By: Arnaud Périlloux / Patrick Giry-Deloison
In an increasingly competitive, connected and globalized world, co-innovation and value co-creation have recently become the norm for all R&D projects from startups to large organizations. In fact, co-innovation is critical to the development and sustainability of organizations of all sizes and and all industries.
But is this co-innovation compatible with the expected level of secrecy mandatory to secure the company’s competitive edge and protect vital assets?
Collective Intelligence: The Foundation of Open Innovation
Of course, the culture, the context, the pace, the means and the objectives differ from one organization to another. But all those which are committed to this innovation process are experiencing a strategic transformation in order to reinvent and regenerate themselves in the long term.
How do they do it? One of the most powerful levers for a successful change is co-innovation. In other words, innovating by collaborating with structures outside your organization—including competitors.
Co-innovation bears many benefits:
- Additional and complementary expertise to those available in the organization: Knowledge of the Asian market for a company that operates only in North America, cybersecurity skills for medical equipment, etc.
- New working methods: Refocusing on the customer / user / patient / citizen experience in both the private and public sectors
- Opportunities and perspectives of personal development for employees: Exchanges and acculturation between professionals of different profiles such as IoT specialists and agricultural equipment manufacturers, and so on
- Generation of new projects made possible by the mobilization of collective intelligence: Response to a health crisis, space conquest, green energy, and more
Collaboration with stakeholders outside the organization has become one of the most frequently used modalities since this concept was introduced by Henry Chesborough in his book Open Innovation: The New Imperative for Creating and Profiting from Technology. In this model, the “outside-in” approach consists for an organization in enriching its knowledge base by organizing co-creation interactions with a set of actors: the ecosystem, or system formed by an environment (biotope) and by all the species (biocenosis) that live there, feed on and reproduce there.
The notion of ecosystem encompasses varied realities and, depending on the activity of the organization, can include customers, users, patients, citizens, universities and research centers, regulators and legislators, suppliers, integrators, distributors, etc. It is open by nature in order to promote exchanges and interactions between stakeholders. While this openness to others has many advantages, it carries associated risks and therefore costs—both financial and human. However, we note that these exposures are often underestimated because they are poorly identified and not upstream enough in the decision-making process.
In this regard, an article published in 2020 in the Harvard Business Review analyzes the evolution of the model of open innovation towards one where it must be protected from looting, maliciousness or theft: confidential innovation. Whatever the stage of the value creation, it is essential to master what concerns confidentiality and therefore the sustainability of the company. It is on this sine qua non condition that security and innovation can be reconciled.
Protecting Your Vital Assets
Conversely, how many companies behave as fortresses to protect themselves from the outside world? How many organizations applying the precautionary principle have refrained from any strategic partnership relationship, in the hope of retaining control of their innovations and therefore of their destiny?
Thus, in many environments (security, defense, healthcare, aeronautics), one usually thinks that to protect oneself from external threats of any kind it is essential to lock everything down. However, it would be difficult to completely blame this withdrawal attitude in front of an external threat when the consequences can be so dramatic.
Without being as strict as Apple with its culture of secrecy, mastering privacy first requires realizing what is valuable in your business. This introspective analysis is an exercise that any business should conduct to identify its vital assets. These form the core of the development and innovation reactor. It is in fact the material, immaterial and human resources that participate in the creation of sustainable value: talents and skills of employees, technologies and know-how mastered, registered patents, data, and so on.
However, are we still aware that the threat can also come from within? Indeed, the problem does not come exclusively from the outside. Sometimes the employee, the organization or even the processes create “holes” through which vital assets can escape.
Here is an example:
Alan is employed by a renowned florist in the Faubourg Saint-Honoré in Paris, who has noticed that his revenues have decreased significantly over the past six months. Worried about the sustainability of the business, the shop owner raises the subject with Alan and realizes that he is naively discussing with his neighborhood competitor and unconsciously disclose information such as the names of clients (prestigious hotels, luxury companies…), the ordered services (compositions, bouquets…) and associated prices. Without this rapid awareness of six months, it is certain that this florist would have closed her business without identifying the cause.
The facts are clear: the organization’s vital assets are hidden away everywhere. We might have thought that the florist’s only vital asset was her know-how in flower arrangement. However, the example shows that the sustainability of its business obviously depends on its know-how but also on its customer files and the services it invoices.
By transposing the example of the florist to an SME or a large group, it is easy to imagine the extent of the area at risk constituted by the sum of vital assets. As for start-ups, the risk is even higher because of their relative business and organizational immaturity. However, open innovation is an integral part of the DNA of start-ups!
Everything therefore seems to oppose confidentiality and co-creation of value: how to share creation and innovation while protecting strategic tangible and intangible assets?
A Systematic Approach to Co-Innovate and Protect Its Vital Assets
In reality this paradox is only apparent. To address it, specific mechanisms for confidential innovation should be put in place. These mechanisms are now essential for understanding the predatory attitudes of competitors, managing the naivety of employees, mastering the phases of partnership negotiations, shaping the pride of engineers, eliminating the various biases.
By working with public and private organizations of all sizes and from all sectors, we have identified 7 steps to reconcile co-innovation and confidentiality:
- Begin the process by identifying projects with low strategic risk but with opportunities for short-term realization and at moderate cost to obtain “quick wins” equivalent to the POCs widely used in collaborations between start-ups and more mature companies.
- Be part of a strategic vision of sustainable innovation that combines internal expertise and talents with the benchmark ecosystem.
- Practice a rapid feedback loop to adapt the operational system, applying an agile approach, adapted to the context of the company and the project.
- Identify and develop the talents who will be the key players in the process in the short and medium term; if necessary, anticipate training and recruitment to make up for shortages.
- Structure and carry out the analysis, assessment and management of risk with regard to the objectives to be achieved and the potential benefits for the organization – whether financial, human, organizational, strategic or of any other nature.
- Train project teams and all stakeholders (Purchasing, Finance, HR, Operations, etc.) in the prevention of confidentiality risks.
- Establish governance and management within each organization and project as well as at the global level.
The Pharmacy Industry: Two Examples of the Efficiency of These Steps
The first is the SbP Alliance (Systems-based Pharmaceutics Alliance). It brings together five major companies in the pharmaceutical sector: Pfizer, GlaxoSmithKline, Eli Lilly, Roche and Sanofi as well as the modeling software publisher Siemens Process Systems Engineering. The purpose of this alliance is to apply the PROMS modeling tool to pharmaceutical manufacturing processes. As reported in the study by the Coo-Innov Research Center of the University of Montpellier, “(…) in addition to the benefits provided to partners, the SbP Alliance improves the activities of the pharmaceutical sector in its entirety (…)” We can see here how the entire ecosystem benefits from this “coopetitive” and open innovation approach, in a sector known for the rigor in the protection of intellectual property.
The second is the collaboration between Pfizer and BioNTech which made it possible to develop the vaccine against COVID-19 in record time. In his interview with the Harvard Business Review, Alvértos Bourlá, CEO of Pfizer, recounts how Uğur Şahin and Özlem Türeci, the research couple behind BioNTech, immediately saw the potential of Messenger RNA technology. On March 1, 2020, they are the ones calling Pfizer and offering to collaborate. The rest we know. In the article, Alvértos Bourlá gives the compass that makes it possible to achieve such results: “Throughout my career my focus has always been on the end users of our products, whether they are animals and their caregivers or general consumers, and I have encouraged the entire organization to adopt the same patient-first mentality, measuring outcomes by people (or animals) served rather than drugs sold(… )” He also says “…to beat back scourges like Covid-19 and cancer, we need to regard ourselves as contributors to a broad scientific ecosystem and innovation network. The business world can step up and insist on it (…)”
These two success stories prove that it is possible to obtain unexpected results in major areas of innovation while preserving the interests of stakeholders who are particularly concerned about their vital assets.
Confidential Co-Innovation: A Matter of Confidence
Far from being an oxymoron, confidentiality and transformation strategy centered on co-innovation go hand in hand. Both are based on a trusted relationship between organizations and between people. Both require a thorough knowledge of the organization’s vital assets.
The systematic approach to the management of the organization’s ecosystem, its processes, and its talents that we propose is designed to dramatically reduce the risks taken and increase the value created.
About the Authors
Initially an engineer and holder of a double HEC certification “Innovation and Entrepreneurship” and “Organizational Coaching”, Arnaud now assists companies in their innovation and strategy. His experience and his research work have led him to formalize the concept of Confidential Innovation. He is also the co-founder of Ic-Consulting, a consulting firm specialized in innovation consulting and organizational coaching.
Email: [email protected]
Patrick Giry-Deloison is an operational consultant, business coach and professor of marketing. His goal is to “transform great ideas into great business.” He is also a business angel and a keen horse rider. Connect with him on LinkedIn and follow him @pgirydel.
Email: [email protected]
Featured image via Unsplash.