Top Editors ... Open Innovation: a new business model for enhanced innovation productivity

Title: Open Innovation: a new business model for enhanced innovation productivity
Date: 19/01/2009
Autor: Sarah Pearson, Open Innovation Champion, Cadbury

New product development and innovation is key to the success of any food or beverage manufacturer in today’s competitive environment, and opening up to external ideas can have a valuable impact on a company’s performance in these two areas Collaboration with external partners on innovation projects is being placed high on the agenda for most leading businesses. This new and growing business model, known by the buzz words of ‘Open Innovation’, is employed to increase competitive advantage through acceleration of the innovation process and access to new ideas that the company would not have dreamed of on its own. Cadbury plc, the global confectionery company, has recognised this as a key strategic priority, setting up a globally linked Open Innovation team to drive and support this initiative. The team’s mandate is to deliver commercially beneficial innovations to Cadbury through partnering and networking with leading organisations and academic institutions.
The model of Open Innovation, a term coined by Henry Chesbrough from the University of California Berkeley, theoretically involves a twoway flow of knowledge and intellectual property (IP). In practice however, most
companies involved in Open Innovation tend to focus on investment in existing technologies or collaboration on joint research projects rather than taking a broader view. The broader view can involve contract research with external partners such as University groups, partnering with key suppliers, coproduct development with large corporate companies (both competitors and non-competitors), or simply licensing technology. A few companies
have capitalised on the opportunity to profit from technology that would otherwise lie dormant in their company by licensing it to non-competing groups, and a number of patent brokers exist which buy patents, bundle them and sell them on the IP market.
The drivers for moving to an Open Innovation model include: the realisation that no one company can own all the world’s best scientists; the existence of solutions to technical challenges in non-competing industry sectors (thereby removing the need to spend time developing technologies inhouse); the need for multi-disciplinary approaches to product development; and the increase in the overall percentage of research and development (R&D) spend taking place in technology-based start-ups, which are keen to find a route to market for their products or technologies Companies in non-food sectors have been actively open in their innovation process for a number of years, P&G being the most well known for this through its Connect + Develop programme. The food industry is fast catching up, with players such as General Mills already being active and successful in this field.
Cadbury started to look to Open Innovation as a potential tool to enhance innovation productivity in late 2006. Since then it has developed its own unique process for sourcing outof- the-box ideas for solving its hardest
technological challenges, a process that has already delivered step change ideas for new products (for example, applying the polymer science used in pressure profiling and electronics to confectionery production). A dedicated
Open Innovation team was set up by Cadbury at the beginning of 2008 with a global remit to bring in new technologies and also develop and roll out best practice methodology, behaviour and the tools to support an open culture. Before looking externally, the team needed to know what to look for, hence the initial focus has been to generate a list of global technical needs that would benefit from ideas outside of Cadbury. This is no easy task: most companies cannot be clear about what technology they really want in the future and the geographic split of a multi-national can also be challenging, particularly when working across disparate time zones. It is crucial to produce a realistic list of technical needs, comprising those that have a strong likelihood of benefiting from external ideas if they are found. In order to achieve this, the building of strong links with R&D, product development, and commercial colleagues in all three Cadbury categories (gum, candy and chocolate) has been a key activity for the Open Innovation team.
Finding the right partner Once the team knows what it is looking for, how does it find the right partner?
There are a multitude of experts outside the company who could work on the company’s specific problem, and maybe even provide potential solutions, but how can these be accessed? Should the team simply wait for solution providers to seek it out? Until the company has the reputation for successful Open Innovation and of being a good partner, and has a clear list of needs that it can articulate to the outside world without giving too much away, this option is really not the answer. In the meantime, the team needs to build up its own networks and access as many other networks as possible.
A number of companies and not notfor- profit groups act as brokers to large networks, such as Innocentive
(http://www.innocentive.com/), Nine Sigma (http://www.ninesigma.com/), and IXC (http://ixcuk.com/home.html). These groups have different business models for value delivery but they all have the aim of helping Open
Innovation teams to link into knowledge and technology that they would find difficult to access alone.
Innocentive and Nine Sigma will develop a technical request in as concise a manner as possible, and then send this out to their extensive international network of ‘solvers’ – experts, researchers and entrepreneurs who may either have the expertise to solve the specific challenge posed, or who have already developed the solution. IXC employs ‘Intermediaries’ who act as embedded one day per week ‘employees’ in four or five companies each. They act as intelligent new eyes that give a fresh angle to challenges. They match solution providers with needs in their client network, and since they are embedded in many companies and Universities they know exactly who to contact about what.
The most difficult groups to connect with are small to medium size enterprises (SMEs), which are rich in ideas, technologies and expertise and as a result are often an excellent source of new solutions. The Enterprise Europe Network (www.enterprise-europenetwork.ec.europa.eu/index_en.htm, of which there are a number of regional administrators) is a European initiative designed to link large corporates with SMEs across Europe, and is a free resource. There are also a number of University and Regional Development Authority-based link-up initiatives (for example The South East England Development Agency’s Food Technology Hub. www.seeda.co.uk).
Of course some of the best networks are the team’s personal contacts built up over a lifetime in the business.
Cadbury uses a number of such networks. The company’s searches to date have led the team as far afield as metallurgy and synchrotron science, from the UK to Australia, and partnerships from contract research to licensing and co-development.
Now that Cadbury has a list of what it is looking for, and networks set up to find the solutions, the Open Innovation team is set to match those needs and deliver innovative solutions to the business to drive growth and profit.
The business has a number of immediate technical needs, as well as long-term interests that will always be on the agenda. For instance, food grade ideas for novel (and pleasant) sensations or textures for confectionery products will always be of interest. If a potentail partner has an idea that may be of interest, the team at Cadbury would be happy to hear directly from them. However, before making contact with any multinational, a potential partner is advised to make sure that it has protected its idea through a patent application and should only send a non-confidential description of the technology. In the case of ideas for Cadbury’s Open Innovation team, the information should include: a non-confidential description of the technology; why the idea would be of interest to Cadbury; what impact the technology would have on the consumer; what makes it different from currently available technology; and whether the IP is protected and who owns it.