Open Innovation: definition and challenges for the Supply Chain

Expert opinion

SprintProject
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Meeting with Hervé Dechene, specialist in Open Innovation and Entrepreneurial Management. He is the Vice-President of Strategy at SprintProject, the shared open innovation unit of major players in the Supply Chain. SprintProject detects and analyzes weak signals, trends and innovations from international Supply Chain startups likely to pivot the sector. SprintProject also facilitates the co-development of high-potential startups with its clients, to enable faster and more balanced cooperation.

What is Open Innovation?

We call open innovation or innovation ouverte in French, innovation which is developed not exclusively internally by companies, but in co-development or in collaboration with external structures (research laboratories, suppliers, customers, startups, etc.).

Until the 2000s, innovation was a mission exclusively developed internally within companies. There were innovation cells or innovation departments, headed by Innovation Directors. Innovation was then a matter for specialists, experts in companies and the subject was entirely dedicated to them. In the best cases, certain companies, keen to be open to new ideas, turned to research laboratories and tried to “capture” innovations by carrying out a few co-construction projects with them, but these openings were quite rare to the time. It is clear that innovation was considered a subject “too serious” and too strategic for companies to decide to outsource.

From the 2000s, the context of innovation changed. With the advent of the internet and digitalization, knowledge, technologies and markets become accessible to everyone, everywhere in the world.

Innovation is becoming democratized, teeming and “internal experts” are realizing that their vision and the projects developed internally no longer guarantee large companies their supremacy. They need to reinvent themselves, to move faster and therefore to look for ideas outside. We then start to talk about Open Innovation.

 

Open Innovation has developed along three main axes:

Initially, companies turned to their historical suppliers to help them innovate: “What are your innovations? How can you help us integrate your innovations into our solutions? What can you send us? »

Secondly, companies turned to their employees. Each employee then has the opportunity to bring forward ideas and suggestions to accomplish their mission more effectively, or even help the company evolve. Innovation is then no longer just a subject for experts, but is now an integral part of company life. We then speak of participatory innovation.

Then, around 2010, companies began to look at SMEs (Small and Medium Enterprises) and SMIs (Small and Medium Industries) located outside their own sector to draw inspiration from trends and “import”, transfer these innovations external in their own ecosystems.

In France, it was only really from 2014, under the leadership of the government and the French Tech movement, that companies began to really take an interest in Open Innovation from the start-up perspective.

 

In other words, Open Innovation is defined by the action of a company to seek outside innovation that it does not have internally.

 

The definition of Open Innovation at SprintProject is characterized by the action of: seeking from startups, innovation that a company does not have, or cannot develop internally quickly enough.

Why start-ups? Start-ups are new emerging economic actors with very specific behaviors. Unlike an SME, a SMI or a supplier, the detection and good understanding of the characteristics of a startup and its founders makes the development of Open Innovation projects more complex and requires particular skills.

 

Open Innovation, what are the challenges for the Supply Chain?

The challenges of Open Innovation for the Supply Chain are purely contextual. Today, every major player in the Supply Chain is attacked from all sides in its markets by startups, which are faster, more agile and more technologically advanced.

Faced with this myriad and proliferation of small players, large groups have no other choice if they wish to survive than to stay on top of these innovations and, in certain cases, to work with these new stakeholders to develop new solutions.

What are the innovations of tomorrow? How can we integrate these innovations to become more agile?

 

SprintProject and shared Open Innovation

In this context of abundant innovation, SprintProject highlighted five findings conducive to shared Open Innovation:

1 – All players in the Supply Chain – industrial players, delivery, logistics, all the way to the end consumer – face three major global competitors with considerable resources: Amazon, Alibaba and JD.com all of which have the strategy of integrating all of the professions in the value chain. While Amazon allocates $24 billion to Research and Development each year, it is clear that no “historical” player or leader in the sector is able to match it. Supply Chain players must evolve quickly and efficiently if they want to survive this hegemony.

2 – The Supply Chain brings together low margin professions. The major players in the sector do not have the financial capacity to develop and finance innovation. Alone, they do not have the capacity to detect, characterize, monitor and lead codevelopment projects with startups.

3 – The Supply Chain is characterized by everyday, operational professions. Every day, businesses receive and send goods. These professions are not trained to project themselves into the future and analyze what will shake up the sector tomorrow.

4 – The world around us is undergoing profound upheavals. Until today and like many other economies, the Supply Chain sector has lived in a closed, siled environment. But, it is clear that faced with the arrival of technology, the industry must go ever faster, ever stronger. The emergence of the “Smart” world is one of the effects. “Smart” allows the creation of interactions between different ecosystems. Let's talk Smart City, Smart Building, Smart Vehicle, Smart Energy and Smart Supply. Smart Supply is a connected Supply Chain which will enable better efficiency in the value chain tomorrow. So imagine connected buildings, connections with transport companies and better communication with cities to optimize supplies. As such, the “Smart” world will make it possible to optimize travel to meet the requirements of tomorrow’s stakeholders, consumers and consumer stakeholders.

5 – Doing Open Innovation – detecting, characterizing, monitoring startups, analyzing the best time to work with them, leading codevelopment projects – requires rare skills and has a significant cost. For example, an internal Open Innovation Unit costs between €500k and €1m per year. A cost that is often too high to bear alone for Supply Chain companies.

 

Faced with these observations, SprintProject created a co-development program called “ Hyperdrive “ in which several large groups work together on collaborative projects with start-ups. By pooling efforts and costs, large groups can work on innovation projects with start-ups, innovate the sector and monitor future innovations.

To know more : contact us

 


 

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