What is it about the information age that we live in that is different from anything that has come before? Firstly, the world is more globalized than ever before and, secondly, the speed of technology development is faster than ever before. Information, globalization, and technology development further stimulate each other, ensuring that all three grow at an exponential rate. What do companies and startups do now to make the most out of the shift from an economy of labor to an economy of innovation? They innovate at an unprecedented scale and, more importantly, they take advantage of Data-driven Open Innovation.
What is Data-Driven Open Innovation?
Data-driven Open Innovation is a business management model that encourages companies to seek collaborations with external agents to drive innovation. As the economist Henry Chesbrough who coined the term said, “in a world where technology and product knowledge has been globally distributed, companies must look outside their R&D departments for sources of technology and innovation and growth”. This includes a wide range of strategies under the umbrella of innovation intelligence, defined as the process of collecting, enriching, and analyzing largely publically available data to provide organizations with a decision support system or process to execute their external innovation strategy.
The data-driven open innovation concept promotes an information age mindset toward innovation. Unlike the secretive nature and silo mentality of traditional innovation, open innovation makes the boundaries between an organization and its environment more permeable. As innovations flow inward and outward within and across companies, the resulting acceleration of technology development benefits all companies involved, the customers, the industry, as well as the society at large.
Information Flows between Companies and Startups
Traditionally, internal research and development was a critical aspect of any company. It provided a competitive edge as well as discouraged younger companies that don’t have the resources to set up their own R&D departments. However, the growing access to venture capital is increasingly allowing startups to compete with large companies. Moreover, the information age opened up access to information, making innovation a truly global affair. In response, companies have no choice but to embrace data-driven open innovation. The paradigm benefits established companies as they can commercialize new products faster.
This is why corporations now actively promote both internal and external innovation pathways. To discover external innovation, Innovation Managers usually employ a range of mechanisms. These include challenge prizes, hackathons, startup scouting, strategic partnerships, corporate incubators, corporate accelerator programs, startup programs, startup calls, and startup acquisitions.
Generally speaking, emerging companies are more agile than large companies with thousands of employees in almost bureaucratic hierarchies. Therefore, more often than not, innovation comes from young startups. On the plus side, open innovation makes emerging technologies developed by startups available for larger companies. This usually happens by the latter purchasing the technology, product, service, or a stake in the startup – a process also known as inbound open innovation. In contrast, for outbound open innovation, the information flows in the other direction. This is when companies license their technology or set up joint ventures and spinoffs to advance internal innovation that may not be the company’s top priority and, thus, left unutilized within the organization.
Explore the Benefits of Data-Driven Open Innovation
Any company that wants to survive needs to keep innovating. However, even the best companies often hit a wall when tackling tactical, operational, or strategical challenges. Going beyond internal resources, capabilities, and expertise unlocks new ideas. Moreover, external agents bring a fresh perspective to the organizational innovation challenges, thereby accelerating the innovation process.
Open innovation contributes to a company’s competitive intelligence, trend forecasting, and strategic planning capabilities. It enables decision-makers across the organization to look beyond their immediate needs and stay mindful about long-term growth. Companies that engage with the global startup ecosystem are better placed to avoid strategic surprises and technology shocks. Further, open innovation is a great tool for finding talent. A wide search helps find and engage individuals and startups that are perfect for the existing opportunities within the organization.
Regardless of the development stage of your company or the industry you operate in, data-driven open innovation offers multiple benefits. Some of these advantages include:
- Reduced Costs: Reduction in the cost of conducting research and development by distributing them across many stakeholders
- Faster Time-to-Market: Improvement of development productivity and time-to-market through early collaboration with disruptive startups
- Gain in Competitive Advantage: By leveraging existing innovation and startup ecosystems companies stay ahead of the technology curve
- First-Mover Advantage: Early adoption of completely novel business models enabled by emerging technologies
How to Unlock Data-Driven Open Innovation
According to our data, over 2,5 million startups and scaleups are active globally. This makes it difficult to conduct a comprehensive search of the innovation space. Manual methods are time-consuming and expensive as well as often do not find stealth-mode or startups operating under-the-radar. Using a data-driven open innovation scouting approach quickly gives you an exhaustive overview of innovation in your area of interest. This saves time and costs while accelerating your external innovation.
Depending on your innovation goals, StartUs Insights offers a range of services enabled by our Big Data and AI-powered Discovery Platform. Some of our services that help companies like Samsung, Iberdrola, and Nestlé in their data-driven open innovation goals include:
- Startup Programs: Boost startup deal flow through data-driven promotion, direct outreach & storytelling that reaches hundreds of thousands of startups & scaleups, making sure you attract the most relevant ones
- Trend Scouting: Identify emerging and latent trends and developments that will impact your competitiveness
- Technology Scouting: Reveal emerging technologies that match your innovation goals
- Startup Scouting: Discover over scan over 2,5 M startups & scaleups globally, scouting the right partners & saving you weeks of desk research
To discover how StartUs Insights can speed up your open innovation goals, get in touch today to identify what’s next.