The Hill Times by Giovanna Mingarelli 20 February 2012
What is open innovation? And how can it be used to bring about measurable change to business and government?
These are two questions that have stayed with me since attending the World Economic Forum last month in Davos, Switzerland.
The theme for this year’s conference was aptly “The Great Transformation: Shaping New Models.” I was invited to participate as a member of the WEF’s newest community of participants, the Global Shapers, and because of my background as an entrepreneur who has been using the open innovation business model in my company.
The main idea behind the open innovation business model is that in a world of easily-accessible and widely-distributed knowledge, many companies can no longer afford to rely exclusively on their own research.
Instead, they should be encouraged to buy or license inventions or technology from other companies. In turn, companies that have created new inventions or technologies internally should free those inventions up by taking them outside their company and spinning them off or licensing them for others to use.
During one of the WEF workshops, I was fortunate to team up with Dr. Henry Chesbrough, the executive director at the Centre for Open Innovation at the University of California and the man who coined the term open innovation in 2003. The workshop explored the concept of how informed and connected consumers are reshaping product and service innovation.
We determined that the traditional top-down approach prevalent in most businesses today, where companies dictate the agenda for consumers, is no longer relevant.
Consumers want to be equally involved in the agenda of business. They want to work with companies that are genuine and transparent so they play a role in the creation of new products and policies.
Leading edge companies such as LG, Proctor and Gamble (P&G) and IBM have resorted to using new forms of technology, such as crowdsourcing, to cultivate this new open innovation business model. For instance, due to P&G’s Connect + Develop open innovations strategy, it now uses external collaboration in the creation of nearly 50 per cent of all its products.
Crowdsourcing is defined as the outsourcing of a project or initiative through the web to a group of people to get something done.
Given the recent success of crowdsourcing through the open innovation business model in the corporate world, much has been said for expanding it to national government.
In fact, the government of Iceland made history last year when it used crowdsourcing through the open innovation model to overhaul its constitution following the financial crisis that saw the collapse of the country’s banks and government.
This decision followed a national forum in the summer of 2011, where 950 randomly selected people spent a day discussing the constitution. A website was subsequently created to host constitutional submissions and a social media platform, including Flickr, YouTube, Facebook and Twitter, was created. All future constitutional meetings were then opened to the public and streamed online via the website and Facebook.
The U.K. government is another trailblazer in the use of open innovation to drive economic growth.
In 2010, the British Prime Minister’s Office led a series of regular, high-level conversations between academics and business leaders to discuss how they could speed up the growth rate of the new East London Tech City initiative. This initiative involves turning a cluster of technology companies in East London, also known as the Silicon Roundabout, into a world-leading technology centre.
The move was bold, indeed. And it worked.
With government commitment and active support from major global technology companies, including Cisco, Intel and Google, East London is now experiencing continued growth and momentum. The lesson learned in this case was meaningful: governments can be a catalyst to open innovation.
In summary, there are many benefits to using an open, innovation business model, such as crowdsourcing. It doesn’t necessarily replace corporate and governing structures, but it can infuse them with greater transparency and enable better connections among companies, governments, and stakeholders.