In the future most companies will rely on open innovation, in different forms, to drive the development of their products and services. In order to become attractive for external talents, startups, SMEs etc. they will have to present a clear value proposition for why the externals should contribute or cooperate. Still most companies are only using open innovation initiatives as marketing (contributors win prizes) and basic ideations because they lack an open innovation strategy and the ability to present real value for the external players.
Take the Schiphol Airport Challenge as an example. The airports baggage handling system needs to be further developed. The needed innovation for developing a new system will not come from within and now they are asking for help. This kind of challenges are called ideations. KLM are simply looking for new ideas, not systems, or companies with new innovative solutions to solve the challenge. So why should anyone submit an idea to their challenge?
Well, you will, if you are one of three winners, be rewarded with 10 000 €. On top of that you might be invited to join the pilot project to implement the winning idea. But will that attract the right kind of innovators and solutions to the defined challenge?
- The innovator will not let an business idea go for 10 000 € – it´s not worth the effort – the prize sum is to low (maybe as a student exercise only)
- Who will own the future rights to the innovation if adopted? Do the winner give away the idea that obviously have a bigger value for the company, for only 10 000 €?
- A good business idea to win a challenge like this would also potentially benefit a whole industry (airports) if developed – is the plan to build a company to deliver this innovation to other airports – or for Schipol to sell this and pocket the future profits?
Ideation competitions might work as an internal activity inside a company, to bring out creativity and collaboration among employees, but cannot directly be applied to external open innovation without a strategy.
Successful pilot projects can result in supplier negotiations with KLM and/or Schiphol for acquisition of up to 30 Automated Baggage Handling Systems. Furthermore, there will be the opportunity to market and demonstrate successful solutions (together with KLM and Schiphol) to other airports.
Schipol should be ready to invest and help build companies that could help them develop their baggage services. A clear value proposition would then be to give an external startup or exciting service provider access to their systems (digital and physical), work with their experts, and later even help sell the innovation to others (scalable). I wouldn’t be surprised if Schipol or KLM have great lawyers, back-end resources that also might come useful for building companies that would be based on their current challenge outcome. In the end, Schipol and KLM are only one of many airports in the world that the innovator could work with. In this case I as an innovator get´s 10k€, and will contribute with my time to develop a service/product that might be implemented and might be sold to others at a later stage. What will the innovator(s) live from during this time? Who will own the end product? This is only about what KLM and Schipol wants (better baggage handling – incremental innovation) and not based on what the innovators need.
KLM should learn from Lufthansa who actually have a strategy for working with open innovation, I´m pretty sure that this current initiative will go down internally at Schipol and KLM as something that in the end took a lot of resources and came with a high prize and no real innovation came out of it.
Open innovation do work, if it´s done the right way, but you will need a strategy.