Technology is advancing faster than humankind could have ever imagined, which has forced an evolution in consumer demands at a rapid pace. These trends are driving a necessity to innovate, disrupt, and reshape businesses all over the world. These new dynamics are defining how we work, relate, communicate, and learn. Incumbents are becoming more vulnerable to disruptors that are challenging their products, services, and business models.
I have been interviewing leading innovators and intrapreneurs across the world and disruption & innovation are two of the most important strategy builders for large corporations to medium-sized businesses and startups. One of the most common threats companies are facing is looking at innovation as a proprietary activity that is happening inside the physical boundary of the company itself. As innovation and creativity are essential tools to sustain business success, closed innovation models can’t keep up with today’s pace of innovation.
Open Innovation was defined by Dr. Henry Chesbrough, Executive Director, Center for Open Innovation, Haas School of Business, as
A paradigm that assumes that firms can and should use external ideas as well as internal ideas & paths to market, as the firms look to advance their technology.”
This doesn’t mean that we need to stop internal innovation in the groove. Essentially, innovation should evolve from the combination of “internal and external”. Therefore synergy of both is important. While some companies are taking time to adopt this new wave and suffering resistance, other companies are opening up their internal processes to new ideas outside their walls to the ecosystem.
Through this research, I envisaged ten trends that are shaping and will tweak the future through Open Innovation. Let’s go through the ten trends you should also look out for if you require constant internal and external innovation in your business without losing your roots.
1. Aligning innovation strategy with the ecosystem
“Ecosystem innovation” includes innovations that are happening outside the organization embracing startups, academia, venture capitalists, private equity, accelerators, and incubators. All of them combine to create an innovation ecosystem”.
A good corporate innovation strategy is a combination of what happens inside an organization as well as the outside. The key output of this process is collecting ideas from the inside and then employing a filtering process to select some of these ideas that will get a prototype and probably follow up with a commercial solution. This approach is good only if your internal innovative strategy is in line with the bigger goal.
In 2020, open innovation and ecosystem alignment will increase further across industries. Companies must build a similar funnel of external ideas that are tracking the ecosystem for most disruptive innovation and ensure that it is combined with internal innovation capabilities.
2. More and more customers distributed co-creation
More organizations are opening their innovation efforts to collaborate with customers and getting them into the act. This approach is also called “distributed co-creation”, by leveraging on technology to create global communities of customer innovators. Some of the examples include:
- LEGO introduced the LEGO Ideas initiative that was based on the open innovation model, a place for customers to share their ideas on possible new products, enter contests and vote for the ideas that are most liked.
- Starbucks has an entire website dedicated to consumer co-creation, which, since its launch, has seen widespread use and success. The main function of MyStarbucksIdea.com is to encourage and enable customers to submit ideas that would potentially help Starbucks franchises grow.
3. Co-creation through evolution
Sometimes the answer is just in front of us and we are not able to see it. Companies do not have to reconceive their business systems to start experimenting with open innovation. While I was working with telecom operators and financial institutions, we developed several new services requested by our customers. We called them “customization”, but in most of the cases, these services were also interested in other customers in the same segment, other segments or different regions.
This success prompted our company to consider how the company could define a process to harness these efforts to develop ideas or products. We identified these success stories and created some regional programs of co-creation.
4. Crowdsourcing innovation
This is perhaps one of the most innovative paths that I have discovered over the last decade. It identifies new opportunities by bringing together a community to change the status quo and innovate. General Electric or GE’s First Build in a co-create collaboration platform that connects people from various paths of life to come up with resourceful ideas and provide solutions in the form of new home appliances. Winning ideas are developed and then sold in the open market.
5. Integrating academia
This is one area that many companies lag in. Academia-industry linkage is a factor that has made the research possible with endless outcomes such as cars, telephone, and the internet. Companies usually see pouring money into academia as a waste of effort and funds but a single output product can put the same company on the corporate map.
NASA was helped by Harvard and London Business school in developing a code that allowed NASA to determine the optimum content of medical kits required by NASA missions (remember weight is not a luxury in this scenario). This solution could not have come at such a low cost from internal funded and sponsored solutions. Science Exchange is another example of the corporate academic linkage which allows them to operate in a market place for organizational research services.
6. Collaboration between fields and cities
More and more companies are reinforcing their efforts to keep an eye in different ecosystems by collaborating with different cities and keeping track of the entrepreneur’s evolution. Samsung has moved from the technology epicenters to cities like New York, Palo Alto, and San Fransisco to find new solutions and answers. Similarly, Coca Cola has introduced an accelerator program that helps start-ups in eight cities around the world that helps in building the Happiness Coca Cola brand around the world.
7. Outsourcing accelerators
According to the Corporate Accelerator DB report, half of the corporate accelerators launched over the last three years were outsourced to external partners such as Techstars, LMarks, or Nest. The other half were directly run by large, established companies like Orange, Microsoft, Telefonica, Airbus, Cisco, Google, Telstra, AT&T, Coca-Cola, La Poste, Walt Disney, Mondelez and Unilever.
Outsourced accelerators help start-ups and large firms work better together and manage other areas of conflict at different speeds in the decision-making process and evolving strategy both at the company level and external start-up level. Hubraum is one such corporate accelerator in Germany that creates business opportunities for corporations as well as startups associated with them. The leverage partnerships and help smaller companies grow which allows the bigger company to gain excessive traction.
8. More off-balance investments
The trend towards more off-balance investments rather than the utilization of corporate venture capital (CVC) funding as investments as well as acquisitions back positive commercial engagements and strategic considerations, rather than being driven by financial returns only.
This includes research and development partnerships, joint ventures, and operating leases. For example, several leading companies are increasing their efforts to develop funded proof-of-concept and co-development programs to initiate their engagement with startups, often leading to procurement contracts and sometimes the complete product as well.
- The Cisco Entrepreneurs in Residence (EIR) program six-month startup incubation program supports early-stage, product-focused entrepreneurs that help young entrepreneurs in developing a business that is in line with Cisco’s future goals forming the base of Cisco future strategy.
- Capgemini collaborates with its muli-national clients and startups to bring forward solutions that can be assessed and then moved forward with providing a solution to the client under the Applied Innovation Exchanges (AIE) umbrella.
9. A shift of acquisitions from the US towards emerging startup ecosystems
According to the 2019 Global startup ecosystem report, there will be 30 new Silicon Valley in the future. The more important fact is that these 30 incubation centers or technological hubs will not be in the USA rather than emerging markets around the world. None of them will be as huge in prospect as the real Silicon valley but each of them will provide a candid opportunity for innovation at a lesser cost.
Some of the possible hubs mentioned include Finland Europe, Hangzhou China, Jakarta Indonesia, Lagos Nigeria, Melbourne, Montreal Canada, Moscow Russia, Mumbai India, São Paulo Brazil, Seoul Korea Asia-Pacific, Shenzhen China, and Tokyo Japan. Trends at the moment and cumulative projection of the future indicates that these hubs will be smaller than the ones in the USA but will be highly beneficial for new startups that have a lower initial capital.
China is also making its presence felt in the global startup ecosystem as a hub for deep tech startups in areas ranging from artificial intelligence, computer vision, and electric vehicles to drones and genomics. Expect more China ‘safaris’ and bridge programs in 2020.
10. Trends Spotting, keeping an eye on what’s next
Last but not least, we need to keep an eye on the future. Flexible lean antennas are preferred rather than more structured labs and research centers. Continuous learning, being open to new trends, detection of consumer changes and pains, evaluation of value chain disruption and emerging business models and technologies used not only in your industry but also in other industries will be the only way forward for a company of any size.
In 2020, Open Innovation will focus more on broader business problems and Digital transformation than peripheral use-cases as the focus shifts from tactical, one-off problem statements to scaled deployments. Imagine new scenarios for your company in the next 10, 20 years. Imagination, creativity, and continuous learning are key to the innovation process. Excursions and Open Innovation classes are also booming with typical destinations today are Silicon Valley destination, followed at a distance by Israel and Singapore.
Just take a leap of faith and come out of the conventional in-house thinking!
To conclude, in 2020, corporates will move several steps further in their journey to leverage the power of Open innovation, especially by experimenting with multiple Open Innovation models, collaborating with a wider set of stakeholders, and thinking deeply about realizing value from their investments.
This Blog has been written in collaboration with Avnish Sabharwal, who is Managing Director for Accenture Ventures and Open Innovation program, based at Bangalore and a strong evangelist of the Indian B2B DeepTech startup ecosystem.