in this issue
Creating an open mindset to innovate
7:15 AM MDT | May 9, 2013 | By JOS KEURENTJES, RD&I DIRECTOR/OPEN INNOVATION, AKZONOBEL
The need to innovate, to improve existing solutions and create new ones, is essential for the future success of any business. Customers want products and services to be faster, cheaper, more functional, more convenient, and more sustainable. But how do businesses meet these demands? And how can they keep up with the pace of technological change?
To meet this challenge, many businesses, particularly larger corporations, are turning to the outside world for inspiration. This open innovation approach is being employed increasingly by corporations that realize they can no longer rely solely on internal resources to maintain a competitive edge.
At AkzoNobel, we spend over €350 million ($460 million) on R&D each year. That’s a significant sum—yet it’s just a drop in the ocean when compared with the tens of billions of euros being spent in universities, research institutes, and companies around the world.
To capitalize on the work that’s being carried out by these organizations, businesses need to connect to them. They need to tap into the emerging science and technology taking place in the outside world. It is only by doing this that they can get into the fast lane of innovation.
Large corporations often struggle to make this connection, however. In many businesses there are structures, rules, and regulations in place that hamper the ability to set up open relationships with outside organizations. There is often a strong inward orientation too in these businesses, with many R&D professionals not sufficiently aware of the changes that are taking place in the outside world. Perhaps the biggest challenge that companies face, however, is creating a more open and forward-looking mindset—thinking beyond current business issues and immediate future horizons.
To engage in open innovation effectively, companies need to be prepared to work in a much more open and collaborative way. This can be challenging for many businesses whose instinct is to protect ideas and intellectual property. But the benefits of this open approach can be game changing. By engaging with people outside the company, not only can you uncover exciting new ideas, but you can also get those ideas to market much faster than would be possible through traditional models.
Often the value of being first to market far outstrips the ability to patent your technology. In this fast-changing world, if you are first to market—and you manage this repeatedly—your business is going to be very healthy, with big revenues. In this commercial environment, you don’t have to worry about intellectual property.
Following an open approach to innovation does not just mean working collaboratively with research groups and universities. There are significant opportunities for larger companies to connect to small businesses through venturing strategies. A good model for doing this is the Connect+Develop approach, developed by Procter & Gamble (P&G). In this model, the P&G business units focus their efforts on developing innovations for their markets for which the time frame is about two years, and a venturing approach is then used to address opportunities for innovations that are realized on longer timescales. In this approach, a good balance is struck between the amount of R&D done internally and the amount spent on sourcing plug-and-play solutions and technologies that can be acquired and adapted as needed.
There is also an opportunity for companies to participate more strategically in national and international research frameworks to learn about, and influence, the publicly funded R&D agenda. For example, participation in the EU Horizon 2020 program, with a total budget of €80 billion, represents a significant opportunity for many businesses.
In summary, businesses that adopt open innovation models effectively in this fast-changing world will ultimately stand to benefit. To achieve this, a culture change to a more open and less risk-averse approach will often be required. In today’s world, it’s not just about owning and protecting everything. The quicker you get there, the better.
At AkzoNobel, we know there are times when we need to work with others to find those breakthrough innovative solutions. That is why open innovation is a big part of our innovation strategy, and that is also why we will become massively engaged in open relationships with a wide range of technology and knowledge providers.