Tag Archives: open innovation

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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SUNN (Start Up Neural Network): Discovering Innovation

Innovation requires discovery. To discover is a verb implying creativity and research; to discover is also to realize there was something we did not know. It seems reasonable to think that everything that is not discovery improves matters.

Discovery is a very healthy, willful act in which we strive to distinguish ourselves from the rest of our competitors … even if it just means to experiment with soft drinks. We ultimately want our search for new worlds to have meaning, a differentiation that the market can perceive and value. If the end customer fails to perceive any added value and is unwilling to pay for it, innovation is reduced to a mere theoretical, intellectual exercise.


But while innovation is based on discovery, the problem so far has been how to put the wheels of creativity in motion, how to know what you are looking for or how to find what is being sought by others. Each agent in an innovation system (research groups and technology centers and institutes, companies, startups/spin-offs, and venture capital/business angels) seeks disruption for different reasons: for financial reasons (financial investment), for strategic reasons (strategic investment), for reasons of scientific cooperation, to develop the “second floor” of a patent, for commercial reasons, and so on. He or she who does not know what to look for rarely finds it, and therefore cannot discover.

To date, the flow of transactions in an innovation system, be it in Spain or the United States, Colombia, Israel, or Singapore, has been based on static information or low capillarity to companies that need said innovation. And it does seem that those companies seeking innovation suffer the most neglect, as they will receive very little information about new findings that may affect the competitiveness of their business.

 

The international startups looking for investment that we meet often have interesting potential, both strategically and financially. But it is impossible to drum up attention for them in a network as wide and complex as is the universe of funds and companies interested in emerging or disruptive technologies. The only way to make them known is to harness the power of their own contacts, their newsletters, emails etc. That is, by conducting some very limited technological brokerage and organizing events. Commercial activities “below the line” are virtually impossible and mostly very expensive. Just ask the Research Transfer Offices, whose work has been commendable when it comes to commercializing research, but always with a low market reach and a very low budget for achieving such ambitious goals.

In innovation systems, particularly in Spain, the agents are unseen, are hard to pin down, tend to move in the dark, unless someone contacts them.

The universities are not seen by companies; companies do not know what universities do; companies do not generally invest with funds (pledge fund); the startups hardly know each other and then only at the regional level; the funds watch the startups but not the university spin offs, and the universities do not know the demand for innovation, or even how to find out…

 

There is no awareness of the real supply or demand in innovation, which is really decisive, and therein lies one of the reasons we do not have any divested markets, much as we have conferences and events on entrepreneurship. The ignorance is such that sometimes there have been investments in young technology entrepreneurs, when the solution had actually been invented 10 years earlier.

 

To overcome this deficiency in the innovation system, Spain has just seen the creation of the Alpha version (i.e. in registration alone, for now) of its first neural network in the cloud. It will have an international reach and aims to solve two strategic unknowns for the world of innovation: the discovery and the connection between the agents in the system.

This platform is called SUNN (Start Up Neural Network), a system modeled on Israel’s innovation system and whose proof of concept has been carried out in Israel, the U.S. and Singapore, and supported by Madrid Network and the Spanish Ministry of Economy and Competitiveness.

SUNNLANDING

 

SUNN is based on the idea of ​​differentiating ecosystems (innovation bidders) from industries (innovation seekers) and connecting them through Innovation Maps and so-called InnoBox, inboxes through which flow disruptive deals, research groups, innovation seekers and venture capital funds.

 

Starting with a standard international questionnaire that any venture capital fund would insist on to protect its investment, the system opens windows of neuronal connections between companies, universities, funds and startups to deliver 15-day innovation cycles to each one, containing the best proposals in national and international innovation.

 

Ecosystems

 

The ecosystems add innovation sources: patents, research groups, spin offs, startups. And they develop in innovation cells (icells) and Key Enabler Technologies (KETs). The SUNN platform was modeled on a study of the innovation system used in Israel, and was later tested in the U.S. and Singapore.

 

Basically it brings together five major “world class” source ecosystems (innovation repositories), where international venture capital funds and the international demand for innovation are concentrated: Energy, Cleantech (water and waste treatment), advanced ICTs, Life Sciences and New Materials, Electronics & Components. These source ecosystems are transforming the world and this spreads to other areas: aeronautics, smart cities, fintech, agrofood, etc.

 

The basic ecosystem agents are the inventors (patents), research groups, startups and spin offs.

Below you can see the Ecosystems, with Icells and Kets:

 

Industries / Clusters

 

Moreover, SUNN includes the traditional industrial classification and displays industrial capabilities by sector and connects them to the ecosystems. The idea is to know how to innovate fundamental skills and project them in four areas of innovation: core competencies, added value, diversification and troubleshooting Alpha problems, which require co-creation and open and closed innovation networks.

 

Industry agents are primarily the companies that SUNN targets: equipping small, medium and large enterprises with the opportunity to access a world of possibilities, now almost confined to internal research departments, emails, or complex systems of competitive intelligence, surveillance or static databases.

 

Funding and the last mile of innovation

 

This neural network includes a cooperation “workflow,” based on international scientific protocols and venture capital, so that in the platform framework the agents of a system can propose agreements and joint projects. These processes, should they require funding, are transmitted to international InnoBox venture capital funds.

 

Moreover, the system has implemented an Observatory, the possibility to perform international technology “sanity checks”, a risk analysis engine, a virtual investment committee, startup ratings, etc.

 

 

Discovering Innovation

 

The complex algorithm implemented for the discovery and matching of innovation, like many other aspects, comes from the relationship between industrial capabilities – ecosystem icells, and between icells and icells, which will not only discover new opportunities for competitive growth through disruptive technologies, but also perform smart matching between the agents of an innovation system. All these complex algorithms are resolved in a fantastic graphic called “My Ecosystem World”, which discovers the world of disruptive innovation for companies or venture capital funds, or the world of innovation demand for startups and research groups:

 

All transactions in the system are contained in The Diverse (The Disruptive Universe), which will indicate the broad trends of innovation, and which resembles a web of relationships between innovation cells:

 

 

 

The geostrategic area of this platform covers four regions: Asia, America, Europe and Israel. Currently it already has 2000 disruptive startups, 500 research groups, 5000 innovation-seeking businesses and 200 venture capital funds

 

The beta version of SUNN is expected to be finalized in December, after which, in March 2014, it will be presented in Boston and Singapore. Important national and international universities, economic development agencies and industrial corporations have already signed up as beta testers.

 

I encourage you to register (www.sunn4i.com) to start discovering new blue oceans (in English, the language of innovation) … and hope that the Chinese, Indians and Koreans do not decide to fish there too. At the end of the day if Asian purchasing power continues to increase they may lose production but will head straight into stormy waters (attracting scientists and research centers), in which the Spanish may have neither shipyards nor boats, nor disruptive technologies or ideas, to compete with them in the world of added value.

Carlos Marquerie

CEO of 4 Innovation

@cmarquerie

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