Open innovation: the key to staying ahead of the game

R&D used to be an in-house affair with companies investing in laboratories, equipment, researchers and engineers. However, the success rate for new products was quite low. “Certain companies realized they couldn’t be good at everything. To focus on their core competencies, they started outsourcing services. We often think of outsourcing services like maintenance, cleaning or call centers. But, technology is also a commodity that can be externalized,” explains Michele Coletti, an associate professor at Grenoble Ecole de Management in the department of Management, Technology & Strategy.

Don’t start from scratch

The creation of the computer mouse is a common example: Steve Jobs negotiated the opportunity to observe Xerox’s tech developments, including a “mouse”. While Xerox did little with this discovery, it was the catalyst for a major advance in Apple’s development of computers. “The big jump is the realization that looking for external tech means companies don’t have to start from scratch. This allows them to build a unique, innovative offer without creating every idea, writing every line of code or developing every part of a product. By finding technology breaks on the market, companies can focus on their core competencies, shorten time to market and reduce risk,” explains Michele.

Open, but managed innovation

“Open innovation doesn’t mean opening all of your processes and industrial secrets. Instead, it means carefully developing a strategy in which you decide what you can reveal and what you can’t.” Open also doesn’t mean free. Technology and knowledge are traded. For example, in exchange for visiting Xerox, Steve Jobs offered the opportunity to buy shares in advance of Apple’s IPO. “Open innovation is not about cutting costs. While you might invest less in your own research, you will pay for tech deals and train or recruit talent that can manage open innovation. You will need people who know how to: negotiate tech exchanges, collaborate with private and public entities, monitor and stay up-to-date on tech developments…” adds Michele.

Creating an open innovation strategy

Michele, who also teaches the first module of the Advanced Certificate in Open Innovation (see box below), shares three fundamental issues companies should consider: “First, think about technology: What is your core technology? What do you focus on? What enables your products? This will help you figure out how and with whom to collaborate. Second, think about the market: Open innovation requires you to have a very clear picture of the market and your users. How do you implement market monitoring? How well can you understand your customers? Finally, think about efficiency: How can you optimize this process? What talent and resources do you need to effectively implement open innovation?”