In a 2017 survey, the Innovation Research Interchange (formerly Industrial Research Institute) published a survey related to the use of external innovation sources. They found that most entities utilized standard R&D management practices and personnel in their projects.

Contribution to Revenue

They also found that the contribution from external innovation to the overall revenue returns from their innovation portfolio was modest, most had less than 1% impact, and over 75% of the projects had less than a 5% impact. This decrease is significant because results in the 2002 to 2005 timeframe from Procter & Gamble and Air Products were finding a significant return on external projects. These two companies reported that most of their internal projects saved hundreds of thousands of dollars of net research expenditures and up to two years of internal effort feature for each project done. Those exceptional returns have not been sustained, and most recent company efforts do not generally achieve such results.

Number of Open Innovation Scouts (Full-Time Equivalents)
Partnerships Entered Into Each Year

When looking at the resources which the survey companies were applying to open innovation, the numbers indicate that small specialized staffs were doing most of the work. This is also borne out by the number of partnerships the companies were engaging in each year.

Negotiation Time with Partner

A key element in determining which type of program is suitable for a partnership, is the time it takes to get from the “intent to partner” to a “deal signature”. Thinking of the traditional phases of partnership from Want, Find, Get, and Manage, this is the duration of time in the Get phase. As most projects were taking over six months to get initiated, it stands to reason that most partnerships are formed around next-generation or breakthrough business and technology needs.

In contrast to these results obtained for mostly PRODUCT innovation research, open PROCESS innovation is more encouraging. Work collected by the KOF Swiss economic Institute in 2005, 2008, 2011 from over 1000 manufacturing entities, found that manufacturers can benefit substantially when they look for ideas beyond their factory gates, especially if their operations are already advanced.

Normally process innovation activities are held tightly under wraps. Many see their processes as sources of competitive advantage that should not be shared with anyone. Certainly in some cases, companies have good reasons for keeping process innovation concealed, for example, when a combination of process and product innovation often results in a competitive advantage. The research suggested however that for many manufacturers, such defensiveness deprives companies of a valuable source of ideas for productivity improvement. Walling off process improvement innovations from the outside world can be a losing strategy, because sooner or later, competitors usually catch up. Counterintuitive as this may seem, the research suggested that most operations managers can build greater advantage for their company by following a policy of open process innovation rather than secrecy.