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Open Innovation: Work With Your Competitors

By Erol Harvey

Clients, customers, buyers and competitors are innovation sources second only in importance to internal employees.

Small and medium enterprises (SMEs) should relentlessly consume and absorb knowledge about their industry, customers and competition, and then share this information aggressively with employees, collaborators, the market and even their competitors.

They usually have to make a little go a long way, so focus and depth are vital and collaborations are essential.

For any business, but particularly for an SME, the business environment extends well beyond the confines of the enterprise they are in, and being an active and contributing part of your business environment is critical to success.

Open Innovation is becoming a mainstream strategy for both large and small companies. The concept of active participation in a broad innovation and entrepreneurial environment is increasingly common, independent of the size of the organisation.

This talks to the concept of sourcing ideas that drive innovation from a range of external agencies, including competitors.

At MiniFAB we built our business model as a contract product developer and manufacturer of microfluidics and consumable medical devices, tapping directly into the trend to outsourced innovation. More than 80% of our business is with overseas clients.

In our early days our commercial partners and competitors could not understand how internationally connected we could be even when our marketing budget was a fraction of theirs. The secret lay in tapping into and using the extensive global academic network that was our company’s origins – one of the value propositions that could encourage improved industrial and academic collaboration in Australia.

During a recent visit to a science park around the University of Twente in The Netherlands, nearly everybody I spoke to referred to the “ecosystem” that existed around the “Kennispark” (a Dutch word for “knowledge park”).

The participants in the Kennispark include two universities, the local and federal governments, agencies, consultants, firms and support businesses. The range of networking events and collaboration opportunities that existed was impressive, from formal events and presentations to monthly “boring-but-important” talks on in-depth technical, legal and financial issues.

Many surveys have shown the importance of external sources of innovation. Clients, customers, buyers and competitors are sources second only in importance to internal employees. So being in an active, dynamic and stimulating business environment is a critical element to the success of any innovating SME. There are many elements to this environment, from the all-encompassing ecosystem referred to by the Dutch to the more modest regional cluster or business incubator.

Current communication and social networking tools give Australian SMEs global access in a way that was formerly only afforded to large multinational organisations – so that now this entrepreneurial ecosystem can be truly international.

Prof Göran Roos, a consultant to the Prime Minister’s Manufacturing Taskforce and the South Australian Government’s “Thinker in Residence”, says there are nine key elements to success in the high-cost environment Australian businesses operate in: ambitious leadership, a skilled workforce, a global outlook, a niche-approach focus and depth, a distributed business structure using partnerships, a strategic alignment with clients, value-based (not cost-based) products, an innovation focus, and linkages with research institutions that reduce business risk and drive innovation.

Research institutions can offer SMEs valuable global technology networking.

Any good academic will be an active participant with his or her international peers in the development of their topic of interest. High performance academics have extensive and trusted relationships that are both highly competitive for grants, confidential in the peer review processes that are used, and collaborative in terms of discoveries.

Once it is part of an entrepreneurial ecosystem, the SME must find value within that ecosystem. Tapping into innovation processes, facilities, infrastructure, experience, knowledge and networks all contribute to SME success.

The SME must have the ability to focus and build depth. Feeding off the ecosystem helps and creates competitive value within the products and services offered.

The SME must – lastly – contribute back to the development of the ecosystem. Only by being an active and valued contributor to the entrepreneurial ecosystem can the process be made sustainable.

Sometimes you will be helping your competitors, but more often you find they are helping you.

Erol Harvey FTSE is CEO of MiniFAB (Aust) Pty Ltd, a product development company and manufacturer of polymer-based microfluidic, lab-on-a-chip diagnostic devices. He is a former Professor of Microtechnology at Swinburne University.