[OI Market Study 2013] Key Results – Global Market for Open Innovation Support

When engaging in OI, organizations face the challenge of creating the internal ecosystem that allows them to profit from external input in an efficient and effective way. Professional assistance is offered by Open Innovation Accelerators (OIA)

OIAs are intermediaries, consultancies, and agencies helping their clients to accelerate an open innovation project by providing dedicated tools, methods, access to an established community of solvers or participants, but also education and process consulting.

 With more than 160 players, the market for OIAs however is getting complex and difficult to navigate. Hence, we reached out to 160 providers of (inbound) open innovation services to join a 90 min survey investigating the OIA’s business model and environment, productivity, services offered, project specifics, and characteristics of their participant pool. In addition, we asked about estimates for the development of the open innovation market.

59 (37 percent) of the OIAs contacted provided us with a complete data set. For the remaining companies, we used secondary data sources.

In total, our study is the largest inquiry of the global market of open innovation services. In the following, we will provide some high-level results.

OIA Market Structure

We find that the market for open innovation is getting mature. On average, OIAs have already conducted a high number of client projects, many of them 200 and more. Still, the market for OIAs shows continuous growth. 

Ideation contests are seen as the most promising open innovation format. They cover almost 80 percent of the entire open innovation market. Secondary services like software support, consultancy, or executive education enhance the offerings of many OIAs.

But we find that OIAs also increasingly reach out to functions beyond new product development. The core idea pattern of open innovation to engage an open, undefined network of people in form of an open call or open search activity seems to be transferrable to a variety of tasks, including marketing, customer service, recruitment, knowledge management, and HR.

When comparing our 2013 data with data from an earlier study in 2010, we find that about 20 percent of the 2010 OIAs do not exist any longer or have been acquired by other players. We expect an even stronger wave of acquisitions and mergers for the coming years.

The average cost for an OI project with an OIA is €43,000. But project costs differ widely, ranging from €12 (for a basic monthly description of an OIA web-service) to €164,000 (for an OI consulting service). The main project cost driver is personnel capacity. In the end, OIAs are no IT services or "self-service internet platforms", but knowledge-intensive service businesses. Recruiting experienced project managers and analysts becomes a major challenge for many OIAs.

OIA Services & Methods

In general, OIAs differ, first of all, regarding their approaches how to tap into an external knowledge space. These approaches can be differentiated according to the way how contributors for a specific project are selected and the collaborative process is being initiated. We find three options:

• Open Call: Calling for individuals to identify themselves by contributing to a given task;
• Open Search. Searching for relevant information or individuals according to a given task
• Selective Open Call: Calling for individuals, but within a pre-defined set of potential participants (a hybrid between the previous two options)

These three options also help to structure the service types that OIAs offer when we add the type of information requested by the client: information about market needs or information about technical solutions:

 

Table: Open Innovation Approaches and practical examples

 

Working with an OIA

Picking the right intermediary depends, first of all, on the type of task and the nature of the innovation problem. Not all OIAs are suited for every open innovation challenge. OIAs further differ with regard to the breadth, scope, and structure of their pool of potential participants, and the options for clients to control access to this pool and the interaction within a given project. Furthermore, outcomes of an OIA project can range from raw ideas to sophisticated concepts – and selecting an OIA very much depends on the expected outcome and preferred degree of outsourcing the OI function to the OIA.

From a client perspective, the OIA business has two major characteristics, distinguishing it from conventional innovation consultants. These two characteristics also should be key decision criteria when selecting an OIA:

First, software plays an essential part of any open innovation venture. Web 2.0 and social software technologies allow OIAs to operate globally and integrate large numbers of participants without high transaction cost. In 90 percent of all cases, OIAs offer a distinct software solution. Hence, selecting an OIA also means deciding whether the software solution should be implemented in-house (following a traditional license model) or using it as a web-service or via a hosted service of the OIA.

Secondly, OIAs build on the involvement of a community. OIAs connect clients through their communities with a variety of external actors, most of them are new and unknown to the client (this "looking out of the box" is exactly the value of open innovation). OIA services differ significantly regarding their community composition. In average, we find that OIAs have an existing pool of participants (their "community") of 20,000 members. But OIAs specializing on ideation or technical contests often have communities of more than 100,000 members. To join the pool of participants, prospective participants have to accept general terms and conditions, but in general do sign not a formal contract. This is a core difference of open innovation via OIAs compared to traditional forms of R&D networks or alliances.

Between communities, the general level of expertise of its members differs significantly among the different services. OIAs offering technical search services in form of technology scouting, for example, have access to high level expert communities, while OIAs focusing on ideation and concept generation often have a broad, very heterogeneous community of "average" consumers.

For the full picture, refer to The Market for Open Innovation: The 2013 RWTH Open Innovation Accelerator Survey. authored by Kathleen Diener & Frank Piller, 2nd edition, May 2013. Lulu Publishing: Raleigh, USA (available via study.open-innovation.com).

Check back from more updates and key results from the OIA 2013 market study!