Open innovation:what it is and where it stands in Italy

Companies need new stimuli to create value and remain competitive.Often internal resources are not enough and open innovation comes into play.

• Open innovation is a strategic approach whereby companies make use of ideas, resources, tools and technological solutions that come from outside.
• The most widespread approach, called inbound, involves starting collaborations with startups and universities, crowdsourcing activities, hackathons or other similar initiatives.
• In Italy, especially large companies have embraced this collaborative approach, while small and medium-sized businesses show greater resistance.

Everyone talks about it, but are we sure we know exactly what it is?THE'open innovation it is becoming central in the strategic choices of many companies, as well as many other "cousin" concepts.To familiarize ourselves, we can try to translate it into Italian:with open innovation refers to a strategic approach adopted by companies to create more value and be more competitive on the market, using ideas, resources, tools and technological solutions that come from the outside.We can compare it to grafting in botany, which consists of inserting branches or buds of another species or variety into a plant, with the aim of improving its resistance to climatic adversities or parasitic attacks, or to obtain a new individual capable of bear more valuable fruits.

When the concept of open innovation was born

The first to theorize the concept of open innovation was Henry Chesbrough, professor and executive director of Berkley's Garwood Genter for Corporate Innovation, in California, in the publication “Open innovation:The new imperative for creating and profiting from technology” which dates back to 2003.After analyzing large multinationals in the high tech sector, Chesbrough describes the traditional paradigms of closed innovation, carried out within the company following consolidated and tested strategies, comparing them with the new impulses that move research beyond the company boundaries.The latter is an approach baptized as open innovation.

But how is open innovation put into practice?

There are essentially two types of open innovation: outbound and inbound.The first, still not widespread because it is considered risky, is a process of externalizing internal stimuli and ideas to bring innovation outside the company, for example through joint ventures (agreements whereby both the profits and the risks are divided).The most widespread formula, inbound, is based on the search for new ideas and new external projects to bring innovation within the company.

How do you start this process?Essentially through collaborations of various kinds with startups and universities, use of crowdsourcing, a call for ideas, touser innovation or the organization of hackathons, datathons, appathons or internal hubs, up to actual acquisitions.The final goal of theopen innovation so, it's one contamination of ideas, solutions, processes, people, skills and company resources capable of generating advantages for all actors:large companies, startups, various partners, individual "inventors" and, ultimately, the market.

Simple, right?Not so much actually.Let's imagine for example that, to realize open innovation, an already consolidated entrepreneurial reality decides to acquire a startup:a similar maneuver implies a difficult revision of the processes and corporate culture.For this reason, in recent years a dedicated professional figure has even been created:the'innovation manager, a sort of facilitator of the process, able first of all to identify opportunities and, secondly, to introduce and internally develop a culture of change.

The innovation potential of startups

Acquire innovative startups it is one of the preferred ways for companies to do open innovation.Generally this is a win-win situation.On the one hand, the businesses they secure new ideas, technologies and skills in one fell swoop and have the opportunity to deal with a leaner, younger and more open organizational model.On the other, the startups they access larger capital and gain know-how, experience and connections.In a moment of profound crisis such as the one linked to the coronavirus, for example, many startups have demonstrated resilience, exploiting their creative DNA and generating solutions to face the resulting economic and social challenges.

The biggest obstacle to overcome when choosing this open innovation paradigm is combining contexts that are most often profoundly different from each other in terms of culture, methodology, approach, timing and governance.On the one hand, it is up to companies to align their times and organizational processes with the pace of startups, on the other hand the latter, in turn, must try to adapt to the organizational complexity of their interlocutors, in order to create a synergy between their respective worlds.

For this reason, knowing how to determine which startup to focus on and what type of collaboration to establish is essential for a company that wants to implement a profitable open innovation project.Startups can be hired with relationship mode different, such as collaborations in the research and development area, spot or long-term supplies, development programmes incubation or acceleration, partnership for the co-creation and innovation of the overall business model, up to participation in the equity of the startup and the actual acquisition of the same by the company.

With Lifegate Way, innovation is also sustainable 

LifeGate offers an open innovation approach through its subsidiary LifeGate Way, building an ecosystem of native Italian sustainable startups from which to draw, stimulating corporates, venture capitalists (VCs) and stakeholders to adopt virtuous practices and new models of thought.What innovation it is, in short, as long as it is sustainable:after all, laws, regulations and consumer sensitivity are increasingly moving in this direction.The tools and solutions that LifeGate Way makes available to the companies in its ecosystem are many and respond to the most varied needs.For example, Sustainable South Working responds to a challenge or a topic of investigation launched by the partner company while at the same time carrying out training and team building through experiential activities.People are the engine and at the same time the fuel of the "startup machine":if something goes wrong, everything else stops too.LifeGate Way with the People program works both on individual individuals and on group dynamics to facilitate exchanges and prepare the team to welcome new talents.If the objective is instead to open dialogue between all stakeholders on the corporate sustainability vision, there is the workshop Sustainability 10 cum laude which uses a deck of cards divided into values, trends, objectives and actions, with the budget variable guiding the dynamics and strategic choices.As we said at the beginning, the acquisition or partnership with a startup is a real boost of innovation for a company.The program Adopt a startup offers businesses the opportunity to actively participate in the development of one or more startups from the selected LifeGate Way ecosystem, developing projects of common interest through mentorship activities and workshops.

At what stage is open innovation in Italy?

Although lagging behind other countries (European and otherwise), the drive towards open innovation is increasingly widespread in Italy too, especially among large companies which generally prefer the less risky inbound approach and seek ideas and stimuli outside.According to research byDigital transformation academy observatory out of a sample of 161 large national companies, 45 percent have already started collaborations with these companies and 23 percent are thinking of doing so in the future.

In particular, large Italian companies tend to collaborate with training and research institutions or, in 49 percent of cases, with startups.This approach is less widespread among small and medium-sized enterprises:especially for those anchored to a now obsolete business model, and to the reassuring certainty that "it has always been done this way here", it is not easy to balance the need to innovate and the threats that may arise from it.And it is not even easy to find the tools, the spirit of initiative or the will to undertake an internal reform.To overcome these obstacles it is necessary to define a clear corporate direction and develop a real one culture of innovation and find a profitable balance between openness towards the outside and achievement of internal objectives.