The importance of Open Innovation
Timothy O’ Connell from H-FARM Consultancy
William Chesbrough coined the term open innovation in 2005 (same year that H-FARM was founded), but I believe we are just at the beginning of it.
Acceleration and startups, especially in Europe and Italy, was a low flying trend up until about 2014. It has been really interesting to see in such a short period how it has now become one of the core parts of the strategies of companies to compete.
Companies have started to understand they can’t rely on hoping that everything is going to be invented within the four walls of their own organizations.
What does it mean for a company to open innovate?
Actually, it’s a simple concept. If you run a business you have to put in place mechanisms that allows your organization, your staff, your directors to be aware of the transformations happening in your industry, and that could radically change what you do.
You have to really understand your market and your consumer needs, but you also have to build and understand technology, and that is one of the great benefits of doing open innovation with startups and entrepreneurs. In this scenario, the US is becoming less and less important. Today, a lot of interesting projects are being developed in Europe, Asia, Africa, all around the world.
How can large companies successfully partner with startups?
A recent research by Accenture found that 85% of large corporations from China, India and US believe that collaborating with smaller firms can help them thrive in technology-driven markets. However, these partnerships often don’t deliver the hoped-for outcomes because of strategic, operational and cultural gaps.
If you, as a corporate, partner with a couple of startups and they don’t have enormous success, you can’t be surprised because that’s normal. If you partner with 8-10 startups, then you may find that 2 or 3 of those actually make a big difference in what you’re doing.
There is so much interest in the marketplace right now. Many corporates come to us at H-FARM to figure out how we can help them put together open innovation strategies. I think this is going to be a huge opportunity for startups in Europe in the coming years.
How has open innovation become so powerful over time?
Many companies are used to defend their territory, defend their highly trained engineers working day and night creating new products and solving problems. They have no expectations that a startup of 3 people is going to substitute their engineers, and rightly so.
The tipping point was that they began to realize that a lot of the things that affect their businesses are occurring outside of their world.
In the beginning, it seemed that open innovation was affecting just a couple of industries. Now it’s affecting everything, from how you consume energy, to how you get from point A to point B, to how you book your vacations, to how you eat, to how you work.
At the end of 2017, we finished an “exploration project” where we scouted startups for a very large luxury retail brand. We selected the top teams from all over the world and brought them together with the company’s management.
What’s a great success for me is when you see that management team, people who spend their time running multibillion dollar companies, riveted to their seats and with no intention of leaving the room. And it happens a lot.
These for me are great successes because I’ve realized that everyone is starting to embrace this innovation culture.
Creating an innovation culture means changing the culture of a company, from the executive team to the middle managers, and understanding that these type of projects are not a risk to their jobs or to the future of the company.