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New Insights Into Open Innovation


Open innovation is sometimes chaotic and often difficult to measure, but getting it right can give firms a real edge now and in the future.

A recent survey into Open Innovation (OI), involving interviews with business development and R&D directors from 30 leading global companies in the healthcare and manufacturing industries, has led to some revealing insights into attitudes to and challenges resulting from OI, from the potential pitfalls to the opportunities presented by working with external expertise. For the survey, OI was defined as "how the company works with partners, agencies and other companies outside your organization to foster innovation.

Key themes and observations
OI is

currently capturing the attention of a high proportion of businesses

in a relatively turbulent state of flux as companies gain experience in the various options and begin to assess what works for them

creating a new dimension of competition in the "battle of the networks" as businesses seek out their favoured OI partners

forcing companies into detailed consideration of OI challenges in areas such as IP sharing, OI business case development, skills development and IT infrastructure needs.

Also evident was that

The potential benefits of OI are recognized: Most organizations appreciate that OI deserves management attention and resources in the face of intensifying competition and the pace of technological change.

OI approaches vary according to business context and maturity: There was a contrast between the few companies that have set up dedicated OI teams with clear objectives and scope compared to the majority who are approaching OI in a relatively unstructured and ad hoc manner.

IT infrastructure for OI needs step-change development: Apart from "ideas portals" most companies are frustrated with the lack of progres sin introducing wider ranging IT system support for OI processes.

Few companies have OI strategy and action plans in place: Most of the companies spoken to with recognize the need for clear top down strategy and planning but also admitted that this was not yet established.

Concerns exist over sharing know-how with OI partners: There is uncertainty and tension over whento adopt open or closed policies to IP and know-how sharing and this is impeding development of OI.

OI culture is emerging: There is clear recognition of the need to build the global outward facing culture so essential to OI success. However, some Business Units or Departments develop more rapidly than others in the same company, creating islands of expertise which may not be shared. Development of OI culture therefore tends to be evolutionary and fragmented rather than transformational.

OI investment decisions pose unique questions: Few companies have developed rigorous "business case" to support their investment in both project based and company-wide OI.

OI processes are evolving but metrics lag: Most companies have invested time in defining OI processes for activities such as IP management, technology scouting, licensing and partner search.

Overall, most of the companies surveyed are already gaining valuable benefit from OI. Virtually all intend to further develop, scale up and refine their OI capabilities and approaches. Nevertheless, they do not underestimate the challenges ahead in creating significant competitive advantage from what is essentially "innovative innovation."

For a copy of the full report of  PA's Open Innovation Survey, e-mail: innovation@paconsulting.com