Today, it is impossible for companies to rely solely on internal research and development (R&D) to drive innovation. Henry Chesbrough, the economist who coined the term open innovation, stated that “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 is why companies now seek external innovation that supports their business goals. Doing this requires companies to open up at least some of their data to external innovators who they engage with via open innovation challenges.
Depending on the type of the company and scope of the challenge, there are different kinds of innovation challenges you can pursue. Often, the challenges invite innovations from within the industry an organization operates. However, organizations seek innovations from people outside the industry as well since cross-hybridization of ideas often brings up novel ideas as well. In this article, you will learn about different kinds of open innovation challenges and their benefits for companies.
Open Innovation Challenges for Industry Insiders
Generally, startup incubators or accelerators are run by venture capitalist firms, academic institutions, governmental organizations, or non-profit bodies. However, companies are now realizing the value of setting up their own incubator or accelerator programs. For example, the pharma giant AstraZeneca runs an incubator for startups working on improving patient outcomes. For early-stage startups, such incubators provide access to the host organization’s vast resources.
Benefits of Corporate Incubators
Corporate incubators allow companies to invest early in moonshot technologies. These technologies are high-risk and high-cost. Incubating a large number of startups allows you to take multiple bets on such technologies.
- While not all incubated startups succeed, they contribute knowledge to the incubator ecosystem. Bringing together internal and external expertise often leads to the development of new value propositions.
- Startup activity is booming globally, leading to an increase in tech talent in different countries. Hosting corporate incubators in these locations allows companies to source talent from new markets while establishing a presence there.
Data-driven Startup Programs
In data-driven startup programs, companies identify challenges from individual business units within their organizations and open them up to startups globally. They then reach out to high-potential and relevant startups through direct and promotional reach. After screening startup applicants for their fit for the program, companies onboard them to the startup program. Increasingly, many startup programs are virtual or semi-virtual, which allows many more startups to apply to them as well as allows organizations to host more startups.
Benefits of Data-driven Startup Programs
- Since startup programs attract innovations from across the innovation ecosystem, you get access to solutions that you wouldn’t if you looked only for startups around you. This allows you to identify key trends emerging in other markets before your competition.
- By their design, particularly virtual or semi-virtual startup programs, startup programs encourage the participation of startups from around the world. This allows you to cast a wide net, increasing the chances of landing high-quality prospects.
- Often, there are multiple solutions to a challenge, but it is hard to tell which one is the most cost-effective. Startup programs allow you to run multiple pilot programs, allowing your company to tackle a problem through different approaches.
Open Innovation Challenges for Industry Outsiders
Generally, young startups, especially with a social impact, and innovators use crowdsourcing initiatives to raise capital. In recent years, corporations are also embracing crowdsourcing to gather ideas globally. With these, companies reach out to not just independent inventors but to their customers as well. For example, LEGO often involves its customers in designing new toys.
Benefits of Crowdsourced Challenges
- There are minimal costs to running crowdsourced challenges. Only the most promising ideas are selected and invested in further.
- Crowdsourcing challenges are often linked to marketing campaigns. Such challenges, therefore, boost customer engagement. This also provides the host organization with customer-centric data that supports its other innovations as well.
- Largely, the diversity of crowdsourced ideas opens up new perspectives. This is because customers think differently from product development teams and even among customers, different features matter to different customer segments.
Innovation Challenge Platforms
These operate like crowdsourced challenges, with the exception that the ideas come from people with expertise related to the challenge. Innovation challenge platforms generally host contests that run for a few months. These are ideal for teams or innovators toying with their ideas and who may be interested in starting up. For example, NASA used the innovation challenge platform Innocentive to identify solutions to track medical supplies in space, among other challenges.
Benefits of Innovation Challenge Platforms
- Such platforms allow companies to tap global expertise tailored to the specific requirements of their challenges.
- Distributing the risk of early-stage research and development (R&D) to teams around the world reduces the cost of product development. Further, the cost of implementation is often a metric in challenges hosted on such platforms.
- Lastly, innovation challenge platforms enable fair and simple intellectual property (IP) transfer. They allow companies to assess a large number of ideas and purchase or license technologies they like, as stipulated in the challenge guidelines.
Mainly in the software industry, hackathons or student challenges are also growing in popularity. In a hackathon, the host organization opens up a few challenges, and teams of students and young innovators work on them for a few days or weeks. For students, these events provide a feel of how companies operate, whereas, for companies, they usually lead to a bunch of prototypes.
Benefits of Hackathons
- Hackathons increase brand awareness for your company among talented students who will be the leaders of tomorrow. In addition to creating a community, identifying such talent early allows you to take measures to attract them to your company.
- They also generate viable prototypes that, if suitable, the product development teams can develop further into real products.
- Companies often become slow as they grow. Since hackathons also engage your employees, they are a great opportunity to foster intrapreneurship.
Leverage Data for Open Innovation
Data on innovation is spread across the internet in startup and company websites, technology news websites, academic papers, and patent databases, to name a few sources. Turning these data into actionable insights that support your innovation strategy can be a challenge. The StartUs Insights Discovery Platform, with data on over 2,5 million startups and scaleups, allows you to find innovations blazingly fast. Based on our platform, we provide the following services:
- Startup Programs: Boost startup deal flow through data-driven promotion, direct outreach, and storytelling that reaches hundreds of thousands of startups & scaleups, making sure you attract the most relevant ones
- Trend Scouting: Identify emerging and latent technology trends and developments that will impact your competitiveness
- Startup Scouting: Discover over scan over 2,5 million startups & scaleups globally, scouting the right partners & saving you weeks of desk research