Open Innovation, Part II: Using Web 2.0 Technologies to Connect Innovation Partners

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In the Spotlight

Open Innovation, Part II: Using Web 2.0 Technologies to Connect Innovation Partners

Sherry Ward, AltTox Contributing Editor

Published: January 13, 2012

Henry Chesbrough defined the term open innovation in 2003 as “a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.”

The previous In the Spotlight, “Open Innovation I: The NC3Rs Programme CRACK IT,” described a new open innovation program in the UK to fund contractual research partnerships that harness the UK knowledge base and technologies to “reduce reliance on animal use, improve animal welfare, and deliver advanced tools and technologies to benefit the bioscience sector.”

Open innovation (OI) contrasts with what is called the traditional model of innovation, or closed innovation, where a company develops its products internally and markets them through traditional channels. Open innovation typically involves some form of sharing research, resources, ideas, and/or funding among different organizations/researchers for the development of new technologies and products. Open innovation also extends to the use of new business models, such as licensing a technology from another firm, licensing your technology to another firm, or even creating a new venture to develop and market a new technology, which can be an additional source of financial benefit for companies and their partners.

The concept of open innovation, to leverage internal and external resources for the creation of new products and technologies and then using the most appropriate business model for marketing the new innovations, had been in practical use within the R&D laboratories of many organizations long before Chesbrough’s definition of the term. The emerging use of the Internet throughout the 1990’s, however, provided a platform that is now being used to exploit the full potential of open innovation.

An important benefit of open innovation is similar to that of teamwork, and comes from bringing together partners with diverse expertise and experience. This kind of expanded intellectual network applied to problem solving can result in the generation of more ideas, and superior outcomes are anticipated. The innovation environment at small firms and universities is typically more productive and robust than at large firms. Additionally, capital infusions and partnerships dilute the risk associated with new product/technology development. Therefore, partnerships between large, cash-rich firms and smaller firms that generate more innovations per R&D dollar can be an effective mechanism for accelerating the pace of innovation.

One of the best known open innovation platforms in the United States is InnoCentive, which uses the challenge driven innovation (CDI) framework. “In CDI, a portion of the innovation is formulated as a Challenge, in which a ‘Challenge’ essentially represents the problem statement for a block of work that can be modularized and in most cases rendered ‘portable.'” This is the same model used by the CRACK IT Challenges. NineSigma, established in 2000 and located in Cleveland, Ohio, is another open innovation service provider. Both InnoCentive and NineSigma have hosted challenges from chemical and consumer product companies. CRACKIT is the only OI platform known to be exclusively dedicated to developing partnerships to accelerate innovation in new products and technologies aimed at reducing animal use in research and testing.

Like in the UK, the US government is beginning to exploit the power of innovation competitions to provide solutions to urgent challenges. The US Department of Health and Human Services (DHHS) and the Office of the National Coordinator for Health IT are involved in an innovation program called the Health 2.0 Developer Challenge. The challenges in this program involve the development of health IT applications that use government data sets. For example, a recent winner of the “Using Public Data for Cancer Prevention and Control: From Innovation to Impact” challenge was My Cancer Genome, which “provides therapeutic options based on the individual patient’s tumor gene mutations.” Additional open challenges are described on the Health 2.0 website. Submitting or solving a challenge is open to all types of organizations and individuals, and sponsors of challenges provide project funding.

A potential hurdle to the effective use of open innovation is the management of intellectual property (IP). Finding an attorney with open innovation experience has been recommended. The open innovation websites cited above explain steps taken to protect IP, but the information provided is limited and appears to primarily cover the IP developed during the collaborative work phase on a funded project. For example, in the CRACK IT program, the FAQs section states that “IP is the property of the Contractor and Subcontractors” and that NC3Rs and industry partners are not joint owners of the IP. This covers IP developed for a proposal that has been funded, and is typical of the IP protection described by other OI service providers.

Before getting to that stage, however, there are additional IP issues to be considered. Concerns of the company proposing a challenge could include the following: 1) the company needs to disclose information about its “problem,” which will make public some information about company activities and interests, and 2) the company needs to determine whether the proposed solutions are available for future IP protection so that they can actually be used. Those seeking support also need to consider possible IP issues, such as the disclosure of their ideas and inventions to unknown and possibly competing parties during the proposal review process. Proposal reviews typically involve the use of external experts/reviewers, who are undefined at the time of proposal submission.

As noted by Bonabeau (2009), “An application that taps into collective intelligence for improved decision making may be simple in concept, but it can be extremely difficult to implement.” He points out that the mechanism design of these types of Web 2.0 technologies for OI is the most potentially problematic issue. After reviewing the CRACK IT “Guide for Participants,” it appears this program team has developed a strong Web 2.0 application design, and developed an intelligent strategy for proposal review and project management of the awards, thus, proactively addressing many potential problems. As an example of their understanding, the CRACK IT Challenge Panel will provide feedback at the second level of proposal review on the “highest quality” applications. This addresses a weakness identified by Bonabeau, that “feedback loops between [solution] generation and evaluation tend to be weak or nonexistent.” This iterative process should lead to better identification of each challenge as well as to improved evaluations of the proposed solutions.

In summary, InnoCentive, NineSigma, CRACKIT, and Health 2.0 are four examples of open innovation platforms that focus on connecting problems and problem-solvers to accelerate innovation in new products and technologies. Since R&D for non-animal methods has been considerably under-funded, at least in the US, researchers developing new approaches and companies in need of new technologies should consider how best to use this new funding and partnership development model.