Partnership Formation for Growth 

You believed that crowdsourcing was a relatively new corporate invention, then. Rethink that! 

The British government established the Longitude Prize in 1714, offering a sizable monetary reward to anyone who could create a quick, precise method of determining a ship’s true position at sea. The challenge was created to use the crowdsourcing technique, which is now known as independent innovators’ and experts’ ideas, to solve this ancient navigation dilemma. 

The $3.74 million main prize of the Longitude Prize, which was worth £20,000 at the time, was never awarded in full, but smaller awards were given to individuals whose work significantly impacted the answer. 

The “open innovation” notion, which holds that the best ideas are rarely confined to a single firm, is what the prize and crowdsourcing are. It means that businesses should think about exploring outside their own walls to hasten the research and development process. 

Learn about open innovation in this post, and discover how to set up a productive exchange of ideas. 

Open Innovation: What Is It? 

In his 2003 book, “Open Innovation: The New Imperative for Creating and Profiting from Technology,” University of California at Berkeley professor Henry Chesbrough introduced the concept of “open innovation.” 

He claims that “outside in” and “inside out” are the two elements of open innovation. When an organization shares its ideas with others, it works from the “inside out” or from the “outside in.” Both internal and external information flows can speed up the innovation process. 

What expertise and information you choose to bring in or share with others may depend on your business model. Additionally, your strategy could be built on some of the traditional techniques for acquiring technology, including crowdsourcing, cooperative R&D, and licensing. 

For a number of reasons, several organizations have switched from self-sufficiency to open innovation: 

-It can cut down on the expense and danger of R&D. Your company can benefit from innovation without “carrying the load” of conducting independent R&D. 

-Rarely is knowledge centred in a single organization. Over time, there has been a significant increase in the highly educated population, who can now be found everywhere. Additionally, when employees quit their jobs, they transfer their knowledge to their new companies. 

-The development of start-up companies that produce novel concepts and technological advancements has been facilitated by the venture capital sector. As a result, foreign vendors are now more numerous and sophisticated. 

-Companies now have a wider audience as commerce becomes more international, and the Internet has made it simple for them to work together globally. Foreign partners can frequently offer more affordable labour, resources, and specialized technologies. 

How to Create a Program for Open Innovation 

Although there isn’t a single best way to start an open innovation program, the five steps listed below can increase your chances of success: 

1. Create a Culture of Acceptance 

Organizations that are accustomed to independence may experience a culture shock when they convert to open innovation. Some people could be hesitant to embrace foreign concepts or innovations. Others can be reluctant to divulge knowledge they have acquired. 

Getting top-level managers on board is essential to removing obstacles to change and creating a climate that supports open innovation. Once they agree with the idea, they may support your efforts and spread their enthusiasm throughout the organization. 

The success stories of your industry peers can be used as evidence to persuade managers or team members of the advantages of open innovation. And when your innovation team succeeds, tell everyone about it—inside and outside your company. People may be more open to forming external partnerships as they come to understand the advantages of open innovation. 

2. Form a Team Internally 

Researcher and developer involvement is not the only aspect of open innovation. Colleagues from different levels and departments can join your team, which can hasten the adoption of the proposal. A diverse breadth of experience could also be beneficial. For instance, a legal team member might identify potential problems in licensing agreements with partners, or a communications team member might highlight your achievements. 

3. Select the Important Issues to Address 

Your first step is to identify what “innovation” means to your company. What is your main objective? Do you want to gather innovative concepts or technology, for instance? It will be simpler to decide which projects and partners can assist you in achieving your goal after you have identified it. 

Obviously, not every project is a good fit for open innovation. Working with an outside partner would be of minimal use, for instance, if a project is moving along well with your internal resources and you don’t require any outside assistance. You might not want to disclose some critical technology that provides you with a competitive advantage. 

4. Select the Person to Contact 

Your aims and strategy will influence the possible partners you choose. For instance, you should restrict your search to companies you are confident in if you want to protect critical information. 

You might emulate businesses like P&GTM (see the case study below) and develop a portal on your website that promotes your open innovation program and invites people to submit their ideas in order to expand your product line or facilitate an idea flow. 

You can choose to look for strategic partners in a more focused manner. If so, you can formalize your request for proposals and issue a call for bids. Or, you may use a networking website like LinkedIn® “to identify individuals or establishments with the specific expertise your project requires. 

Other qualities to consider in a partner include the potential for a long-term connection and whether the partner fits well with your company’s culture. However, these will be less crucial if you’re searching for a quick exchange of ideas and a short-term partnership. 

5. Use the appropriate business model 

Different from previous models, such as working together on open source software, is open innovation. Despite the fact that both open innovation and open source have a typical contractual component, open-source material can be used with significantly fewer limitations. 

It’s crucial to take into account the permanence of the arrangement, your familiarity with the market, and the scope of your use of the intellectual property when selecting a business model for an open innovation program. As we previously indicated, you have a number of options to think about: 

–“Traditional” models. The use of crowdsourcing, licensing, joint ventures, joint R&D partnerships, and acquisitions are all tried-and-true techniques for exchanging technology and information. 

–Platforming for products. With this method, an organization gives contributors access to a work in progress and solicits their ideas for finishing and improving it. 

–Idea contests. You might provide incentives for valuable contributions by organizing contests, also referred to as “hackathons,” which are popular when creating software. These are brief events that typically last between a day and a week, but by doing so, organizations can access a lot of ideas. 

–Customer involvement. In this paradigm, you get in-depth customer consultations. Positive client feedback can help your product’s final design and usefulness when development is almost complete. 

–Networks for innovations. An organization can build a network of participants in the design process by providing rewards or incentives, much like idea competitions. Instead of soliciting suggestions for brand-new items, the network is invited to come up with solutions to issues that already exist. 

An Example of Open Innovation 

Today, many multinational corporations rely on third-party contributions to grow their brands. For instance, the global consumer goods corporation Procter & GambleTM has created more than 2,000 open innovation partnerships through its “Connect + Develop” program. 

One of its most effective campaigns was the Febreze® brand. P&G used Connect + Develop to expand the $1 billion Febreze fabric refresher product portfolio. It permitted outside companies to use the Febreze brand name on a variety of goods, including air filters and vacuum bags. To jointly create new goods, such as Febreze® Set & Refresh, it also collaborated with other businesses. 

P&G collaborated with Italian air freshener producer ZobeleTM on Febreze Set & Refresh. Their combined knowledge and resources produced a ground-breaking new product that debuted two years early on the market. 

Major Points 

In his 2003 book “Open Innovation: The New Imperative for Creating and Profiting from Technology,” Henry Chesbrough created the idea of open innovation. Its premise is that businesses shouldn’t rely exclusively on internal resources to innovate because outside partners can provide ideas and motivation to encourage innovation. 

Open innovation can be quite advantageous when you have a solid working relationship with the best partner. For instance, it can reduce the risk and expense associated with research and development and hasten the introduction of brand-new goods and services to the market. 

You need to establish a welcoming culture, a strong internal team of champions, the proper challenges to tackle with outside assistance, the right partners, and a solid business model in order to set up an effective open innovation program.

If you found this article insightful, you might also be interested in exploring these topics further. Here are five articles that could capture your attention:

1. Self-Coaching Strategies – Discover techniques to coach yourself towards personal and professional growth.
2. Team Management – Learn effective ways to lead and manage a team successfully.
3. Essential Competencies for Managing a Team – Understand the key skills and competencies required for effective team management.
4. Providing for Your People – Explore strategies to support and nurture your team members’ development.
5. Mentoring – Gain insights into the art of mentoring and how it can benefit both mentors and mentees.