Covid-19 Fuels Open Innovation
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Covid-19 Fuels Open Innovation

The Covid-19 pandemic has not only threatened human life but the health and welfare of both large and small businesses.  SAB, for instance, had to face the problem of government hanging a “business closed” sign on their front door, when the sale of alcohol was banned. For others, the issue was the crushing limitation of resources, operations and staffing. Others were forced to face the hard truth that their company had already been sliding towards irrelevance. In stormy times like these, when companies realize they need help because they are sinking and surrounded by sharks, open innovation is the lifebelt they reach for.

Open innovation is demonstrated when companies rethink the ways in which they generate ideas and bring them to market. They move outside the comfort of their own in-house R&D to look for external ideas and outside collaborations.

Martin Wallen, an American professor of innovation management, explains that open innovation has the potential to widen the space for value creation. It allows for many more ways to create value, be it through new partners with complementary skills or by unlocking hidden potential in long-lasting relationships. In a crisis, open innovation can help organizations find new ways to solve pressing problems and at the same time build a positive reputation. Most importantly it can serve as a foundation for future collaboration — in line with sociological research demonstrating that trust develops when partners voluntarily go the extra mile, doing unexpected favors for each other.

Open innovation has a long history, but the current surge has proven that the modern business open innovation theory has massive potential indeed, whether you’re in a crisis or not.

Collaborative innovations

Joining hands for hygiene, a chemical, a mining and a logistics company are helping hospitals in South Africa fight COVID19. Sasol ramped up production of hand sanitizer and split production costs with AngloGold Ashanti, the global gold-mining company providing the specially built bulk-storage tanks for the product while the logistics company Imperial Group ensured that the sanitizer tanks were safely transported to the hospitals.

Now that international conferences and training will not be held over the next several months (conferences that were a major base for marketing activity and business development), companies are innovating training and virtual conferences, while entrepreneurs are introducing their innovations to the international corporations.

We are seeing companies building business partnerships with specialized, maximally flexible third parties at the technological forefront, using this crisis to assimilate startup innovations and advanced technologies through open innovative relationships.

International tourism has taken a severe hit. Travel being one of the main reasons the Coronavirus has spread across the world, government restrictions on movement and tourist traffic are a relatively universal response. Considering the fact that tourism is one of the largest and fastest-growing industries globally, innovation is needed in the present situation because the post-COVID tourists will not be the same as pre-COVID ones.

Innovative solutions regarding safety and hygiene measures, as well as the proximity of medical facilities, will be of key importance in meeting the public’s expectations. Another important step has been that of flexibility. Businesses are demonstrating this flexibility in the form of cancellation policies, service rates, schedule modifications etc. Also, new practices and policies are expected in nearly every aspect of the guest’s experience when it comes to health care facilities and support. In the area of collaborative tours with partners, tourism experiences etc., open innovations are forming to create and position domestic travel as the NEW EXOTIC DESTINATION.

Practices that hinder open innovation

Factors that limit the transformative power of open innovation are governance issues (such as decentralization), IP, value sharing, value transfer, and copyrights. These are all barriers to collective intelligence, collaborative R&D and innovation networks development.

Open innovation is a culture that many companies have not yet developed internally. They struggle with collaboration inside the company, and with strong boundaries across teams, departments and geographical locations.  The challenge lies in creating the capability of collaboration as a work ethos that grows from the inside out. There is little chance for collaboration to evolve into co-creating with customers, partners, and competitors when this is not taking place internally on a daily basis. Companies need to adopt a “process for innovation” moving it to the top of the value chain ladder.

While it has been difficult for companies to grasp the technique and adopt open innovation, it has been successfully used in the social space, addressing problems like MIT SOLVE, OPEN IDEO or broker platforms.  Around the globe and here at home in South Africa we have seen these innovations transform crises into profitability.

What does the future hold in terms of open innovation? Will companies be more open or less open to working with others to develop new product ideas? The world’s response to Covid-19 has shown how companies can work together to solve problems. With everyone facing a shared enemy, and in a common crisis, open innovation can help organizations find new ways to solve problems and do business.