Over the last few years, the term “Open Innovation” has been bandied about by a lot of people as the new way of doing things (I am sorry, but I really cannot bring myself to use the word paradigm!). In my final days at ICI we had a few attempts to test the more extravagant claims but I had lost touch with its progress. When I discovered that an old colleague was now the Business Development Director of one of the main players and was giving a presentation in London, I took the opportunity of catching up with him and the subject at the same time. Although I missed the meeting – the RSC organised ”Creating Business through Outsourcing R&D” - I did get dinner with the chairman and 2 of the speakers (including my ex-colleague).

The basic premise of open innovation is simple enough – it is no longer possible for a company to develop all its necessary intellectual property, but others may well have the answer (or part of the answer) to the question that is holding them back. It is the way that the “trading” of ideas is done that distinguishes the 3 main companies that operate in this area. Innocentive (who my ex-colleague works for) are probably the market leaders. In their business model, the problem owner advertises their problem and rewards the solution with cash. The cost – and definition of success – is agreed upfront and the deal involves transfer of the Intellectual Property. Second (in my experience) is Yet2.com. They put those with pre-existing, yet unexploited, Intellectual Property together with the problem owners. The confidentiality and costs issues are left to the potential partners to agree. The third major player is NineSigma. Their process is closer to Innocentive’s but does not involve the transfer of Intellectual Property or an agreed upfront cost, rather it is controlled by a contractual request for proposal mechanism.

All offer a route for those with problems beyond their resources to access other people’s ideas, and (to those with the patience to look and the inspiration to see) a route for those with pre-existing technologies to find the most profitable application for their ideas. Although the process of Open Innovation started with the larger American companies, it is now spreading well beyond this and is probably a business in its own right, turning over several tens of millions of dollars! To an extent, these companies rely on the complexity of modern science and technology to confound the ability of “normal” companies to find the innovative ideas they need. However, they have succeeded in growing a new market – and now that people are aware that a market exists, other lower cost business models may well spring up. Like publishers coming to terms with their role in the a new world of “open access” literature, perhaps these companies will sell “quality” rather than just innovation. Or perhaps they will be replaced by an equivalent of eBay. Either way, they will have turned innovation into a global business.

David