Meeting with Hervé Dechene, open innovation and business management specialist. Hervé Dechene is Vice-President for Strategy at SprintProject, a shared innovation unit consisting of major players in the supply chain. SprintProject identifies and analyses weak signals, trends and innovations from international start-ups in the supply chain that could turn the industry around. SprintProject also facilitates the co-development of high-potential start-ups with its clients, to encourage faster, more equitable cooperation.
Open innovation is innovation that is developed not entirely within a company, but as a co-development or in collaboration with external organisations (research laboratories, suppliers, customers, start-ups, etc.).
Up until the 2000s, innovation was pursued by companies as an in-house concern, within their own innovation units or departments and headed by innovation directors. Innovation was a matter for specialists at that time, experts within the company, and the innovation was dedicated entirely to the company. In the best-case scenario, any company anxious to open up to new ideas would approach a research laboratory to try and ‘capture’ innovation by getting involved in a few co-construction projects with them, but this type of collaboration was quite rare at the time. Innovation was clearly considered ‘too serious’’ and too strategic a topic for companies to look outside their own resources.
Since the 2000s, the innovation context has changed. The advent of the internet and digitisation has meant that knowledge, technology and markets are now more accessible to everyone, all over the world.
Innovation has become more available and abundant, and in-house experts are realising that their vision and internally-developed projects can no longer guarantee the supremacy of large companies. They need to reinvent themselves and move faster, so they have to look outside the company for ideas. This is how open innovation first came about.
At first, companies turned to their traditional suppliers for help with innovation: “What innovations do you have ? How could you help us integrate your innovations into our solutions ? What can you pass on to us ?
Next, companies turned to their employees. All employees were given the opportunity to put forward ideas and suggestions for achieving their objectives more effectively, or even for developing the company. Innovation was no longer just the domain of experts, it was henceforth an integral part of the life of the company. This is known as participatory innovation.
Around 2010, companies start looking at SMEs (small and medium enterprises) and SMIs (small and medium industries) outside their own sector to learn from the trends and ‘import’ these external innovations into their own ecosystems.
In France, it wasn’t until 2014 that companies started to take a real interest in open innovation from the start-up perspective, spurred on by the government and the French Tech movement.
In other words, open innovation can be defined as a company looking for innovation externally that it does not possess in-house.
The definition of open innovation at SprintProject is based on what it does: looking to start-ups to provide the innovation that a company does not have internally or cannot move quickly enough to develop in-house.
Why start-ups ? Start-ups are new, emerging economic players with a very specific approach. Unlike SMEs, SMIs and suppliers, identifying and understanding the distinctive traits of a start-up and its founders means that developing open innovation projects is more complicated and requires specific skills.
The challenges of open innovation for the supply chain are purely contextual. Nowadays, all major players in the supply chain are beset on all sides by start-ups in the market; start-ups which are faster, more agile and more technologically advanced.
Faced with this proliferation of small players, large groups have no other choice than to remain alert for these innovations if they want to survive, and in some cases work in partnership with the newcomers to develop new solutions.
What are the innovations of tomorrow ? How can they be integrated for increased agility ?
In the present context of abundant innovation, SprintProject has set out five findings that are consistent with shared open innovation:
1 – All players in the supply chain – manufacturing, delivery and logistics operators, and even end consumers – are competing with three major global players that have considerable resources and operate on every level of the value chain: Amazon, Alibaba and JD.com. Amazon puts 24 billion dollars per year into research and development, but it is abundantly clear that no traditional player or leader in the sector will be able to match their performance. The players in the supply chain must evolve quickly and efficiently if they want to survive this domination.
2 – The supply chain incorporates low-margin occupations. The major players in the sector do not have the financial capacity to develop and fund innovation. On their own, they are not able to identify, map, monitor and lead co-development projects with start-ups.
3 – The supply chain is characterised by daily, operational occupations. Every day, businesses receive and send out goods. These occupations are not designed to be forward-looking so they can predict what will constitute a disruption for the industry in the future.
4 – The world around us is going through profound upheaval. Up until now the supply chain industry, as with so many other economies, has existed in a closed environment – in silos. But with the arrival of technology, the sector is now bound to move increasingly faster and become increasingly stronger. The emergence of the ‘smart’ world is one of the results, creating interaction between the different ecosystems. Smart Cities for example, smart buildings, smart vehicles, smart energy and smart supply. Smart supply is a connected supply chain that will give rise to a more efficient value chain in the future. Think about connected buildings, connections with haulage companies and improved communications with cities to optimise procurement. As such, the smart world will enable optimised transfers that can respond to the demands of future sector players, consumers and consumer-players.
5 – Setting up open innovation – detecting, mapping, monitoring start-ups, considering the best time to work with them, carrying out co-development projects – requires uncommon skills and comes at a significant cost. An internal open innovation unit, for example, can cost between €500K and €1 million per year, too high a cost for companies in the supply chain to take on alone.
In the light of these observations, SprintProject has set up the Hyperdrive co-development programme, where several large groups work together on collaborative projects with start-ups. By sharing the work and the costs, the large groups are able to work on innovation projects with start-ups, innovate the sector and keep an eye on innovations in the pipeline.
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