Open innovation was already slowly gaining importance before the COVID-19 pandemic, but this has brought it to the fore. Many companies have been forced to adopt more digital processes and/or look for alternative business models that are not so affected in this type of crisis.
If this pandemic has taught us anything, it is the need to adapt to the different scenarios that companies must have. Big companies may think they already have the best talent available, but the truth is that great innovations often come from small startups on college campuses, garages, and small offices around the world.
It is true that corporations tend to have highly qualified personnel -due to their ability to pay higher salaries- , but they are usually limited by the company's own legacy. That is, by having to follow very specific patterns and ways of doing things that make it difficult to open up to disruptive innovation. This is the reason why open innovation has many advantages over in-house innovation.
What is open innovation?
The first to speak of the concept of open innovation was Henry Chesbrough, a research professor at the University of Berkeley, in 2003. He defined it as the innovation model based on opening R&D departments to people outside the company or employees from other departments with the aim of having a decentralized approach to innovation and boosting the company's growth.
Open innovation aims to attract innovative ideas outside the usual processes of the different departments thanks to an enriching environment where ideas can be developed, even unorthodox ones that break with the company's legacy.
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Benefits of open innovation
Find new sources of income
Oftentimes there are new business models in the sector that are difficult to fit into the company's main business model. In these cases, this opportunity is usually missed, in order not to harm the company. Open innovation allows us to develop new business models externally without harming the corporation's core business model.
Apply the latest technologies
In large companies, due to their structures and departments, it is difficult to jump from one technology to another, since implementation times are very costly, involve many departments, and economically harm the company in the short term. Open innovation allows them to discover, test, pilot new technologies thanks to startups and/or entrepreneurs very quickly. If the pilot is successful, it will be easier to implement this technology in the company's processes.
Reduce costs and implementation times
As we mentioned before, corporations usually have highly departmentalized structures that entail bureaucratic procedures that slow down any new process. Startups do not have the financial strength to develop many of their projects, but what they do have is knowledge and execution agility unattainable for large companies. For this reason, the association of corporates and startups is so beneficial for both parties, if it is a two-way collaboration.
The possibility of attracting talent
There is not enough talent available to meet the demand for qualified professionals in emerging areas such as blockchain, augmented reality, artificial intelligence, fintech, etc., so being open to new ideas from entrepreneurs is a great way to attract high-value talent.
Get closer to the end customer
Launching new projects in our same sector along with startups can help us get closer to our clients and better understand what their needs are — if they have changed, if we are no longer satisfying them and how we can solve it. Startups involve clients in the early stages of projects in a very personal and close way, so that the client finds themself in a more relaxed and trusting environment to be able to give honest opinions.
Examples of companies with open innovation
Wayra, Telefónica's startup accelerator, is considered one of the best in Spain and, in addition, its open innovation program known as Telefónica Open Future is becoming increasingly important. The corporation collaborates with startups related to 5G, IoT, Artificial Intelligence, Cloud Computing and Big Data, providing them with resources and streamlining their processes.
Juan Roig, President of Mercadona, always advocates maintaining sustainable business development based on creativity and innovation through digital tools. Mercadona's Transversal Innovation Model (the only supermarket to launch with a similar model) is a model in which all the company's departments participate, as well as customers and suppliers. The company's management believes that this way of working has been one of the main reasons for its growth and differentiation.
Seat launched an open innovation program known as "Breaking FAB" whose objective is to improve the production processes of the Martorell factory. In this program, Seat seeks collaboration with external companies so that they can propose the most innovative solutions in industry 4.0. Startups, researchers and industrial designers who seek to add value to one of the most revolutionary factories in the sector participate.
The Boston Consulting Group included Orange in its list of the 50 most innovative companies worldwide. Part of this recognition is given by its involvement with the Higher Technical School of Telecommunication Engineers of the Polytechnic University of Madrid (ETSIT-UPM), where the “Cátedra Orange” is taught. The objective of this is to channel Orange's knowledge of network science and social networks for its application in projects of great potential related to the university ecosystem.
The Masmovil Group decided to create the Másventures startup accelerator in 2019 with the aim of supporting entrepreneurs with innovative projects within the telecommunications sector. The creation of this startup accelerator is part of the new open innovation strategy that the company wants to promote in order to give back to society what it has previously given them, since not long ago MásMovil itself was a small startup.
Acciona was awarded the "Open Innovation Innovative Approach Award" granted by the Startup Europe Partnership (SEP) program of the European Commission. This award recognizes Acciona as one of the most innovative companies in Europe thanks to its “I’mnovation” program. The objective of this program is to promote the development of startups through a 3-month acceleration process in which mentors, experts and professionals from the company's different business areas participate.
The startups receive funding to carry out a real pilot of the project, with the possibility of closing collaboration agreements, commercial agreements or financing by the Acciona Group.
BBVA Open Innovation is the name of the area of the corporation dedicated to open innovation. It is characterized by giving support to fintech startups that have scaled their business model and have achieved some traction. In addition, BBVA Open Innovation plans to strengthen its alliances with venture capital funds and investors with the aim of being able to offer even more value to the startups that participate in BBVA Open Innovation.
If you think your company needs to innovate as well, drop us a line. We can discuss new oportunities in your sector and build a new buisnesses to comeplement your current business model.