Jean-Louis Liévin is the founder of IdexLab, Open Innovation services consultancy, helping companies accelerate their transition towards a world where innovation comes from everywhere, and nurturing some of their innovation to the best minds around the world. He has over 20 years of experience in hardware, software and telecommunication services.
What are the different channels to handle an open innovation approach?
Open Innovation projects can be managed in different ways: using companies’ own means to involve the crowd (branded ideation web sites, like Imagine with Orange), by the involvement of consultants, or by using dedicated plateforms.
These platforms have a large experts audience and can respond quickly and effectively to a problem or to generation of new ideas through the reuse of knowledge or external ideas.
The time saving and new opportunities brought by this approach attracts more and more companies. The open innovation platforms experience a constant growth as testified by the twofold increase of the number of challenges published every year.
They can manage the search and intermediation between seekers and solvers, organized around a specific topic (a challenge) similarly to other marketplaces. Most often the intermediation is between a company and either individuals (ideas crowdsourcing ), or specialists involved in scientific research or with a particular expertise (search for solutions).
What would your recommend to a company seeking for the best suited open innovation channel?
It depends on its context and the goal it has set itself.
The ideation platforms aim at exploiting “collective intelligence”, either with the largest audience, this what we call “ideas crowdsourcing” (eg. spigit, studyka) or towards certain communities e.g the employees of a company (refer to social intranet jive). The ideation platforms allow to reach a specific audience as the consumers of a brand ; Coca-Cola, Oreo or Patagonia are heavy users who organize idea competitions to improve their products, their advertising campaigns etc…
The solutions platforms search for the best experts, and the aim is to solve a given problem. These platforms publicize a specific problem to a number of persons who are targeted as potentially being able to solve it. They have a function of intermediary and can provide an experts database, the project management and the option for the seeker to hide their identity.
We distinguish between two forms of solution platforms:
- The market places (innocentive, innoget…) require that experts register themselves and informs them when a challenge matches their skills;
- The expert search platforms as ideXlab identify the best experts and submit the question to these experts specifically.
The marketplaces are relatively simple to set up but have to invest in their notoriety to create their expert database (200k to 400k for the biggest). It is difficult for them to be versatile or to qualify the actual expertise of their members.
The expert search platforms, instead, are more complex to implement as they require means to identify and contact experts (using data mining techniques). But they can be applied to any subject, ensure the relevance of those contacted and also ease the confidentiality management as challenges are not necessarily published on the web but sent directly to experts.
In a solution search approach, once the contact is established with the appropriate experts, how do you support the innovation process?
In this case, the innovation challenge has been specifically designed, and the expert is providing a solution to a problem. The intermediary role may end when the seeking company has selected one or more relevant proposals. Usually, large corporations have the resources to handle this kind of innovation partnership or outsourcing / subcontracting.
But when it comes to SMEs, the legal aspects, the IPR management and in some cases the project management may require additional support. As ideXlab is concerned we are working on a model where such services can be provided by our partners when needed as we focus on the experts and solution finding stage.
What is the trend of the open innovation market? What are the figures of a typical OI challenge?
To better understand the activity of these service platforms, let’s look at some key statistics (study based on public data from ideXlab, InnoCentive, Innoget and NineSigma).
There is a growth of nearly 100% per year in the number of Open Innovation questions asked, with more than 500 in 2013 and a total of several thousands since their inception. Although this number is difficult to estimate, we think that about 5000 challenges were published by these players to date.
Approximately 50% of challenges are published with a reward amount. These prices have decreased by 25% per year over the last 3 years to reach an average value of € 20k in 2013. This decrease is largely dictated by the sharp increase of challenges with rewards below €10k. They represent half of the volume in 2013 but were nonexistent in 2011. This follows a penetration of Open Innovation in more companies and product categories, including SMEs. Indeed, by making a more systematic use of O.I., companies are seeking for more solutions of smaller value. This is particularly true for Innocentive or ideXlab while NineSigma specializes in “grand challenges” worth hundreds of thousands to a million dollars.
The average duration of a challenge is 90 days with a great variability depending on the platforms. Some favor the short time (~6 weeks) and other longer periods (24 weeks as Innoget). This difference is partly explained by the nature of the challenges. The requests for transfers of specific technology tend to be processed more quickly than broader requests for ideation.
Could you enlighten us on the market breakdown in term of challenges’ domains?
There are specialized platforms such as in social development as Open Ideo or the acquisition of patents as Yet2.com and many others. So the domains covered are very broad but the main volume of requests is hosted by the generalist platforms. Of these, the most requested areas are in order: the life sciences, IT and electronics that constitutes 70% of the total, far ahead of health or energy which probably demonstrate a lack of knowledge of these tools in some industry areas and so an great additional market potential.
Fig.2: breakdown of challenges by domains
The nature of partnerships also varies depending on the maturity of the solution seeked, from theoretical ideation to actual supply agreements. The most wanted category is contract research (53%), whereby a company enters into an agreement to finance the maturation or implementation of technology developed in previous research activities. This is a situation where the “innovation leverage” is ideal as it benefits from existing knowledge and results while it still allows to acquire exclusive rights from the supplier at a reasonable cost. Next on list comes technology licensing (14 %) and joint developments.
Fig3: Breakdown by contract types
So the future is bright for OI?
We believe so. The Open Innovation service offering is now well structured. The number of transactions has increased sharply in the past years and the practice is widely used for both large and smaller projects.
However not all industry sectors have embraced Open Innovation yet and so there are promising untapped markets to enter into. The open innovation enablers like ideXlab are in place to support these initiatives!
More on open innovation platforms at http://www.innovationmanagement.se/2013/10/14/brokers-and-intermediaries-for-open-innovation-a-global-market-study/