Open innovation as an approach to businesses developing products and services initially started to gain traction across industry in the early 2000s. However, it was only really after retrenchment during the economic crash in 2008/9 that we have noticed this accelerating at pace. As the economy improved and businesses started to make good money again, they invested differently in innovation. Open innovation has a profound effect on organisational needs and we need to understand this better if we are to properly attend to the needs of R&D intensive business in the 21st Century.
The change in pace at which some organisations have adopted the open innovation model has been particularly evident over the last two years and we think it will only accelerate over the next two to three years - leaving those that don't embrace it falling behind.
What is Open Innovation?
Essentially, open innovation is an open door for ideas, helping companies develop their products and services more effectively, more efficiently, and more quickly. With lower cost levels and better offers to their customers, businesses that do it well become highly competitive.
Practically it works like this:
Ideas are fed into the organisation's R&D funnel. So far so unremarkable, however these ideas are now made up of a mix of internally developed concepts AND externally developed ideas, conceived and contributed by academics, start-ups, SME's and indeed all sizes and forms of organisation. Idea generation is therefore no longer limited to ideas that have been internally developed. As this mix of internally developed and externally contributed ideas progress through the R&D funnel towards product development they often spin out additional ideas. These concepts are not necessarily ones that would be naturally developed by the lead organisation. Technology developed can be used to create or move into new markets and grow opportunities, or spun out for use by others.
The process of open innovation is a much more efficient way of developing products and services. It saves a lot of money because many of the ‘idea generators’ are external to the organisation and therefore don’t need to be employed by them. Equally, the number of ideas generated is much greater and the speed at which they are developed is much quicker, because they are coming in from multiple avenues. It’s the model of a smaller, more agile machine – essentially mimicking the processes a smaller business goes through when generating new ideas - something that SMEs are particularly good at because their survival depends on them maintaining high levels of innovation.
Why does Open Innovation matter for science parks and other centres of innovation?
The scene has been set for this way of working and locations that exploit the opportunities this creates can effectively secure their position in the landscape for the foreseeable future. Those that don't – for whatever reason - will fail to attract businesses that would value and benefit from the open innovation approach in their area. We think they will quickly get left behind.
In our experience, as companies gravitate to successful hotspots, these hotspots become even hotter.
Those involved in promoting Science Parks or other centres of innovation must have an in-depth knowledge of what their particular area has going for it and understand how to take best advantage of those opportunities. Businesses are out there, with money to spend. Science Park promoters need to take stock of their area’s academic profile and have an appreciation of how effective their engagement is. In addition, they need to truly understand the profile of the companies they already have in their wider geographical area – ie how many, what size they are, what activities they are currently engaged in and in which sectors – to allow them to set out their stall appropriately to attract the right kind of big corporate to engage with these companies in open innovation.
Having collected data around all these touch points it is then vital that it is used by promoters in an engaging way to encourage people to see where the value is. Actively engaging stakeholders in the community to go out independently within their area, using personal networks and beating the drum about the location is really important to work on. Providing individuals within stakeholder groups with the information and context to be able to communicate this effectively is also important – potentially making the difference in terms of how comfortable, and also how compelling, their ‘pitches’ to potentially interested parties are.
Promoters themselves also need to actively participate in networks, but not just at the Science Park or district level. In this era of open innovation, promoters need to think more broadly than this and actively pursue and then participate in activity within the hotspots. If for example, your campus is out of the city or in a completely different city to an innovation hotspot, you must think about holding events where the action is and not confine activity to your individual campus. Those already embracing this advice are also taking it a step further with some campuses now leasing space within these other hotspots. It puts them right in the midst of the innovation ecosystem – close to the communities they seek to serve. This in turn gives a much stronger narrative to businesses about being able to have a home in a location for life.
Imperial College, London is an excellent example of a principal putting this into action, having invested in a new facility at the Babraham Research Campus. The facility, the development of which is being led by Imperial College ThinkSpace (providers of high quality laboratory and office space to companies at all stages of growth), will offer a direct connection to the Cambridge Cluster as part of the College’s proposition and will complement Imperial’s existing London facilities, including Imperial West, its new research and innovation district in White City.
Professor David Gann CBE, VP (Development & Innovation) at Imperial College was quoted when the news broke in February 2015 as saying: “Our move to invest in facilities at Babraham underlines Imperial’s commitment to create value from ideas, wherever we and our partners are best-placed to thrive.
“We are determined to help technology spin-outs with specialist support, and the space to grow and scale-up. This collaboration strengthens our ability to create conditions for science-based ventures to flourish, opening-up new opportunities and revenue streams to support the College’s academic mission.”
Another big hitting example of a large organisation that understands the opportunities and benefits of taking an open, innovative approach is AstraZeneca.
Pascal Soriot, the relatively new CEO of AstraZeneca, came to Cambridge and met with Jane Osbourn from Medimmune. Jane wanted him to see Cambridge Biomedical Campus, see all the things that Cambridge could offer AstraZeneca as a location, and meet the people making it happen. Pascal recognised that the people he had met in Cambridge – the academics, clinicians, start-ups, spin-outs and SMEs - could all bring value to AstraZeneca. This is evident in the fact that, since they made the decision to move to Cambridge, AstraZeneca has been busy carving out further arrangements with MRC, Cambridge University and the Sanger Institute at Hinxton - and are already seeing immense value from those collaborations. The tipping point for Pascal will have been the fact that during his visit – through those he met and the facilities he visited - he could touch and understand the value that Cambridge as a location could have within the context of his business.
As illustrated beautifully in the way Jane approached her interactions with Pascal, in our view, one of the most important take-aways from this way of working is to understand that engaging with and communicating this approach is not about a sales team selling a proposition – it is about direct engagement with senior influencers, talking, showing and believing that they can achieve more by working together.