Stepping into the innovation ecosystem

Posted on 30 June 2008

Category: Collaboration

Dave Brown, BT, recently attended a 24-hour workshop as part of NESTA’s Open Alchemy initiative – a collaborative innovation project between diverse, non-competing UK clients of Oracle. Here, he explains how the telecom giant is embracing corporate open innovation to forge new partnerships and generate new opportunities. 
 
Ten years ago, the typical corporate organisation carried out all of its research and development within one dedicated division. Now, large companies realise that great ideas can come from different places, such as smaller businesses, customers and academia. Every corporate is surrounded by an ecosystem of innovation, and I see the collaborative method of open innovation as the way to access its potential. The benefits are clear: collaborating with external partners can deliver many more ideas than can be generated through the traditional internal approach.

For companies whose business is selling products, open innovation can present intellectual property (IP) challenges. In these cases, relationships between the partnering organisations tend to be about the division of IP. But companies that provide services are used to working closely with suppliers and don’t generally create a lot of IP, and this makes the open innovation model a natural one to follow. As a strategy, I think it’s pretty low risk for service organisations. There is a chance that the partnership won’t end up leading anywhere, but that’s an inherent risk in any kind of research.

“Open Alchemy is a very good example of how companies can come together to brainstorm ideas.”

 

Dispelling misconceptions

Some people view open innovation with suspicion, thinking that it’s a way for large companies to take advantage of smaller ones – a predator and prey situation. In my experience this is far from true. At BT we try to avoid circumstances where we would become the dominant customer of a small company – it’s more preferable to operate in a competitive environment, working with companies that have lots of customers. Open innovation partnerships can and should be equally beneficial for all sides – in fact this is crucial if it’s to prove successful. All partners need to understand where the others are coming from and unless it’s win-win for everyone then it’s not a good idea to develop the partnership.

It’s also important that partners develop a strong relationship, building up trust over time. When large corporates join up in this way, each needs to demonstrate that they have the right capabilities and are worthwhile working with. Companies also need to decide which partnerships are strategic and which are tactical. Strategic partnerships require particularly close management in order to develop deep and effective relationships. One of the ways we do this at BT is through our Engage programme, where we invite large customers with significant innovation potential to join up with us on research projects.

Seeking out innovation

At BT, if we’ve identified a problem or issue that we want to tackle, we know that there’s likely to be at least two or three start-ups working on the same problem somewhere in the world. If we can identify those start-ups we can take on a kind of venture capitalist role, collaborating and innovating together. We’re always looking for new ways of locking into the broader system of innovation and collaborating with outside partners. An example of this is the BT Beta Site, where customers can test out our new ideas and send us feedback. We’re also tapping into the innovation potential of smaller software players by giving them access to our platform through the Software Development Kit (SDK).

The original BT Home Hub is just one example of a BT product that had its origins in open innovation - we worked with a California-based company called 2Wire to develop this service. Each year we bring around four or five new products or services to market as a result of collaboration with Silicon Valley companies. Israel is another place that’s producing some very promising small companies at the moment and we recently gathered 20 Israeli companies together in London to showcase the work they’re doing. Events like this and Open Alchemy can be an exciting part of the open innovation process, bringing excellent opportunities for collaborating and developing ideas across organisations.