Tag Archives: innovation challenges

The Market for Open Innovation (2013)

An interesting study was published recently on the Open Innovation Market (The 2013 RWTH Open Innovation Accelerator Survey), developed by RWTH Aachen University, under the guidance of Prof. Frank Piller, who has interesting ideas and important data for this new sector. In this post I shall present the main points of this study and some reflections.

Open Innovation (OI) is the set of processes and practices that enable companies to identify and integrate external knowledge to solve innovation challenges. Service companies and platforms dedicated to this search and its integration in the innovation business are called OIAs (Open Innovation Accelerators).

We distinguish two groups of OIAs: those that apply open innovation processes on behalf of their clients and provide a solution to a particular challenge, and those that help clients formulate their
own challenges. In this sense, the OI process designed by NCUB (National Centre for Universities and Business) in order to coordinate these University-Business efforts is also very interesting:

Untitled

Source : “Best Practice Strategies for successful Innovation through University-Business Collaboration”

The observation of IOA groups and their business models suggests the pursuit of innovation is shifting in two ways:

  • Those following innovation from its source (startups, research groups, technology centers), moving “upstream” towards innovative, disruptive or incremental technological solutions.
  • Those following the voice of the market, or “downstream,” listening to its needs and proposing ways to change the service or product strategy.

 The services that OIAs usually offer include:

  • Workshops, i.e., managing communities of innovation problem solvers
  • Contests for services dedicated to solving innovation challenges or problems
  • Searching for market solutions by reengineering or reinventing products
  • Searching for disruptive or incremental technological solutions – existing patents – in certain ecosystems.

Each of these models differ in the way they contribute to solving specific challenges and how the collaborative process begins:

  • Open Calls to experts to identify how an innovation challenge can be solved.
  • Search for relevant information or experts according to a particular challenge.
  • Calls to experts, but in the context of a given set of potential participants or related ecosystems (a hybrid of the previous two).

 The number of market participants is not large. Some 200 OIAs are thought to exist worldwide, most very different in nature, ranging from reinventing brands to the search for creative work. The size of innovation communities, which manage each OIA model, differs by type:

AVERAGE

Source: The Market for Open Innovation (2013 RWTH Open Innovation Accelerator Survey)

Open Innovation is a rapidly growing market, with an estimated current value of 2.7 billion in 2013, with expected growth of up to 5.5 billion in 2015.

 VOLUME

Source: The Market for Open Innovation (2013 RWTH Open Innovation Accelerator Survey)

The market is dominated by companies that offer resolution services for innovation challenges based on contests or calls (80% of the current share), although the highest relative growth will be experienced by “market share” and “technical search” processes. The high expectations arising from intense mergers and acquisitions in the coming years are both interesting and typical of any growing sector.

AVERAGE2

Source : The Market for Open Innovation (2013 RWTH Open Innovation Accelerator Survey)

Some of the OI models feature a software services platform. From the clients’ perspective, the OIA market has two distinguishing key features:

Software plays an important role in any OI initiative. Web 2.0 and social networking technologies can operate globally and integrate many participants, resulting in a large number of transactions. In 90 percent of cases, OIAs present different technological solutions, although most are technologies to be implemented in clients, based on licensing agreements.

To build their network, OIAs get different ecosystems involved. The main goal is to “look outside the box.” On average, OIAs manage a pool of around 20,000 participants in the community. For platforms that seek technological solutions such communities can reach 100,000 members.

The average cost of an OI project is 43,000 but it varies greatly depending on the nature of the business and its models (from 12 for a basic subscription describing the OIA to 164,000 for OI consulting services). In the latter case, experience in investment, negotiation and consultant analysis is key.

Perhaps one of the most interesting aspects not covered today is how these OI processes are brought together by integrating the four system agents (companies, startups, universities/technology centers, and venture capital funds/business angels), at present not covered by OIA models (although SUNN, the StartUp Neural Network, is an exception):

  • Discovering process innovation possibilities.
  • Scouting, creating an ecosystem of innovation actors for each company or startup, VC fund or university research group.
  • Matching, organizing the deal flow for each agent and detecting sources of innovation.
  • Cooperation, to allow a direct relationship between innovation buyers and sellers.
  • Contests, by facilitating open calls for solving specific challenges affecting competitiveness.

Innovation is not the property of few but the talent of many. This industry of co-creation, co-talent or co-discovery, of Open Innovation, requires access to networks and the development of systemic thinking in order to build competitive advantages in the shortest possible time, against economies of scale. Spain is still lagging behind in this respect but there is no doubt that employers increasingly understand the role of open innovation as a path to competitiveness.

Carlos Marquerie

CEO of 4 Innovation

@cmarquerie

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