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More Corporations Are Incorporating Open Innovation

Faced with an increasing number of disruptive challenges from new technology, social media, and global competition, U.S. businesses have responded by investing more time and money in innovation. Traditionally, the search for innovative products, services and processes was performed internally behind closed, secure doors. The results of these efforts, however, have been underwhelming.

But an increasing number of companies is now turning an “Open Innovation” approach, centered on openly soliciting ideas from external sources as a supplement to their own internally-generated ideas.

According to a 2013 study by University of California Berkeley professor Henry Chesbrough, 78 percent of firms surveyed practice some form of open innovation, and 82 percent reported that open innovation was practiced more intensively than three years prior.


Experts from both organizations partner as part of a “solution validation team.” The team is chartered to operate within a tight budget and time-constrained “sprint” environment to validate a solution. When roadblocks are uncovered, they must be adept at solving the issue and pivoting to adjust or, in extreme circumstances, give up before spending more time and money. Throughout the engagement, the startup should receive corporate business mentoring, while the corporate team experiences “sprint lean risk” skills necessary to innovate.

While the team’s objective is to successfully complete a proof-of-concept, the sprint requirement forces the combined team to share their skills and expertise. This exchange nurtures innovation and provides internal entrepreneurs a platform to work in, while rewarding the external innovator with an endorsement and compensation.

The approach is just as valuable when an innovation validation process fails to pan out. In this case, the external innovators’ risk-taking skills and ability to adapt or accept failure quickly can save the acquiring organization time and budget. Startups—especially successful ones—are experts at using failure to quickly adapt and pivot to a more successful result.


Walgreens is one firm that has embraced the concept. The national retail drugstore chain actively pursues products and services developed by startups to stay ahead of the competition. According to Jay Rosan, a physician and vice president for health innovation at Walgreens, it’s understood that young companies can bring fresh ideas that help to differentiate the firm.

Open innovation calls for companies to transparently promote areas where they need assistance, and to solicit innovative solutions from small entities often in their early stages of development. Advantages to this approach include the ability to react early and more quickly.

In the open innovation process, solutions—typically from early-stage companies—are searched for and screened against specific business challenges posted by the corporation. When a fit is surmised, the startup is contacted, investigated and sometimes invited to bring in and adapt their solution for the corporation. The innovation company gets access to a powerful distribution partner and the corporation gets early access and influence to an innovative answer.

Recently, Walgreens partnered with a Silicon Valley company, Theranos, which innovated a less-invasive method for collecting blood samples for testing and is currently piloting the service. In addition, the Walgreens Well Ventures Fund, established in 2010, has invested in many innovative startups.

As the pace of technology continues to increase and the pressure for success grows, it not only is vital, but necessary to innovate. By looking look externally using open innovation, companies can complement their internal efforts to find that next great product or service.

Coley Brown is CEO and co-founder of VisionMine, an Open Innovation consulting firm and internet portal that matches corporate business and technology challenges with startup innovations discovered by the firm. Reach Coley at [email protected], or 201-474-5776.



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