Open innovation and collaborations with universities

Open Innovation

Summary

Open Innovation (IO) is a paradigm that states that companies can and should make use of external ideasas well as internal ones, and access with internal and external routes to markets if they want to advance in their technological skills.

The first to give a definition of OI was Henry Chesbrough, an American economist and author who christened the new concept with a book entitled 'Open Innovation: The New Imperative for Creating and Profiting from Technology', published in 2003 by Harvard Business School Press. 

He reflected on the fact that globalisation had made research and development processes increasingly expensive and risky because the life cycle of products had become shorter. 

According to Chesbrough, it is not those who produce the best innovations in-house that become the most competitive, but those who manage to create innovative products and services by best modulating what comes from within and what they can get from players outside the company perimeter. Companies that invest in open innovation have simply recognised two things:

  • no company is able to develop all the technology it needs in-house;
  • the products/services they produce must work well with those produced by other companies, including direct competitors and companies with very different business models, e.g. open source software providers.

There are few large companies that have such a large and functional pool of internal resources that they do not need a exchange with the outside world. And even these are realising that external contributions are a significant and sometimes essential stimulus. 

Challenges for SMEs

For SMEs accessing ideas/technologies from outside is important:

  1. have absorption capacity: to be able to bring into the company, absorb, integrate and make one's own what comes from outside, making it a part of one's own value chain.
  2. Relax anxiety about losing information secret by bringing them out of their closed enclosure towards the competition. The real challenge of innovation is in implementation. 
  3. Continuing to innovate allows you to always be one step ahead.
  4. Develop clear rules of the game and well defined in advance (what I offer and what I lose; what I take home against what risk) well defined in advance (codifying the process).

Having said that, it is important to pay attention to the formalisation of relations that the SME establishes with external partners through contracts between the company and employees aimed at regulating the latter's behaviour. These clauses are important because:

  • can prevent employees from joining a company involved in the same business as the former or from becoming a competitor of the company themselves (non-competition contract).
  • They can establish secrecy constraints aimed at ensuring the confidentiality of ideas, trade secrets and other confidential information and materials (NDAs or confidentiality agreements).
  • They can regulate the transfer of rights to inventions resulting from the work of the staff. 

Tools for practising Open Innovation

Challenge based innovation, hackathon and crowdsourcing
An SME with few resources for innovation and little relevant expertise can start with tools such as challenge-based innovation, hackathons and crowdsourcing.

Everything is built around a challenge (challenge, problem in search of a solution) promoted by one or more companies in search of a solution to a problem. 

La challenge is managed by specialised organisations (often intermediary organisations that have contacts with universities to involve students, including doctoral students, in the exercise) or by the universities themselves, through experienced researchers of design thinking and business development. 

Another mode is the hackathonprogramming competitions, during which developers and programmers are asked to create innovative digital solutions related to a specific field within a limited time frame (24 or 48 continuous, in general). Solutions must always be in response to a challenge/challenge. Finally, the crowdsourcing uses groups of people by harnessing collective intelligence to make innovation. There are different types: 

  • crowd contest (competitions);
  • crowd collaborative communities (participants can share and mix ideas);
  • crowd complementors (starting from a technology and processing it to create innovation);
  • crowd labour market (a kind of on-demand marketplace to look for those who can provide the solution to a given problem.

Corporate acceleration and corporate entrepreneurship

There are specialised structures (regional agencies, incubators, accelerators, technology transfer offices) in the so-called corporate acceleration.

Starting from the specific needs of a client company, these structures go to see which start-ups and innovative companies can offer a suitable solution. 

These facilities, for larger companies, can be internal and offer in-house programmes of corporate acceleration with proprietary organisational structures, whose objective is to identify innovative solutions that can also lead to the creation of new markets, new businesses, with the establishment of new companies or the acquisition of newly created start-ups. 

Acquisitions

The acquisition of innovative start-ups or SMEs by medium-sized companies is considered one of the main tools to make OICompanies that take over the majority of shares in start-ups  they secure ideas, technologies and skills in one fell swoop. In several cases, the acquisition also involves hiring the partners and/or employees of the start-up, in order to maintain continuity with the previous management and integrate the identified digital talents into the workforce.

Partnership

Another IO route concerns the possibility of entering into agreements with external partners.

  • Ainter-company agreementswhereby one company delegates to another, usually smaller, company the creation of certain innovations or the production of specific artefacts.
  • Partnerships and relationships with universities, research centres or groups of researchers.
  • Collaborations by innovation procurement,creating a supply chain with their suppliers to develop innovative solutions.

Focus on university-business collaborations: what is needed

Universities can play a central role in fostering small business innovation. However, there are several factors that hinder effective collaborations:

  • the focus on exploratory and long-term research;
  • the institutional logic of the research world;
  • the focus on market development and exploitation, speed and the short-term horizon that characterises the work of many companies/SMEs;
  • negotiation of intellectual property in research collaborations with universities and public research organisations. 

How to overcome these obstacles? What suggestions for SMEs and universities? Suggestions for SMEs: 

  • abandoning the family business approach; 
  • invest more in employee training and skills upgrading (continuous trainingup-skilling and re-skilling); 
  • recruitment of graduates and people with doctorates; 
  • consider industrial PhD and funding of research grants; 
  • create internal incentives to open and collaboration with universities.  

Suggestions for Universities: 

  • create internal structures (entry point) for aspiring companies seeking forms of collaboration;
  • be visible and reachable;
  • investing in professionals (human capital);
  • investing in communication of marketable research results, also with a dissemination slant aimed at impact;
  • promote (also through incentives within academic career paths) the involvement of researchers and PhD students in research projects with companies to generate impact;
  • Develop a portfolio of activities to be collaborated with the company that goes beyond research (vocational training, workshops, involvement of entrepreneurs in teaching, organisation of joint seminars, technology transfer, placement, open innovation, etc.);
  • develop (together with business associations) new curricula, study paths in line with the expectations of SMEs (Professional Degrees).

Bibliographic and web references

  • Aldieri L., Externality of knowledge between enterprises, Giappichelli Publisher
  • Chesbrough, H. 2003. Open Innovation. Harvard Business School Press
  • Grant, R.M. 2020. Strategic analysis for business decisions. TheMill
  • Pisano, G. 2015. You need an innovation strategy, Harvard Business Review
  • Porter, M. 2011. Competitive advantage, Einaudi small library
  • University of Palermo, Intellectual Property
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