The innovation that comes from outside

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The Open Innovation is an opportunity that enterprises can exploit to be more competitive. It is based on the concept of turning to realities outside the company, outsourcing part of the innovation process with reduced times and costs.

According to the Open Innovation concept, innovation stems from the interaction between enterprises and external players, like start-ups, technology suppliers and research centres. According to this model, the innovation process does not take place exclusively inside the company but it becomes an eco-system constituted by a network of partners, each of which makes its core competences available to research forefront solutions. The conventional innovation modalities do not seem any longer sufficient in a competitive context like the current one, where digital plays a more and more relevant role. In the era of Industry 4.0, the Open Innovation and the Crowdsourcing (which is an open innovation model) represent an important opportunity to innovate in shorter times and at lower costs. The Crowdsourcing allows enterprises (in technical jargon defined seekers) to turn to web platforms (innovation malls) to get in touch with subjects (defined solvers) that compete to solve a problem posted by the seeker. To understand more in-depth the potentialities of this innovation model, we have interviewed Antonio Messeni Petruzzelli, professor of innovation management at Bari Polytechnics. Puglia University has developed specific know how that allows it to play an intermediation role between enterprises and innovation malls, to permit companies to gain access to the new models of innovation more easily.

How is the Open Innovation connected with Industry 4.0?

The concept of Industry 4.0 includes a whole of technologies able to modify business models and manufacturing processes and this creates a high degree of complexity for companies because it is necessary a transformation that involves several transversal technologies enabling the change. To face this complexity turning to the only inner resources can be very complex for an enterprise. The Open Innovation model can allow companies to decrease this complexity, focusing only on their core competences: it is a sort of outsourcing of the innovation process.

 

How much can the Open Innovation be strategic for the household appliance industry?

The Open Innovation model is a modality of dealing with innovation processes that is completely transversal with regard to specific industries: household appliances are one of the ambits where this model is spreading. Electrolux, for instance, is one of the companies that have undertaken this course, having also identified a specific function (the one connected with Open Innovation dynamics) inside its organizational structure. The open innovation is strategic when it allows enterprises to use a network of solvers permitting to find innovative solutions at lower costs and in shorter times. I make an example: let us imagine that an enterprise needs to develop a technology for a new type of washing machine: obviously, this technology can concern various aspects of the product. It is possible that the enterprise cannot manage in-house all technological components inherent to this innovation (by their nature, home appliances are an architectural product encompassing different technologies). The solution of one of these technological problems can be for instance outsourced turning to web platforms where companies can post a specific problem and attain a variety of possible solutions for it. The Open Innovation activity can be connected with a technological aspect of the product but it might regard new marketing methods and cover an innovation course that concerns the entire chain: from the most productive aspects to the customer care or the after sale service. The open model works very well when the product we are going to develop is based on more technologies that coexist inside the same solution. Digital technologies, for instance, are increasingly present inside household appliances and this increases their complexity: the Open Innovation allows enterprises to reduce the technological complexity outsourcing parts of it.

 

Does this complexity decrease reduce the risks of doing innovation, too?

Yes, certainly, because actually the company focuses only on those aspects where it has higher competences but it is not “compelled” to work also at side technologies, which are anyway necessary to fulfil the innovation project.

 

Going into the details of the Crowdsourcing, what do you mean with this term?

The Crowdsourcing is a model of Open Innovation. It is based on the crowd concept and operates through web platforms (innovation malls) that diffuse inside a network of possible solvers a determinate type of problem posted by the seeker. These platforms, through competence search algorithms, identify the solvers who could better satisfy the seeker’s specific demand. The problems that may be posted are of various nature: their fundamental characteristic is that they must be described in detailed manner. It is essential to succeed in posting the slightest elements of the problem on the platform, in very precise manner, because solvers are often not expert in the specific sector where the seeker operates but they are active in other ambits. The concept on which the Open Innovation is based is precisely the fact the innovative solution can come from external partners. The fundamental advantages of this model are four, in my opinion: first, you do not pay for all possible solutions you receive but you pay for the winning solution only. This means lower costs for innovation because an enterprise should spend a lot to attain, for instance, 50 possible solutions internally. Moreover, these calls generally remain open for a couple of months and then development times are shorter, too. The third advantage is that, with this model, the company addresses a community towards its specific problem. Innocentive, for instance, which is the platform number one in the world, relies on 300,000 solvers: even if we consider that the seeker does not receive solutions from all solvers, it is clear that the number of addressed players is very high. Finally, a further advantage is that you obtain very different solutions, then the company has at disposal a variety of even unexpected proposals concerning the posted problem.

 

What kind of solutions is it possible to obtain?

Three different types of solutions are essentially attainable: ideas, theoretical demonstrations or practical demonstrations (for instance, prototypes or patents that attest the actual functionality). What changes is obviously the price; the idea is less expensive but it must be implemented inside the company; if instead I ask for a practical demonstration, obviously the technical uncertainty decreases but the cost rises. In any case, it is important to underline that, to use the Crowdsourcing at best, the enterprise must have the capability of “absorbing” the solution internally. A “turn-key” proposal is not achieved but instead a solution to be customized and adapted to one’s own requirements.

 

Eventual criticality factors worth particular attention?

Companies must be skilful in attracting solutions because they often find it hard to make the problem understandable to people coming from other different industrial ambits. Concerning this, the intermediaries’ role can be an important support. Another element worth considering is that when a company posts its problem, it makes its matters of interest accessible to eventual competitors. For this reason, platforms operate almost exclusively in anonymous manner, both on the seeker’s and on the solver’s side, and enterprises search for not so much the core solutions for their business but instead side solutions, i.e. those that enhance the product value. The third element worth highlighting – and here the presentation modality of the problem is at stake once more – is that, once received a series of solutions, I must be able to analyse all of them as I must provide a feedback to each solver (also the rejected ones, explaining the reason for my decision). Then defining the selection parameters in very precise manner allows me to be very fast in the identification process of the winning solution.

 

Can you make some examples of innovation malls?

One of the main platforms is Innocentive that I mentioned before. Other realities, which operate with similar mechanisms, are Ideaconnection, NineSigma, Yet2.com and Yourencore. Innocentive is a fully open platform and then any solver can post the solution; other platforms, such as for instance Yourencore, require specific requisites to become solver. As already reminded, Innocentive counts 300,000 solvers, Ideaconnection about 5,000: this diversity implies a price difference and also a different capability of reaching solvers, in terms of both numbers and of competences. Moreover, Innocentive has a posting cost of 8,000 dollars, Ideaconnection has lower costs, around one thousand dollars. In general, the Crowdsourcing system is suitable for both big enterprises and smaller ones because it offers a broad range of possibilities.

Enterprises sometimes turn to us because they have some information about this instrument and they want to understand better how it works. In other cases, it happens that, inside research projects, the Crowdsourcing emerges as a possible solution for determinate types of problems. Once the enterprise has shown its interest and especially a cultural bent for this type of approach (because it means to change the way of doing innovation), we evaluate the problem that the company must solve and we try to subdivide it into elementary “packages”, to understand how they can be posted on these kinds of platforms. Then, depending on the complexity degree of problems and on the enterprise’s spending capacity, we turn to different innovation malls. Afterwards, we support the company in the solution selection phase. Our support is particularly crucial in the initial part of the work, to succeed in identifying and explaining the problem according to the parameters afterwards presented to solvers.

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