The results of a recent Bain & Company survey of more than 200 global senior executives, suggests there is pent-up desire to pursue open-market innovation.
Even in throes of a global recession, when the most of executives thought often turn to restructuring and cost reductions, 80% of the respondents rated "becoming more innovative" among their top three priorities for achieving company success.
Nearly 2-thirds of them admitted their businesses were not close to realizing their full potential in tapping outside ideas: they deemed such as action a "Big Opportunity".
91% of executives across all industries surveyed called increasing their company's capacity for innovation "critical to creative future competitive advantage and earning profits.
Despite this wellspring of enthusiasm for reaching outside the company for great new ideas, the poll also revealed another side of the quest to innovate: two of five executives surveyed admitted that their companies suffered from not-invented-here syndrome.
Only about 30% of the respondents were satisfied with they came up with new products and services for key customers or changes to their companies too internationally focused.
And so? Some of the fastest growing and most profitable industries are finding open-market innovation to be a critical new source of competitive advantage.
Open market innovation is fostered by several complementary businesses, technology trends and could be offer for corporations distinct advantages.
Let's check them out:
- Importing new ideas is a profitable way to multiply the building blocks of innovations
- Exporting ideas is a remarkable way to raise cash and keep talent.
- Exporting ideas gives companies a way to measure an innovation's real value and to ascertain whether further investment is warranted.
- Exposing and importing ideas helps companies clarify what they do best
- Availability of Venture Capital:
There is a strong correlation between VC funding and successful innovation. A recent study from the National Bureau of Economic Research found that small companies supported by VC produced six times as many patents per dollars of red spent as traditional companies did.
- Interdependencies of products:
A lot of innovation today is cumulative ( for example in five years the numbers of strategic alliances between biotech firms and drug companies has increased by 80%)
- Innovation Exchanges:
They're sprouting up all over the Internet. TechnEx is a good example of the yale University. Here innovation exchanges between buyers and sellers of biomedical technology is huge.
- Innovation Agents:
In the Toy industry, for example, this kind of changing between independent inventors with idea-driven companies and big corporations, is crucial. That's, off course, valid for every fields where a fresh low of new ideas is essential.
- Accessible Innovation Database:
In December 2000 the U.S patent & Trademark Office made information on 6.5 million patents available through a searchable on-line database.
These trends in technology business practices funding will provide a rocket boots to the phenomenon of open market innovation.
Companies that lower their innovation barriers will be able to quickly determine where to innovate for themselves and where to outsource innovation to others.
In addiction, they will build advantage for several years to come over their internally focused competitors. However there are some important risks to consider: entering into open market innovation without properly structuring deals could be really dangerous and could produce opposite effects.
Xerox and Trw, for example, virtually gave away their innovations and had to stand by while other companies capitalized on them. But that's another story…