Building an open innovation capability. Stephen Roper (feb 14)

Building an open innovation capability

[email protected]

ERC overview • The Enterprise Research Centre (ERC) is an independent research centre which conducts

policy relevant research on SME growth and development. The ERC is being led by Professor Stephen Roper (Warwick) and Professor Mark Hart (Aston).

• The ERC is a partnership between Warwick Business School, Aston Business School, Imperial College Business School, Strathclyde Business School, Birmingham Business School and De Montfort University.

• Funding is being provided by the Economic and Social Research Council, the UK government Department for Business, Innovation and Skills, the British Bankers’ Association and the Technology Strategy Board.

• Research within ERC focuses on entrepreneurial ambition and inclination, leadership capabilities in the management teams of SMEs, the impact of diversity on SME start-up and growth, the financing of growth companies, innovation and exporting in SMEs and the role of SMEs in UK jobs growth.

• Alongside its research activities the ERC aims to act as a focal point for SMEs and the SME research and policy communities in the UK, facilitating knowledge exchange.

Developing an open innovation centre for Northern Ireland

Professor Stephen Roper (Warwick) Professor Nola Hewitt-Dundas

(Queens)

Study addresses three key questions

1. Does NI need an open innovation centre?– What is open innovation?– What are the benefits – firm and regional level?– Where does NI stand relative to other areas?– So what should we do?

2. What would an open innovation centre look like?

3. What would be the benefits of an open innovation centre?

Question 1:Does NI need an open innovation centre?

Open innovation (OI) is ….

• Innovation can be thought of as firms’ introduction of new products, services or ways of doing business

• And open innovation is ‘… the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively’.

• Typically, open innovation involves innovation partnerships between firms and/or between firms and other organisations such as customers, suppliers, universities or consultants.

Firm level benefits of OI

• Evidence suggests that OI benefits firms by:– Stimulating creativity– Reducing risk – Accelerating innovation– Improving innovation quality – Helping increase sales from

innovation – Helping access new

skills/technology

• But the benefits differ for smaller and larger firms

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OI also has other wider benefits …

• Increased innovation externalities - openness may increase levels of innovative activity in the region which may themselves generate spillover benefits – For example, under-priced quality improvements -> productivity gains– Demonstration effects– Sustainability or clustering effects

• Externalities of openness – regardless of the impact on firms’ innovation, openness itself may generate positive externalities by increasing levels of organisational interaction and knowledge diffusion.

• These wider social benefits (and the associated market and system failures) provide a clear rationale for public intervention to support OI

Benchmarking OI in NI compared to other regions

• Source: UK Innovation Survey

NI lags all other UK regions – i.e. levels of open innovation are lowest here

Two implications:

1. NI firms are not benefitting from OI and its potential contribution to innovation

2. More broadly NI is missing out on potential regional benefits

Benchmarking OI in NI compared to other regions

• Source: UK Innovation Survey

And most of NI’s problem is with smaller firms – larger firms lag but not by too much

Openness appears particularly limited among smaller firms in Northern Ireland and those in services. Comparing firms’ connectivity to individual types of external partner –suggests that connectivity to each type of partner is lower in NI than other UK regions.

This suggests the generality of the openness deficit in Northern Ireland rather than this deficit being due to any particular type of innovation partner

So does NI need an OI centre?

• Northern Ireland certainly needs more OI which would benefit innovation, productivity etc.

• The evidence suggests that existing organisations have not delivered on OI in Northern Ireland – the region lags other UK regions

• Something else needs to be done to support OI (and innovation) across sectors but perhaps particularly targeting smaller firms

• So we think the answer to the question is “Yes”. And that there is a strong case for intervention in this area.

QUESTION 2What would an OI centre look like?

Possible roles of an OI Centre• Building Awareness - an OI centre could play a valuable role in increasing the awareness of the benefits of collaborative and

open-innovation. Such activities could be events or network based, involve broadcast and other media and the compilation and publication of case-study evidence.

• Advocacy – an OI centre could work as a champion or advocate for OI within a regional innovation system, supporting and encouraging the development of policy measures which strengthen collaboration.

• Capability building – an OI centre might be to help firms develop OI capabilities for managing external relationships or

collaborative innovation. This is essentially a staff or management training activity which is likely to be particularly important for smaller firms.

• Inbound provision of partner information – an OI centre might help local firms to identify potential innovation partners

either locally or externally.

• Outbound promotion of partner information– an OI centre might promote the capabilities of firms as potential partners to organisations elsewhere. This is primarily a marketing and/or promotional activity.

• Facilitation or brokering of partnerships and collaboration – this type of brokering activity aims to work with individual

firms to establish innovation partnerships. The credibility of individual brokers is likely to be key to success in this activity.

• Structuring of partnerships and collaboration – each individual innovation partnership is likely to raise different issues relating to contracting, IP etc. This activity is aimed at assisting firms with the structuring of open innovation relationships and is likely to require detailed work with the partners.

Linking activities and client groups

• Different OI centre activities are going to be relevant to different target groups

• Perhaps the greatest gains in terms of innovation are to be made in moving from non-innovators to closed innovators to open innovators

• Capacity building, inbound partnering and facilitation may be particularly important for smaller firms

OI organisations come in four main types:

• Research organisations – which use OI as a commercialisation methodology. Examples are IMEC, the Collective Research Centres in Belgium and the Holst Centre.

• • Networked Incubators - closely related to the business incubator model. The emphasis

here is on technology-based start-up businesses and applying the principles of OI to commercialisation. Three examples are Chalmers Innovation, Sweden, Normandie Incubation (France) and the Innovation Centre (UK).

• Company based centres – larger companies have led the move to an OI model for innovation. Early examples of OI were Proctor & Gamble (P&G) with their ‘Connect and Develop’ programme, Unilever and IBM’s Collaborative Innovation Initiatives.

• • Independent innovation Intermediaries – independent organisations formed to provide

support to broad groups of businesses to become more innovative through raising awareness of the need to innovate alongside the development of collaborative networks. Examples of innovation intermediaries include InnovationXchange and the Innovation University Enterprise Network

Question 3: what would be the benefits of an

open innovation centre?

Developing a logic model for an OI Centre…

To increase the level of effective open innovation in NI export oriented businessesVision

Goals

Activities

Input indicators

Output indicators

Outcome Indicators

1. To increase the level of awareness of open innovation and its potential benefits

among firms in the target groups 2. To ensure future policy development

supports extended open innovation

To increase the capacity for operationalising

effective open innovation among firms in the target

groups

1. To encourage non-innovating firms to move to become open innovators2. To encourage ‘closed’ innovators to move to become open innovators

3. To encourage ‘limited’ open innovators to extend their open innovation activity

AwarenessPromotional

events/workshops, on-line promotion,

case studies/newsletters

AdvocacyInput to policy

consultations or reviews, visitors to

reference site

1. Number of attendees from target firms at events

2. Website hits/page statistics, media coverage

3. No. of inputs to consultations/reviews4. Local and international visitors

1. Awareness of OI among each of three target groups

2. Perceived role of OI Centre as regional ‘Champion for OI’

3. Perceived changes in policy environment for OI among target groups

Capacity Development

Needs analyses, materials development, training

courses or events

1. No. of training needs analyses

2. Number of course participants and firms

from each of target groups

1. Improvements in managing inward OI by

participants2. Improvements in

managing outward OI by participants

Partner information provision

External media and on-line promotion of NI

innovation, local and international

partner search activities

Facilitation activitiesBrokering of new

innovation partner relationships, network or

consortium building activities/events

Structuring activitiesSupport for individual

partnerships, facilitation of access to external professional support

services (IP, legal etc.)

1. No. of external/internal partner searches 2. Number/investment value of instances of brokering new relationships, events etc.

3. Number/contract value of referrals to service providers for facilitation etc.

1. Proportion of each target group seeking to develop new innovation partnerships 2. Proportion of each target group which has developed new innovation partnerships

3. Proportion of each target group engaging with professional services to facilitate innovation partnerships.

1. Share of limited/intensive open innovators in NI 2. Proportions of non-innovators which have become open innovators

3. Proportions of closed innovators which have become open innovators 4. Proportion of limited open innovators which have become extensive open innovators

A Northern Ireland OI Centre

• A broadly-based innovation intermediary targeting smaller non-innovators or closed innovators. Perhaps 10-12 people.

• Navigate not duplicate - a ‘sat-nav’ organisation helping smaller firms find and work with appropriate innovation partners (both in NI and outside)

• An opportunity for policy innovation – NI is leading the way in considering the policy challenges of OI. An OI centre of this type would be a innovative step

• Is this part of Invest NI? Probably not:– Many of target groups outside INI’s existing clients– Issues of independence and ‘honest broker’ seem important

• But would draw significantly on INI expertise, support and schemes and be a long-term project

Contact us:

If you would like any more information about the ERC and any of its activities please contact the Director, Stephen Roper at [email protected] or

the Deputy Director, Mark Hart at [email protected].

More details about the activities of the ERC and our latest events can be found at:

www.enterpriseresearch.ac.uk