Project Partnership Success Rate

This brings us to the point of how successful are Open Innovation Initiatives? The metrics on the success rate have varied over the decades. Starting with OI results segmented by an organization’s familiarity with the technology and market fundamentals of a project, the “Project Partnership Success Rate” figure shows that this familiarity was helpful in obtaining project success.

By 2013, in a survey conducted by Henry Chesbrough, known as “the father of Open Innovation” and Sabine Brunswicker who is an OI researcher and advisor, of more than 2,840 large stock market listed Europe and US firms, it was found that (1) 78 % of firms report practicing open innovation (with 82 % report OI is practiced more intensively today than 3 years ago; no firms report abandoning their practice of open innovation; 71 % report that top management support for open innovation was increasing), (2) inbound open innovation is more common than outbound (project share with an inbound component is 35 % on average vs. only about 8 % of projects result in outbound activities), (3) leading inbound practices utilize customer co-creation, informal networking, and university grants. Crowdsourcing and open innovation intermediary services rated lowest in usage, (4) leading outbound practices utilize joint ventures, selling market-ready products and standardization. Donations to commons and spin-offs play a minor role. The survey also found that the three leading OI partners are customers, Universities and suppliers. The three leading reasons for using OI are: establishing new partnerships, exploring new technological trends, and identifying new business opportunities. The study concluded with the following overall observations: (1) “Evidence strongly suggests that open innovation is not a fad that is about to go away.” (2) “On the other hand, our survey shows plenty of dissatisfaction with the practice of open innovation in these large firms.” (3) “The level of importance assigned to many open innovation practices was reported to be rather low”.

Issues with Open Innovation

By 2017, an IRI survey found that for surveyed companies, the contribution open innovation made to the company’s overall portfolio revenue was less than 1%. Most companies either had R&D manage the relationship or had a dedicated OI leader and budget. These companies typically had less than 5 partnerships initiated each year and which took on average 8 to 11 months to go from “intent to partner” to “partnership signature”. Unfortunately a majority, 60/40 split were not happy with the performance with their open innovation program. The major issues found with OI initiatives are shown in the “Issues with Open Innovation” figure. Clearly there is room for improvement with the utilization of best practices in this area.

In order to give Open Innovation the best chance for success, Cheryl Perkins of Kimberley Clark Open Innovation makes the following “Velcro Points” that any Open Innovation leader must remember and embrace.
1. Approach innovation holistically … strategy, process, structure, people and rewards.
2. Make innovation a true source of revenue … eliminate internal handcuffs.
3. Create a separate growth incubator and focus on the future.
4. Remember there is a large opportunity for innovation within existing consumer categories.
5. A personal source of innovation is curiosity. ”

In conferences on Open Innovation, the underlying theme has now become to carefully select projects that lend themselves too partnership leverage and success, and to manage those projects with the best-collaboration-practices. Another conference theme promoted by Henry Chesbrough is that when given a choice between looking for a better technology or a better business model, outsourcing and partnerships that are focused on the latter have much more impact when successfully completed.

As described in the Competitive Intelligence Chapter 20, the best ways to find the most promising technologies in today’s digital economy have been outlined and published by Jay Paap. Jay carefully outlines what makes an effective technology scout, and the means to find opportunities and places to look. He asserts that the role of the technology scout includes searching for opportunities and leads, evaluating leads, offering insight into leads, and making the link between a lead and company strategy. A high-performing tech scout will track current and emerging market trends and technologies. He/she will cultivate an extensive and varied network of contacts and resources and will know which outside sources will provide timely and reliable information. The best tech scouts are entrepreneurial and willing to take risks. Thus scouts understand that opportunities are not limited to technologies. While new and/or disruptive technologies can give a company a competitive advantage, other reasons to go outside include market access (customer base, distribution, brand, etc.), competencies (technical, marketing, business) and funding – as well as ideas related to serviceability, sustainability, and other attributes. Regardless, the most important driver is customer need. Ideally a scout will match a new technology or idea to a large, unmet and compelling need. Scouts thus (1) Seek problems, not solutions – identify the gap(s), don’t presume the answers, (2) Think generically, (3) Look everywhere, (4) Manage internal experts, and (5) Keep options open.