100.000 Heads are Better than One

By: Karin Wall

InnovationManagement.se got an exclusive interview with Ben du Pont, co-founder and president of Yet2.com, one of the world’s first open innovation platforms. Read more about Ben´s thoughts about open innovation and how companies can benefit from it.

yet2.com is a global marketplace for technology that was founded 10 years ago. yet2.com was one the world’s first open innovation platforms. About a quarter of the Fortune 500 directly engages yet2.com and most of the Fortune 500 are engaged in deal discussions through yet2.com, ranging from new drug-delivery technologies to new heavy-oil recovery technologies.

yet2.com has offices in Boston, Liverpool, Tokyo, and Wilmington, Delaware. It was jointly funded by Siemens, Bayer, Caterpillar, Honeywell, P&G, DuPont, and NTT Leasing.

Ben, who would you define the concept of open innovation?

I think it´s a natural evolution and that it´s been around for a long time.

– I think it´s a natural evolution and that it´s been around for a long time. It got it´s name from Henry Chesbrough and then everybody realized that that´s what we have been doing for a long time. And that we need to do more of that. It´s definitely not a fad, it’s here to stay.

– Open innovation is a concept of dialog that works in both directions. You can go out and find solutions. But it also works the other way; if you develop a great technology, but you are not aware of what problems it might solve you can spin it out and create value through that too. It´s a much more open dialogue with the world about the technologies.

As I see it, the things you are doing within yet2.com fits very well into the concept of open innovation. What do you think about that, do you agree?

– Absolutely!  And we did it before we called it open innovation. What you need is a strong network, with a global presence, and certain skills that we have developed over the years

You started your business 10 years ago, this must have been a pretty new concept back then. How did you think, what opportunities did you see, and why did you start it?

10 years ago, people where fairly skeptical about what we were doing.

– Well, 10 years ago, people where fairly skeptical about what we were doing – and, in their defense, I don´t think that we entirely knew what we were doing. We had a steep learning curve, it took us 4-5 years to figure out how it all works.

– It was very tough years, fortunately, we had a lot of money in these days that allowed us to keep on developing, we had the luxury to spend these first years figuring out how to do this, with the help of somebody else’s money. It took us e few years to figure it out. And I think it took the whole industry a few years to figure it out how it was going to work.

I also remember being yelled at by people who thought that this was a bad thing for the world.

– There were a whole lot of people back then that felt quite skeptical about the concept of open innovation. I remember some very  hostile meetings, one where the CEO of a big company said “this is never gonna happen”. I also remember being yelled at, more than once, by people who thought that this was a bad thing for the world.

– Companies spend a lot of money on research and companies tend to believe that they got the world expert on this or that. And they may very well have the world expert on this or that. But 100.000 heads are better than one, and open innovation basically democratizes the research process.

Why is that?

– There were a lot of senior R&D people in making their living on convincing the management that they were the best in the world. And then the management said that you might very well be the best in the world, but we are going out there to see what else there is in the world. That might be a very threatening concept.

Do you still meet those kinds of reactions?

– No. So many people have read about it and actually experienced it – so we don´t run across that very often

It´s  been 10 years now since you founded yet2.com, how would you describe the beginning?

We weren’t that that good in the early days to deliver results.

– We weren’t that that good in the early days to deliver results. We would come back to the client with a surprisingly short list of solutions and we also had a hard time finding buyers or licensees.

– And in the early days we weren´t that fond of our competitors. But today I think that our competitors are the best thing that ever happened to us. First. Because they force us and encourage us to do a better job. And secondly you need competitors to enlarge your space.

How does it look today – as compared with back then?

– Today it´s much easier to work since the concept is much better known, people are more open minded, they can see the benefits.

What would you say might be the major road blocks in the process?

– It´s interesting to watch were the road blocks are in the process. In the early days it was difficulties finding enough relevant external partners. That’s not longer the problem.

– Today when a company asks us to go find a technology, we will find between 50 and 100 or more, potential solutions.

– The challenge now is for the client to have enough internal resources to evaluate the different solutions, that’s the road block that we have faced. How are you going evaluate them all? Some might require testing, things that an external partner can´t do very well. So we focus a lot on that and ask our clients if they have the infra structure in place to handle 100 external solutions?

How can you help your clients to handle so many solutions?

Sometimes you can employ an external party to help.

– Sometimes you can employ an external party to help. Or you can bring back a retired employee, who already is familiar with your organization and the problems you are facing.

– The company who is spending a lot of money on research can instead spend the money on development. To bring in more of the open innovation concept means cut down on the R-part in R&D – but instead increase spending on the D-part.

What would you say are the biggest advantages that open innovation brings?

– I would say it´s the same advantages that working with innovation brings to the table; a profitable robust company capable of delivering real value to their clients. When I look at companies that do not embrace open innovation I look at a company that investors would be nervous about investing in. I cant´s see today how companies who doesn´t embrace open innovation are going to be able to compete in the long run.

What difference do you think open innovation makes to the innovators?

I think open innovation is really a great thing for the innovator.

– I think open innovation is really a great thing for the innovator. In the old model the innovator was perhaps often working on a lower level and quite often the case might be that the innovator didn´t get much recognition for his work. But in a world that embraces open innovation, the innovator is the winner.

– I´m thinking in general and this is my personal theory, that we will see large companies get smaller and getting much better at manufacturing, distributing great products. And we will see really smart innovative individuals go out on their own a lot more and licensing their technologies more aggressively.

Small companies will work more like the brain that come up with good new solutions? And then the big companies have the muscles and facilities to produce and distribute?

– Yes, and most of the great deals we see are between really large companies and very small companies. Big to small or small to big. And I think that the small inventive companies will find this a very exciting world to be in.

If we look ahead – what are the biggest challenges you are facing?

– Large companies have two challenges. One is being able to handle the evaluation of all the possible suggestions. The second challenge is not falling in love with the first solution that comes in.  Large companies usually fall in love with the first or second solution. But you got to take a lot of girls to the dance to figure out which one you are going to marry.

What do you think will happen in a short term view within this field?

Most large companies already use open innovation today.

– Most large companies already use open innovation today. You are going to see much more staffing in this area, large companies will focus more on development and evaluation instead of plain research. I think you will also see universities getting to be more sophisticated in this. One of the weaknesses the universities have is that they typically have a professor with an interesting idea and just a little bit of lab data. I think we will see universities that will begin to understand the process much more, they will get more data, more patent coverage. And they will put together a more complete package before they approach the investors and potential buyers.

And in the long term view?

– In the long term I think we have a very dynamic word emerging, where really bright innovators are going to be able to have companies that just innovate. And some that will be really good at creating data compression technologies.

– One of the great gaps that we see is this; large companies would much rather spend a hundred million dollars acquiring a technology that they know will work. That there is no risk and they know they will make money out of that technology from day one.

– But there is a gap in this, because there is still a fair amount of risk involved. For example they haven´t filed all the patents they need to file, they haven´t done all the testing that needs to be done etc.

– So you are going to see firms that jump in and start to play a role, and take a portfolio approach. We will see new companies, bridging the gap between the large companies and the inventor.

If a company is considering venturing into the field of open innovation – what would your best advise be to them?

they have to be aware of that this is a long term effort

– First – they have to be aware of that this is a long term effort. And you need to work with more than just one tech-search or spin-out. Companies need to take a portfolio approach to this.

– Secondly – they have to make sure they staff the function that evaluates needs or solutions that come in. We see many companies having problems with this. You have to make sure you have recourses to handle the solutions that are coming in.

– Third – as I mentioned before, don´t fall in love in the first or second solution that comes in.

– Finally – about half of the deals we do are cross a country line. In order to do this well you got to reach out beyond your geography and into other geographies. That´s when it´s getting really exciting.

Do you have a personal motto?

– Maybe not motto but when my younger brother and I were 19 years old, we took a sheet of paper and put down everything we wanted to accomplish in our lives. And on the back side of that paper we put how we were going to do that.

– My goal was, and I think it was a good goal, that I wanted to be directly responsible for helping bring products or services or technologies into the market, that directly benefited a minimum of thrre million people. And I wanted to have a key role in bringing that to the market. And I don´t know if I have accomplished that, but that was my goal.

What are the things you like the most about working in this field?

– I´m one of those strange people that are fascinated by technology and I love working with people. I can´t say that I would like to work with either without the other. I want play a role in how the world progresses and becomes a better place.

Things you like the least?

– I´m an optimist by nature so I don´t focus very much on the things I don’t like.

What will you be doing in five years time from now?

– The same, but better and bigger.