How to Win at Open Innovation as a B2B Company

In the information age, innovation is globally distributed. Startups and scaleups routinely disrupt industries with new products or business models. For established companies, partnering with startups provides a way to boost their innovation pipelines. Today, such collaborations are a must to build and maintain a competitive advantage for any company. This is why both B2B and B2C companies are increasingly adopting open innovation. It is a business management model that encourages companies to seek collaborations with external agents in order to drive innovation.

However, B2B and B2C companies have differing innovation goals and take different approaches to open innovation. Today, we’re talking about the value of open innovation for B2B companies and how you can implement it.

Why do B2B Companies Seek Open Innovation?

Open innovation brings together the agility of startups with the resources of larger companies. It allows you to speed up innovation within your company and create value in multiple ways:

1. Creates disruptive products: By shortening product development cycles, open innovation provides you with a first-mover advantage.
2. Identifies new technologies early: Investing early in emerging technologies can provide outsized returns for your business. Through open innovation, you get access to emerging and latent technologies in your industry as well as able to assess their potential.
3. Improves designs, product/service quality, or business models: Along with identifying the latest technologies, open innovation also identifies bigger industry trends. This enables you to improve the quality of your offerings and stay competitive.
4. Identifies process improvements: By scanning the startup ecosystem for external innovations, you also get insights on how to make your existing processes more efficient, leading to improvements in your bottom line.
5. Enhances customer experience and retention: Open innovation allows you to develop products and services that better match changing market trends. In turn, this improves your customer experience and retention.

Why Do B2B Companies Find Open Innovation Challenging?

Lack of an Open Mindset

Traditionally, B2C companies work closely with end consumers. Market feedback is rapid and customers jump ship to a competitor if a B2C company’s products flop. This is why they’re continuously innovating, even when they are ahead of the competition. B2B companies, on the other hand, are slow to embrace innovation. As a result, when they don’t innovate, everything may seem fine at first but things can go downhill fast.

To overcome this, B2B companies need to be more intentional about innovation. Innovation managers at B2B companies need to cultivate an open mindset for innovation.

Hard to Find the Right Partners

Unlike B2C companies, B2B companies generally deal with a handful of clients or vendors. This is why it is critical that they pick their partners well. However, there is a lack of sources of firmographic information on potential partners. This is an obstacle for companies looking to collaborate with startups.

With open innovation, B2B companies quickly get access to a large number of high-potential partners. This allows you to spend your time engaging with potential partners instead of spending time identifying them.

Lack the Visibility of B2C Brands

The most successful B2C companies are household names. On the contrary, even the most successful B2B companies are only known in the industry they operate in. This often limits who these companies work with and, consequently, the innovations they pursue. To capitalize on open innovation, B2B companies need to work harder on the visibility of their innovation initiatives.

This is why B2B companies often turn to data-driven startup programs such as those offered by us at StartUs Insights. We leverage the StartUs Insights Discovery Platform, covering firmographic data on over 3 million startups and scaleups globally, to identify and engage the best startups for your innovation agenda.

Read this report: Accelerate Open Innovation with Data-driven Startup Programs

How to Build an Open Innovation Strategy for B2B Companies

Depending on the type of your business and your exact innovation needs, your open innovation strategy will differ from other B2B companies. However, the following steps are usually common to a successful open innovation strategy for any B2B company:

1. Define the Problem

When it comes to open innovation, it’s important to first define the problem or opportunity you want to address. What are your specific goals? And who are your target customers? B2B companies often seek open innovation to solve business problems. To do this effectively, problems should be identified by individual business units rather than just by the innovation manager. This requires innovation to be distributed and bottom-up instead of centralized and top-down.

For instance, those working in sales should listen to what the customers have to say about their product and, more importantly, what they like about your competitors’ products. Similarly, engineering teams need to continuously identify process bottlenecks that are slowing the company’s operations.

2. Research Potential Solutions

After identifying the problems, the next step entails looking for ideas and technologies that can be used to solve the company’s problem or improve its products or services. Traditionally, this involved online research, attending trade shows and conferences, or working with other businesses in your network. With data-driven open innovation, these time-consuming approaches are replaced with a quick scan of the technology landscape.

Technology landscaping is a process that allows you to identify disruptive technologies early on, and to forecast future technology trends. This provides you with an exhaustive database of emerging technologies that can serve your innovation goals and improve competitiveness in the long term.

 Read this report: Why the Technology Landscape is Your Window into the Future

3. Identify Relevant Startups and/or Scaleups

The Discovery Platform features a fast and exhaustive semantic search that finds exactly the startups you’re looking for with high precision. This ensures that you discover under-the-radar startups as well and, especially when you’re looking for something specific, find more relevant startups than any other tool.

4. Test the Solutions (Optional)

For an open innovation initiative to be successful, a major factor is a fit between a startup’s technology and your internal systems. Often, no amount of scoping will be sufficient to analyze this fit and you’d need to test some of the promising solutions in real-world scenarios. This is especially true for companies that have a large physical presence such as those involved in manufacturing or utilities.

While there are different types of open innovation challenges, often the most suitable ones to test this fit are startup programs. By picking high-potential startups from a pool of promising candidates, it improves the success of your startup programs. This allows you to identify what works and get the best return on investment.

5. Build, Buy, or Partner

Having identified one or more potential solutions, the last step in the open innovation journey is to identify how to collaborate with a startup. Is the solution something that you can build internally? Is it cheaper for you to outsource the particular problem to one of the startups you’ve identified? Or is the best approach to acquire the startup, getting access to both the technology and talent in one swoop?

Since open innovation provides you with an overview of the startup landscape, it becomes easier for you to make these decisions. While the build-buy-partner decisions are the final step to the open innovation journey of any company, there are few partnership options that are more relevant to B2B companies. Open innovation allows B2B companies to generate more leads or identify new vendors. Compared to traditional approaches, open innovation allows you to discover leads or vendors that are most likely to work with you, saving time and costs.

Accelerate Your Open Innovation Journey

Open innovation allows you to tap into new markets and develop new products and services more quickly. It also allows you to share risks and costs associated with product development. There are many reasons why you should seek open innovation, including access to new markets, faster product development, and cost savings. By collaborating with external partners, B2B companies like yours are able to better identify and serve your customers. This creates products and services that are more relevant and appealing to your target market.

Our Discovery Platform supports your open innovation journey by bringing the world of startups, technologies, and innovations to you in just a few clicks. This shortens the time it takes to find relevant solutions down from months to hours. Moreover, it makes sure you don’t miss any relevant solutions.

The Discovery Platform provides speed and accuracy to your open innovation initiatives.

Features of the Discovery Platform

Its intuitive interface makes it easy to:

• Identify relevant solutions fast & exhaustively. The Discovery Platform covers over 3 million startups and scaleups globally, making sure it finds every relevant solution so you don’t miss out. It’s also blazing fast thanks to our proprietary knowledge graph, allowing you to scope topics & technologies within minutes instead of weeks.
• Filter results to narrow your search. With more filters than any other innovation scouting tool, it allows you to find startups that match exactly what you’re looking for.
• Find similar companies. Already have a couple of companies that you find interesting? The Discovery Platform features a cool trick that lets you find more companies that are similar to the ones you already know.
• Search iteratively. With every search, the Discovery Platform identifies even more relevant keywords that allow you to continuously refine your search process.
• Bulk export all solutions. Found a good list of relevant solutions on the Discovery Platform? Export them and add them to your knowledge base for further analyses or to share internally.

Open innovation presents B2B companies with the opportunity to leverage high-potential startups and technologies for their innovation goals. To make the most of it, you need a tool like the Discovery Platform.