Open innovation can be handled in different ways within companies. It may be the adoption of new products, new processes. It may also be related to access to new markets, cultural transformation, new approaches that bring financial return and efficiency, among other benefits.
The fact is that innovation is on the agenda of most companies in the world. Consequently, the ecosystem in which these companies are inserted has to adapt.
How the open innovation ecosystem works
The image below illustrates the functioning of the open innovation ecosystem from the perspective of a corporation.
From this map, the company can evaluate its strengths and weaknesses and, with this analysis, elaborate its external innovation strategy.
What is the relationship between open innovation and government
The government has the responsibility to legislate, adapting policies and regulations, so that open innovation happens.
In Brazil, we have the Secretariat of Innovation and New Business (SIN), which works to improve the innovation environment to favor innovative entrepreneurship and the entire private investment environment in startups in the country.
It has two main initiatives:
- InovAtiva Brasil, free large-scale acceleration program for innovative businesses, with the possibility of investment, mentoring, and training.
- Legal Framework of Innovation: created with the objective of improving the legal framework of science, technology, and innovation. SIN understands that it is essential to improve the legal framework for venture capital because it believes that startups do not flourish without a propitious ecosystem around them. I agree.
In addition to these programs, the government invests in research funds.
How research funds drive open innovation
In Brazil, an example of a Research Fund is Finep Startup, from Finep, a public agency that finances innovation, from basic research to product preparation for the market.
Finep Startup's objectives are
- strengthen the National CT&I System by supporting a business segment of high technological dynamism;
- provide financial resources and knowledge to companies with high growth and return potential;
- promote the development of the seed capital market in Brazil;
- stimulate private investment through angel investors.
There are also funds specifically focused on universities, several of them with budgets that exceed billions of reais. One example is MEC's "Future-se" program, which allows universities access to R$ 102.6 billion.
What is Venture Capital's role in the innovation ecosystem
One of the main players in the open innovation ecosystem is Venture Capital. I treat here as Venture Capital all investors who bring venture capital in startups - VC funds, angel investors, accelerators, private equity, corporate venture capital, and venture capital funds with the most diverse investment theses.
VCs invest in startups where, in addition to capital invested in equity exchange, they can lend their expertise to help entrepreneurs succeed.
Usually, a venture investor applies his capital in businesses he knows well, in industries with which he has relationships, and can help the emerging entrepreneur find talent and overcome technical and business problems. After all, as a shareholder, he is one of the biggest interested in the company's success.
An exciting move that already exists in the best universities in the world is the creation of Venture Capital funds to fund ideas of brilliant students that are developed within the university.
These funds exist to solve a common problem for startups that are born in the academic environment. These startups are based on technologies that require more time and resources to develop than a traditional, private-sector startup. They take eight to ten years to reach the market. Consequently, regular venture capital, which expects a return in five years on average, may not be your ideal investment partner.
At Berkeley, I had the opportunity to see and participate in some exciting things. Blockchain, for example, which is now the agenda of every financial sector company, was the most popular subject in Berkeley and Stanford nerd clubs and relied on university capital to develop.
What is the relationship between universities and open innovation
Universities develop partnerships with leading companies, foundations, and other research-intensive institutions. These partnerships do not exist only to transfer knowledge from the laboratory to practice. They provide critical funds for talented teachers and students to pursue fundamental research, allow students and teachers to exchange ideas with the best minds inside and outside the academy, and - perhaps most importantly - help prepare students to be citizens of a rapidly changing world.
This exchange is beneficial for corporations, which find talent, stay close to emerging technologies that can be opportunities or threats to their industry, capture knowledge, and often develop intellectual property with the university.
Within universities, innovations such as CRISPR, a technology for gene editing discovered by a Berkeley professor who now moves billions of dollars in the biotechnology industry, have been developed.
It is clear that the university is indispensable for the economic and technological development of a nation. It is also increasingly evident that having state-of-the-art universities with dedicated students is essential for producing new technologies and industrial development.
Why startup is the main actor in the open innovation ecosystem
There are several types of exchanges between companies and startups. Companies and startups sell products and partner, have a relationship of knowledge exchange and investment relationship. There are several possibilities, but one thing is a fact.
Whatever the type of connection, the company that decides to innovate through startups, as long as it does it the right way, can find solutions with much more agility than those who try to develop everything internally.
How research and technology organizations can help
The last item in the enterprise innovation ecosystem are research and technology organizations. They are the ones that help startups and companies develop solutions that need technologies that are often not yet available to the market or require particular knowledge. A specific algorithm or even a type of hardware that does not exist and needs to be manufactured and prototyped by experts are examples.
The exchange in this type of situation is not just the sale of a solution. Many points are aligned concerning the intellectual property of discovery and complex negotiations involving lawyers to deal with sales royalties.