Open innovation is the buzzword of the current time. After reading Chesbrough’s article on Open Innovation, I went to Google and ran few searches on open innovators. Some wonderful articles and links came back. What impressed me is the potential of open innovation in bringing down amplifying product innovation costs in big corporations. However, one specific aspect of the idea that caught my attention is open innovation intermediary. NINE SIGMA is one such open innovation intermediary that matches the technology needs and questions from companies (referred to as Innovation Seekers) with the possible solutions from a huge network of scientists, university researchers and technology incubators (referred to as Solution Providers). Few other such intermediaries are Innocentive and YourEncore. As I looked up a bit more about NINE SIGMA, I found something interesting. The president and CEO of NINE SIGMA, Paul Stiros, is a former director in P&G’s Corporate Innovation & Knowledge Group. No surprise that the person at the top comes from the breeding ground of open innovation in corporate America.
What sounded more interesting is the trend. Think about it. Currently, large companies are reaching out through these intermediaries to seek knowledge and information to innovate their product development value chain. Cost and time are becoming extremely critical as these two gets costlier day-by-day. Often, predatory competitive landscape doesn’t give the company R&Ds and management enough space and time to pursue research that demands considerable time and resources. This is the trigger point – these companies reach out to the intellectual capital outside their boundaries through NINE SIGMAs. But, there is a risk when the innovation seekers can bypass these intermediaries and create their own brokerage house to gather knowledge from outside. In return, they can provide their IPs as incentive for agile and specialized contributors. In fact, it kind of resembles the early days of Priceline, Expedia, and Orbitz. The airline companies initially sold cheap seats through them. But, soon these airliners got smart, and went out with their own bandwidth to create a customer base and cut the middleman.
One other question I got is the protection of IP and hence competitive edge when a company embarks on open innovation. Chesbrough argues that when IP is not locked down but shared across a transparent but reciprocal partnership, the strength of that partnership creates the competitive edge and barrier to entry for other companies outside the partnerships. Now, if knowledge is an enabler, then can the source of that knowledge become a complementary asset for the innovation seeker? Read a nice discussion in the link below:
Image: Paul Stiros @ NINE SIGMA