Open Innovation Intermediaries: Are they valuable?

By: Innovation Management

The success of Open Innovation hinges on many organizational aspects as we have discussed extensively on the MOOI forum in the past months and will continue to do so until the end of this year. From the beginning of next year, we will start co-creating our e-book on the Management and Organization of Open Innovation in a joint effort with the MOOI forum members.

Throughout the month October our focus was on the role of innomediaries in Open Innovation and how to ensure that innovating companies obtain maximum value from interacting with these service providers. Again this seems to be a management issue where companies that effectively embed these interactions in their internal organization are better able to benefit from intermediated services.

The webinar on innomediaries featured interesting guest speakers, Andy Zynga (CEO of NineSigma) and Letizia Mortara (researcher at the University of Cambridge), who contributed valuable insights from both theory and practice. The MOOI team would like to thank these contributors for their input as well as our 157 forum members for their interesting insights on this topic on the forum. Before we address the major topics touched upon by the MOOI forum members we first examine some of the issues that were raised during the webinar.

Innomediaries and OI: The most important lessons from the webinar

Types of innomediaries

Innomediaries that offer their intermediated services on the basis of interaction between their staff and clients:

• External knowledge searching/find technical solutions that are integrated in the products/services of their clients (e.g. Ninesigma, Innocentive, IXC)
• Making optimal use of unused IP (Yet2.com, Innovaro)
• Staff augmentation (IXC, YourEncore)

Innomediaries that offer their intermediated services on the basis of interaction between companies and technology:

• Offering web based platforms where technological needs/offerings can be posted (e.g. Hypios, IdeaConnection)
• Offering platforms (or engines) for ideation/searches (Inno360, Spigit)
• Providing access to consumers (IdeaScale, Threadless)

Services offered

There are different types of innomediaries and the way they set up their specific services may differ from one innomediary to the next but in general innomediaries help innovating companies to find solutions for specific innovation needs, find buyers/licensees for existing IP, gain insights from subject matter experts, develop Technology Landscapes and Roadmaps, create new products, apply OI throughout the organization.

Market dynamics

With respect to the current market conditions innomediaries are facing, Andy Zynga identified the following challenges:

• Shorter product lifecycles and globalization leading to increased demand for Open Innovation Services
• New players due to perceived low entrance barrier
• Growing demand by smaller companies: Cost of Sales
• More end to end innovation support requested in order to extract more value from solutions
• Public Sector globally discovered Open Innovation

Examples

Andy Zynga also discussed a number of interesting examples in relation to his business. GE, for example, wanted to identify immediate application development partners to validate and test a new sensing technology platform based on an HF RFID tag. The battery-free HF technology can measure volatile organic compounds (VOCs), temperature, solution conductivity, and pressure. NineSigma identified 36 potential partners for GE that eventually contracted with a European organization. NineSigma’s approach of reaching out to potential partners in the global technology community and of facilitating calls with contacts from GE identified industries resulted in a broad array of potential partners, many of which GE would have never considered.

Another example pertains to Climate Change and Emissions Management Corporation (CCEMC) that had been actively running challenges to address incremental advances. CCEMC wanted to ‘elevate the discussion’ and search for breakthrough innovation; the Grand Challenge allowed them to do that. The Grand Challenge is expected to identify multiple technologies that will provide significant reductions in greenhouse gas emissions by transforming carbon from a liability into an asset. NineSigma worked with CCEMC and its Board to define goals, to clarify the need, and to align all stakeholders around a common vision. NineSigma coordinated all aspects of the Grand Challenge messaging, PR, and outreach, coordinating with CCEMC and its marketing agency partner.

Academic literature

The academic literature has produced several interesting articles on innomediaries in the past decade. Authors have mostly examined the role of innomedaries in the open innovation activities of companies and have concluded that making use of intermediated services can potentially help innovating companies in terms of gaining access to external knowledge and optimizing their internal and inter-organizational learning processes. Despite this strong value creation potential research shows that some companies are better able to optimally make use of intermediated services than others.

In this respect, Letizia Mortara highlighted important findings from her research. Different innomediaries have different ways of working, different networks backing them up, and different capabilities; it is crucial that an innovating company selects the right innomediary for the job that it needs to be done. If there is a mismatch between the client and the innomediary in terms of, for example, the way of working this may negatively affect the success of the relationship. Furthermore, research shows that companies, effectively organizing for relations with innomediaries internally through, for example, linking these interactions to corporate strategy/funding programs, are benefitting more from intermediated services than companies that do not organize well internally.

Intermediated services and OI: Take-aways from the MOOI-forum discussions

As the value pertaining to intermediated services is a challenging theme that is of interest to many managers, the topic has generated several interesting discussion threads on the forum. We will describe some general lessons from these discussions below.

The yellow pages of innomediaries

Some of the forum members have discussed the difficulties companies experience when trying to select appropriate OI service providers. Forum members point out that innovating companies in some cases do not have clear ideas about what it is exactly that they need from the innomediary; this may lead to a mismatch between expectations and delivery leading innovating companies to be dissatisfied with the efforts of innomediaries. Furthermore, innovating companies’ expectations are sometimes unrealistically high (holy grail solutions) leading to disappointment. Forum members mention that there may be a lack of experience in both innovating companies (incomplete innomediary selection process, unclear needs, insufficient internal procedures governing the interactions with innomediaries, etc.) and innomediaries (changing service offerings, inadequate management of expectations, etc.) that lead to sub-optimal relations. Forum members wonder if it would make sense to draw up the yellow pages of innomediaries helping innovating companies find their way in the elaborate market for intermediated services.

The value of a customized network

Another interesting issue raised by the MOOI forum members is the question of whether it makes sense for innomediaries to create customized networks for each of their clients’ problems/requests or to draw from the same network each and every time. Some innomediaries like NineSigma believe that each innovation problem is unique and that a new network of potential solutions providers needs to be drawn up to effectively serve clients with the most creative, valuable solutions. Others, such as InnoCentive, make use of the same network every time and target appropriate segments of this network by preparing very specific problem statements and defining exact solution requirements. Clients may require networks to be drawn up specifically for them on the basis of IP considerations, sensitive problem definitions that they do not want to share broadly, a need for specific actors to participate in the challenge, etc. Forum members question if working with innomediaries is the right option if innovating companies have such specific requirements with respect to the network of parties they want to respond to their problems. Can a strong need for control be united with the value that innomediaries can potentially generate precisely because they offer access to unexpected parties beyond companies’ sphere of influence/control?

These are just a few thoughts that have been developed by forum members in an interactive way. The discussions developed on the forum show that high quality discussions can be generated online between knowledgeable people that share the same passion.

Prof. Wim Vanhaverbeke, Hasselt University, ESADE & National University of Singapore,
Prof. Henry Chesbrough, University of California, Berkeley & ESADE, and
Dr. Nadine Roijakkers, Hasselt University.

References

• Roijakkers, Zynga, and Bishop, 2014, What can innovators do to increase value in external knowledge searches? In: New frontiers in Open Innovation, Chesbrough, Vanhaverbeke, West (eds.), Oxford University Press, forthcoming.
• http://www.idexlab.com/blog/role-open-innovation-intermediaries-2
  
  Mortara, 2010, Getting help with Open Innovation, IfM/University of Cambridge report
• Diener and Piller, 2010, The market for Open Innovation-Increasing the efficiency and effectiveness of the innovation process, RWTH Aachen University report.
• Hagerstrand, T. 1952. The propagation of innovation waves. Lund Studies in Human Geography, Series B 4, 3-19
• Rogers, E.M. 1962. Diffusion of Innovations. The Free Press, New York.
• Shohert, S., Prevezer, M. 1996. UK biotechnology: institutional linkages, technology transfer and the role of intermediaries. R&D Management 26, 283-298.
• Hargadon, A. Sutton, R. I. 1997. Technology brokering and innovation in a product development firm. Administrative Science Quarterly 42. 718-749.
• Howells, J.2006. Intermediation and the role of intermediaries in innovation . Research Policy 35. 715-728.
• Lynn, L.H., Reddy, N.M. & Aram, J.D. 1996, “Linking technology and institutions: the innovation community framework”, Research Policy, vol. 25, no. 1996, pp. 91-106.

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