that large organizations can take today to start moving toward a more open innovation mindset.
Map out your internal and external innovation ecosystems.
It’s useful to organize your stakeholders by their roles in the open innovation process. For example:
Where do you connect with start-ups, scale-ups or venture capital? By plotting your ecosystem and the connections in place, you will build a picture of how you meet the principles of open innovation.
As Laurent explains, “The ecosystem is vast, and navigating it can be tricky. Leveraging a network of ecosystem-enablers like universities, co-working spaces, other corporate networks, venture capitalists and their portfolio companies or super connectors, can be an effective way to access a volume of verified, relevant start-ups rather than starting from scratch.”
Identify key, strategic problems that your organization faces but has been unable to solve.
These are top growth areas or new technologies where your organization needs to improve its capabilities. Taking the time to understand why you cannot solve these problems in house will help you build the case internally and externally for why and how you need to engage in more open innovation.
Establish – and celebrate – the practice of reaching outside to plug capability gaps.
With a process in place to identify capability gaps in early-stage concepts, you can systematically look at external capabilities. Make sure that resulting interactions (partnerships, co-development) are celebrated (e.g., joint press releases and launch events).
Consider where there are opportunities to develop platform business models.
As Tom Goodwin famously observed, “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”*
Rather than focus on ownership, they created platform business models that underpin networks of actors for entire industries. Take time to review existing concepts and products to understand if and where they could be adapted to allow others to build their own solutions on top of yours.
Find the right external networks for regular engagement.
Identify a small number of trusted networks you can collaborate with regularly. These should be networks of other corporations, start-ups or scale-ups that are a good match for your growth strategy and offer complementary capabilities that will unlock your own potential.
Laurent emphasizes the importance of “building your organization’s external ‘innovation profile’ in an ecosystem so start-ups recognize and understand your organization’s ambitions, challenges and how you’d like to collaborate.”
The adoption of open innovation is not a one-and-done exercise. It’s ultimately about cultural change and it takes time to embed in an organization. Nonetheless, small, celebrated and tangible steps will ensure that, over time, even industries with a tradition of closed innovation will see the benefits of including open innovation in their central model of innovation strategy.
As de Leon states, “Truly innovative companies collaborate with their most strategic, cutting-edge clients and co-create breakthrough products and services – transforming their business performance, disrupting entire markets and creating new paradigms in their industry.”
*Tom Goodwin, Digital Darwinism: Survival of the Fittest in the Age of Business Disruption, (Kogan Page, 2018)
