To keep pace with the times, companies cannot rely only on their own research centres; rather, they need to buy innovations or license them to other companies and startups. But why aim outward, instead of strengthening their own internal Research & Development departments? Indeed, increasingly often, businesses find themselves dealing with areas outside their core business. Therefore, it is fundamental to know how to look to other companies where those skills are already present and especially be able to do it fast, so they are not late in the game within a world that is moving increasingly quickly. Small external companies can often be nimbler than large enterprises. Particularly startups, which are hungry for business.

The origins of open innovation

The technical term is “open innovation”. It was coined in 2003 by Henry Chesbrough, an economist and professor at the University of California, Berkeley, who published the first essay on this topic: Open Innovation: The New Imperative for Creating and Profiting from Technology. “Open innovation”, Chesbrough explains, “already existed: many companies already sought out external tools, expertise and technological solutions. It was simply time to define and study the model”. Per Chesbrough, l’Open Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, as the firms look to advance their technology. How? By creating relationships between companies and universities, as takes place in Silicon Valley. For example, in the US professors may work one day per week in companies. This benefits both parties: companies, which can draw from the pool of innovation found in universities; and universities, which have a clear view of market needs and can thus finance research projects.

Open Innovation in pharma

The sector that has always been most used to the open innovation model is certainly pharma. In the era of Big Data, the alliance between Big Pharma and ICT is growing: in Italy over the next three years the share of pharma companies that will undertake Research & Development in partnership with Information and Communications Technology companies will rise to 84%, nearly 2 and a half times the 35% reached 5 years ago. This alliance makes it possible to analyse a huge quantity of information in real time, to speed up and boost the effectiveness of the process of researching and perfecting treatments. Thus, drugs stop being simply a product and instead become part of a treatment path in dialogue with diagnostics, devices and digital services. An example? Novartis combines its global network of Novartis Institutes for BioMedical Research, which relies on the work of roughly 6 thousand researchers, with its propensity towards collaborations and alliances with the world of research with a view to open innovation, which is becoming increasing widespread in this sector. In Novartis, all of this also translates into strategic partnerships. In the history of this multinational company, there are a number of examples of agreements with small, innovative companies, as well as partnerships launched with large businesses not associated with the world of health: “We have entered into an agreement with Google relating to eye treatment: in partnership with them, we are studying smart contact lenses for diabetic patients which are capable of continuously monitoring glucose levels”, the company announced.

Open Innovation and advisory services

On the heels of pharma are the large advisory firms, which now have dedicated units for meeting customer needs with innovative external solutions. This is the case of Accenture, which has dozens of dedicated Innovation Centres worldwide, Deloitte  with its Green Houses and, lastly in chronological order, EY with its 17 Wavespaces. These are “showrooms” designed for the implementation of digital solutions with customers and partners and which act as a meeting point between businesses, startups and universities. But EY’s projects surrounding innovation do not end here: “We are implementing and soon we will launch a platform that puts our customers into contact with startups that can meet their digital requirements”, explains Andrea Pogutz, CFO for Italy.

Utilities in hot pursuit

Energy sector giants from Enel to Edison to Iren are also looking to the future. So much so that they have opened up to the idea of open innovation, involving collaborations with or investments in startups or innovative SMEs that bring value and innovative services to users. For example, Enel has already launched projects with more than 30 startups. The Group currently holds investments in some of them, with which it is moving ahead with projects. One such example is Smart-I, which has developed a sensor with an algorithm capable of analysing the urban environment, enabling Enel to enhance its offering to municipalities with services such as mobility control, urban safety and energy efficiency in public lighting. Enel is also coordinating the INCENSe  project funded by the European Community with €8 million: two competitions will select 42 startups, each of which will receive a €150 thousand grant as well as the opportunity to participate in an acceleration program. Luciano Tommasi, head of Startup Initiatives and Business Incubator, explains, “All of these activities fit in with Enel’s strategy of approaching the startup ecosystem and positioning itself as an industrial partner to provide them with support”.