Importantly, the process of incorporating this new knowledge base is often framed in terms of open innovation methodologies. Originally coined by Henry Chesbrough, open innovation practices can speed up knowledge transfer across a company’s traditional boundaries, allowing a competitive advantage to be achieved through cooperative agreements and joint concept discovery and exploration.
Open innovation in the food and beverage industry
Food Service companies, interlinked in vast networks of suppliers and developers, have much to gain by utilising open innovation methods and by adding to the contributions of their own Research & Development teams. The chief reason for this is the relatively low level of technological knowledge operating in this sector. Although, many SMEs are able to develop innovative concepts to an early stage of development, they often lack the resources or know-how to match the sophisticated commercialisation processes that large-scale development requires . This means that they often lose out on the commercial benefit. The tendency for advanced food technology to be undertaken only by a small number of large firms and the impediment that innovative and dynamic SMEs face when developing their innovative concepts, points to a need for change.
Open Innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.” (Chesbrough, 2006) ...
Because open innovation relies upon the exchange of knowledge both from within the company and from without, traditional approaches to strategy which begin and end from within firm's boundaries are unable to take advantage of the vast networks of innovation activity now commonly shared. The first and perhaps most important step to reaping the benefit of open innovation is to examine the way knowledge is currently held and exchanged from within the company. This survey of a company's current innovation practices, will often clarify precisely where the need for innovation assistance is. With this awareness, they can then begin to think about where they might need to look for this assistance, identifying opportunities perhaps from one of the many information sharing networks now available.
Collaborative product design and development
One approach to innovation that many Foodservice SMEs are taking is the creation of a 'neutral' organisation that helps them draw contributors into their midst while fostering a unique commitment to the development of a product or sometimes even a system. The collaborators begin by developing a framework which forms the basis of the collaboration project. This framework which is often open to new members (depending on the needs of the project) provides a channel for resource and financial contributions. Often there is a hosting organisation that will oversee the path to market of all eventual products. This method helps organisations maintain some degree of control by ensuring that the right product is developed quickly and efficiently, while reducing the overall cost of development.
The importance of Innovation Networks in providing resource and support to the core contributors of Open Innovation Projects should not be underestimated. Although they may not be involved in the core design processes of the product, they do act as a key resource for testing and shaping ideas. Contributors from Innovation Networks are also often sought to provide the expertise to fill gaps in knowledge during the development process.
If an organisation's current innovation capabilities have been assessed in advance, with the areas of expertise that are lacking clearly identified, access to Innovation Networks and Open Innovation practices can often ensure value creation for the long-term.
Key Advantages for SMEs from Open Innovation
- Reduced cost of conducting research and development
- Potential for improvement in development productivity
- Incorporation of customers early in the development process
- Increase in accuracy for market research and customer targeting
- Potential for synergism between internal and external innovations
- Potential for viral marketing