Open Innovation and R&D - a partner for success

Open innovation has become a popular strategy to expand the market in different fields as the world progresses. Similarly, the culture of collaboration is taking the evolution to new heights. A market research report The Economist that was sponsored by SUSE in 2022 , revealed that 95% of organizations now report leveraging open innovation practices, with 54% doing so on “most” or “all” projects.?

This article has a special focus on the key element of intellectual property (IP) generation for R&D enterprises, and how open innovation becomes your partner for success. There is now acceptance that the cost of R&D is drastically reduced and go-to-market speed is increased through open innovation approach but there is more to it. We discussed some of the famous industry case studies and arrived at how to implement open innovation by design through the key 4 pillars:

1. Skills,
2. Network Effect,
3. Technology
4. Open Innovation SOPs (Standard Operating Procedures)

Open innovation can be very resourceful in terms of sharing knowledge and resources through collaboration. It can yield enhanced R&D activities. You have seen various pharmaceutical industries coming together through open innovation to develop new drugs through various collaborations between universities, institutes and pharmaceutical companies. The Human Genome Project is one of the best case studies for this. This was the most known successful open innovation project involving the collaboration of researchers worldwide, giving outstanding results in sequencing the Human Genome.?

On the other hand, IP generation is one of the most important backbones of innovation as it safeguards and commercialises the ideas of researchers and companies worldwide. It safeguards the ideas with legal protection and exclusivity that helps them to spread the ideas better. IBM, has generated more than one billion dollars in revenue because it has licenced its patents to other companies demonstrating the value of IP protection. As the concept of open innovation rises, you see a growth of 4% in worldwide patent filings, according to the world intellectual property organisation (WIPO) data. Crowdfunding and hackathons are another open innovative initiative that can lead to the creation of patents and trademarks, another valuable IP creation.?

In this article, we look deeper at the nexus of IP and open innovation, challenges and limitations like the risk of IP infringement,? the complexity of IP laws, the loss of control over the innovational process, and much more.?

Open Innovation As A Driver of R&D Activities

Open innovation can lead to plenty of opportunities for driving R&D, that constitutes collaboration with external partners to achieve new ideas and perspectives in the innovation process, enhancing the results. The open innovation approach will easily lead to increased collaboration, a good networking opportunity platform and knowledge sharing, which can benefit various R&D activities.?

The main motive of open innovation is to share resources and ideas that a company without collaboration would not have achieved. Companies can access a wide variety of resources and expertise by collaborating with external partners and benefiting from it.?

Open innovation can also help companies drive activities more efficiently and quickly by collaborating with external companies and getting the benefits of their skills, resources and knowledge. It can help the company with the procedures like prototyping, testing, and developing new products more efficiently with better resources, and importantly mitigate risk. Access to broader expertise helps the company identify potential challenges early in the process while the additional resources allow them to have a swift strategies with a low risk of failure.?

Case Study: Establishment of a joint innovation centre by Nokia and China Mobile

A recent example of how open innovation has increased IP activity is the collaboration between Nokia and China Mobile. Nokia and China Mobile signed a memorandum of understanding in 2018 to collaborate on a variety of R&D projects, including the development of new 5G network technology.

As part of their collaboration, Nokia and China Mobile created a joint innovation centre in Hangzhou, China. The objective of the centre is to develop innovative 5G network technology and applications, with an emphasis on the Internet of Things (IoT), augmented reality (AR), and virtual reality (VR).

This collaboration brought expertise and resources to improvise the development of new technology and applications for 5G networks. It resulted in high revenue and prophets for both companies, with increased IP activity filling numerous patents and patent applications for sectors of 5G and iot.

In 2020 Nokia announced more than 3000 patent applications related to 5G, with more than 400 patents awarded.?

Lifesciences and healthcare have garnered maximum benefits of this model and R&D teams have led the way, notably, the AstraZeneca (AZ) Open Innovation Platform, Structural Genomic Consortium (SCG), and Pfizer Centers for Therapeutic Innovation (CTI) Program.

Case study: The Biovotion-Biofourmis-Novartis Collaboration

This case study explores the open innovation collaboration between Biovotion, Biofourmis, and Novartis, demonstrating the global nature of open innovation in healthcare. The partnership has potential to reduce costs, improve outcomes, and develop new products for heart failure treatments.

Open innovation is global: The collaboration involves Biovotion, a Swiss startup known for its wearable biosensor platform that is of clinical grade. Biofourmis, a Boston-based digital therapeutics company backed by Sequoia India, recognized the potential of Biovotion's technology and acquired Biovotion. Novartis, a Swiss pharmaceutical giant, partnered with Biofourmis to use wearable devices as a digital therapeutic by patients who are on its drug to monitor their symptoms and manage medications. This global collaboration highlights the reach of open innovation in the healthcare industry.

Unique strengths of each actor: Biovotion specialises in clinical-grade wearables like Everion that can measure 22 parameters. Biofourmis excels in digital therapeutics and possesses an AI-powered predictive analytics platform. By acquiring Biovotion, Biofourmis expands its capabilities. Novartis contributes deep knowledge of drug development, extensive resources, and global reach. The collaboration combines these strengths to create innovative solutions.

New products, and better outcomes: The collaboration leads to commercial gains, new product development, and improved patient outcomes at reduced costs. Integrating Biovotion's wearables into Biofourmis' platform enhances personalised treatments for heart failure patients. The collaboration enables early detection of exacerbation's and the ability to predict and analyse drug treatments, potentially lowering costs and improving outcomes.

Commercial and IP impact: Payment or reimbursements world over are moving to an outcome-based model. Lifestyle factors like exercise, sleep, stress have by some estimates 30% impact on health. Digital therapeutics make it possible to codify this behavioural changes for better health outcomes. Every pharma company is partnering with devices and tech companies to build around-the-pill (like around the heart failure treatment drug above) or standalone to help the patients in a way that the drug cannot. The high investment in pharma coupled with agility of tech companies can accelerate the development process and yield substantial commercial advantages for both parties involved.

This case study demonstrates the transformative power of open innovation in addressing complex healthcare challenges. It also demonstrates the power of defensible IP for startups.?

Case study: Outposts in China and India?

Corporates are increasingly establishing outposts in pockets of innovation across the globe. The National Bureau of Statistics (NBS) reported that China's total expenditure on research and development (R&D) amounted to nearly 3.09 trillion yuan (about 456 billion USD) in 2022 → it is rapidly closing the gap in technology investment with the US that invested about 657 billion USD. Companies like Swiss Post and AXA, the BFSI giant have established innovation outposts in Shanghai, China. Shell has established a corporate accelerator in Bangalore, India - a city that has been consistently ranked in top innovation hubs across the globe. India is committed to net zero goals through usage of renewable energy and decarbonisation of sectors. This has given rise to many innovations in this sector and is aligned with Shell’s ambitions to become a net zero business before 2050.?

The outposts are used to access trends, foster knowledge exchange and harness the strength of the outpost location for business processes. Outposts also underlie the importance of emerging markets allowing the corporates to establish context and contacts. Further, outpost as an open innovation platform complements IP as well by?

• Contributing to development and enhancement of companies’ portfolio by insights from emerging markets?
• Identify emerging trends, customer needs, and technological advancements that can be integrated into its IP strategy, enabling the development of innovative solutions tailored to the emerging markets.?
• The development is typically by leveraging collaboration and expertise of academic institutions to enhance its IP portfolio through joint research and development projects, co-creation of intellectual property, and access to new technologies.?

Other industry case studies:

1. AXA, BFSI - Insurance: Two innovation outposts in Shanghai And Silicon Valley
2. Microsoft, IBM and Intel, Technology: Reducing NHS and Social Care Bills
3. DHL, Logistics: Hosted a competition for traffic congestion, traffic environment and energy consumption

IP Generation And Its Role In #Innovation

Let us look out for IP generation and its role in innovation while exploring interesting insights. Keep reading.

It is essential to have IP generation in any open innovation process. One can refer to the essential roles IP generation provides in an open innovation process below.?

Increase in new product lines: Open innovation can help the companies to expand their offerings and produce new product lines by partnering with multiple external stakeholders and companies to access new technology and resources that can help the companies to commercialise and develop new products. A recent example of this is BMW partnering with a range of suppliers to develop new electric and autonomous vehicles leading to an increase in its IP portfolio.?

Increase in innovation index: Open innovation can help to increase innovation performance by improving the innovation index. Collaboration with external partners can increase their R&D capacity to develop new technology and products more efficiently. For example, P&G has used open innovation to develop new product lines such as beauty, health care and household care, boosting their innovation index.?

Increase in talent for new tech/human capital: When businesses join forces, they can share resources like human capital and cutting-edge machinery. As a result, the organisation as a whole may improve its level of expertise. There's hope that it could also impart know-how and expertise in cutting-edge disciplines. The corporation may give its employees more chances to participate in cutting-edge endeavours if they are able to work together effectively. By being exposed to alternative points of view, they can learn new insights and ideas. Using open innovation, GE has developed cutting-edge tools for the medical, energy, and transportation industries. They've instituted initiatives to improve their workforce by attracting new talent.?

Increase in profitability: Increase of open innovation activities and investment in R&D with expert technology, helps companies to expand their customer base. It can boost profit, and it can help businesses explore new technologies. For example, Cisco increased its profit margins by creating new technology and giving solutions under cyber security, networking etc.?

The Use Of Open Innovation To Generate More IPs - Models Used By R&D Organizations

Let us look at the various ways in which open innovation generates more IPs.

• Collaboration: Collaboration between companies is essential to generate more IP and resources. It is the most common trend in open innovation, which enhances profit accountability and revenues with cutting as technology supports the company with the help of external stakeholders.?
• Crowd Sourcing: It helps with innovation that is customer-oriented, creating new ideas, testing prototypes and collecting potential customer inputs, which are very helpful for the company. It is extremely beneficial for R&D companies to develop new technology and resources through this trend of open innovation.
• Innovation challenges: It is very helpful for creating new solutions by gathering resources and participants, eliminating the internal challenges an R&D company faces.
• Licensing: It can help protect R&D companies from sharing ideas giving new ideas for innovation and development of new technologies to companies that are in collaboration while protecting it through licensing and commercialising. It helps avoid conflicts and? can make the process easier and faster.

Challenges And Limitations Of Open Innovation And IP Generation

• Intellectual property ownership: It signifies the collaboration agreement with clear establishments and ownerships of legal IP rights. Maintaining ownership can be very time-consuming, but it is very helpful for avoiding any kind of ownership conflict.
• Confidentiality and data security: Data rest and security breaches are common hence establishing a protocol for managing a Secure data-sharing platform is essential.?
• Cultural differences and communication barriers: It is important to conduct any kind of communication or cross-cultural training session so that the trust is built strong and there are no communication conflicts later.

Open Innovation by Design: The 4 essentials

To truly leverage the potential of open innovation in IP strategy, we recommend designing it keeping these 4 essentials at the core:?

1. Skills: Design thinning, marketing, critical thinking, legal, program management, procurement
2. Network Effect: An ecosystem of players that act as your advocate and help grow the community
3. Technology: Digital tools to scale and simplify the process of open innovation
4. Open Innovation SOPs: Processes and frameworks in place right from Idea generation, problem definition, research, prototype generation, testing and commercialization

Conclusion

Leveraging Open Innovation and Intellectual Property (IP) generation can be a potent strategy for propelling progress and innovation across various sectors. The industries are poised to benefit from promising advancements in the future. To advance, businesses should prioritize the establishment of intellectual property through open innovation and investment in research and development to broaden and innovate new technologies. To drive innovation and progress, it is advisable to collaborate with industry professionals to explore the possibility of commercializing research and development efforts that have resulted in patent filings.? Let's explore ways to promote innovation and growth through open R&D.