Open innovation helps in effective implementation

INNOVATION has achieved a cult-like status. In 2015, PwC reported that the top 1,000 companies globally spent a combined US$680 billion (S$917 billion) on R&D. That is no small sum.

Walk into any bookstore and you will find books on disruptive, agile, lean, reverse, and process innovation. On LinkedIn, we see the label of innovator emblazoned across profile pages in much the same way a college student boldly positions a university's name on a T-shirt.

Today, innovation has both social cachet and practical value. In the MBA classroom, we might refer to innovation as a means of creating value.

Innovation can make a company more competitive and help improve lives.

I would like to suggest that within this popular discussion of innovation we might be overlooking something important.

Innovation can also be an effective form of implementation - a way of getting work done.

To illustrate, let's consider examples of crowdsourcing and open innovation. Through these, we can see how open innovation can also deliver better execution.

In 2009, Singaporean film-maker Tan Siok Siok decided to make a documentary about Twitter, the social networking site.

She did not make her film the old-fashioned way by building a team that included a writer, director, filmographer and lawyer.

Typically, such a team would appeal to the powers that be for financing and, later, distribution in the cinemas.

This process of seeking financial support and distribution is referred to as development hell or development limbo.

Creative projects can literally get stuck in this limbo for years or, worse, never emerge at all.

Tan elected to bypass development limbo and instead crowdsourced her film.

She appealed directly to Twitter users for stories about how the social networking site has impacted their lives.

The end result was a rapidly-produced and engaging documentary which today can be watched on YouTube for free.

Crowdsourcing allowed Ms Tan to navigate around development limbo and quickly produce a high-quality documentary. Crowdsourcing helped her rapidly execute a film project.

The pharmaceutical industry has its own development hell, of sorts. When independent researchers anywhere in the world create a new compound, on average it takes 18 to 24 months until that new compound finds its way into Big Pharma's R&D labs.

Why do promising compounds sit on the shelf, untested, at a time when we routinely read about the dearth of new drugs in the pipeline?

The simple answer is that very little is known about these new compounds. They have not been fingerprinted. (Every compound has a unique structure just like every person has a fingerprint.)

Meanwhile, the pharmaceutical industry continues to practise a model that prioritises IP ownership. Consequently, pharmaceutical companies are generally unwilling to buy a compound that they know little or nothing about. Thus, discoveries sit on the shelf, untested.

This is where open innovation steps in to solve the problem.

Some firms, such as Eli Lilly and LEO Pharma, are using open innovation to help researchers around the world fingerprint newly-discovered compounds.

The pharmaceutical companies set aside any question of buying the researcher's IP, and instead focus on fingerprinting the new compound and entering that fingerprint into a library used by R&D scientists.

Open innovation, in this case, removes the question of IP ownership and that, in turn, accelerates the pace at which these new discoveries can be brought into the R&D labs.

This is quite innovative for a traditional industry like pharmaceuticals.

Yes, innovation is important.

It can be an important part of our public identity, and a means of competing and improving lives. But now we can also see that innovation is also about getting the work done.

And when it comes to new drug development and treating conditions like HIV or cancer, few things could be more important than getting the work done.

Michael Netzley, PhD, is the academic director, SMU Office of Executive Development.

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