Championship: Opening up the ivory tower

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This is the 22nd article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

By Francis Moran and Leo Valiquette

In the context of getting technology to market, “champion” can mean a lot of different things.

Early in this series we defined it as individuals within established enterprises who see the value in supporting a new venture or investing resources in an innovation to help realize its commercial potential. This is often driven by the need to solve a pain point that the patron organization has been unable to address with its internal resources.

A champion can also be a senior decision maker within a large enterprise who provides the clout and support for a successful spinout. Many companies often sit on proprietary IP and leave its commercial potential unrealized because it doesn’t fit with their product lines or existing markets. However, with a little vision and persistence from few committed intrapreneurs, a new company can be born.

And then there are those entrepreneurial individuals who, having themselves gone through the school of hard knocks to develop, validate and commercialize a disruptive new technology, look for an exploitable innovation which they know is worth their sweat equity until some kind of successful exit is achieved. They become consultants who help out those intrapreneurs mentioned above or university researchers with technology transfer.

Champions in whatever form are essential to the commercialization ecosystem. They are often also mentors, investors and, perhaps most importantly, advocates who take that leap of faith and make doors open at that critical juncture to snatch success from the jaws of failure.

In the coming weeks we’ll feature perspectives from a number of folks who fit this mould, but let’s first put the role of champion in its proper context. For established enterprises in particular fighting to keep their heads above water in a volatile global marketplace, taking this kind of initiative isn’t one of those “nice to do when we have the time and money” things. It’s becoming a competitive necessity.

Henry Chesbrough, executive director of the Program for Open Innovation at Berkeley’s Haas School of Business, nailed it in his 2003 book, Open Innovation: The New Imperative for Creating and Profiting from Technology.

“Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology,” Chesbrough wrote. “The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (i.e. patents) from other companies. In addition, internal inventions not being used in a firm’s business should be taken outside the company” such as through licensing, joint ventures and spin-offs.

Tapping into an outside base of knowledge

You don’t need to look any further than last week’s headlines to see open innovation in action in a big way.

GE and its VC partners announced Thursday US$63 million in joint investments and $500,000 in grants to energy innovators in the second phase of its $200-million open innovation project, the ecomagination Challenge, which it launched last year.

“The Challenge has changed how we do business at GE – we learned that accelerating open innovation across public, private and national borders can drive shared value for the company and its partners,” Mark Vachon, vice-president of ecomagination, was quoted in Science/Business.

That article also highlighted Volvo’s open innovation initiative and featured Hans Persson, the automaker’s senior vice-president of technology and innovation.

“Open innovation is extremely important to cope with the really dramatic changes we foresee in the market, particularly in Asia,” Persson said. “For speed and execution and drive to markets, you need to be very connected to the outside base of knowledge.”

Business Week recently ran an opinion piece from Gary Dushnitsky, associate professor of strategy and entrepreneurship at the London Business School, in which he touted the importance of open innovation as a crucial form of outsourcing.

“Just look at an example from the oil industry,” he wrote. “Following the Exxon Valdez oil spill, there was an immediate need to separate the oil from seawater. The issue wasn’t resolved until 10 years later—not by an expert from within the oil industry but rather by a person with expertise in the construction industry with insights into the manipulation of near-solid cement during large pours. Ultimately, this demonstrates that more and more successful innovations utilize know-how originating beyond industry boundaries and that companies need to go beyond simple outsourcing (e.g., just asking an industry expert) to harness expertise from outside areas.”

Dushnitsky also pointed to open innovation competitions, such as the X Prize, which “allow businesses to pay for a proven solution rather than incurring huge R&D expenses that may in turn fund failed innovation efforts.”

Viable business vs. science project

It all comes down to this: In today’s global marketplace, established companies must look far and wide to gather up every competitive advantage they can. For engineers, researchers and nascent entrepreneurs, this can create a wealth of opportunity to secure funding, mentorship, contact with influential industry leaders and tastemakers. The onus is on business leaders to embrace the principals of open innovation and appreciate the valuable role they can play as champions.

But inventors and entrepreneurs can’t just sit back and wait for opportunity to come knocking. If they want to realize the commercial potential of what they have at hand, they must actively engage with their marketplace to validate their idea, ensure it is addressing a clear market need and connect with the champions who can help them move ahead.

This is what distinguishes a viable business from a science project.

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