Open Innovation spreading as companies and governments seek the benefits of collaboration

The increasing importance of open innovation has fuelled the rapid growth of a new breed of service providers seeking to assist companies forge collaborations to shorten development time for products and speed-to-market. Although the field is still relatively small, Cleveland ON-based NineSigma Inc has emerged as an early leader and is seeking to boost its Canadian presence and client roster.

NineSigma cut its teeth working with large, multinational firms like Xerox, Kimberly-Clark, Kraft, Rubbermaid, Procter & Gamble and GlaxoSmithKline, exploiting a cross-sectoral trend in which in-house aging baby boomers are retiring, compelling firms to seek innovative expertise outside of the corporation. Typically, larger firms are sitting on considerable amounts of cash but aren't sure how to become more innovative.

"It's about first to market, not first to patent. That makes or breaks the business … Open innovation doesn't always mean open. It's about opening up at the right time and the right place in the development funnel. Open innovation is part of the intellectual property you are building," says company CEO Andy Zynga. "It's also about going outside your four walls to find new ideas and partnerships, developing closer strategic alignment with suppliers. We look globally."

The global nature of the business prompted NineSigma to establish an operations presence in key markets, with subsidiaries in Tokyo, Leuven Belgium and Melbourne Australia. The firm currently serves the Canadian market from its Cleveland base but Zynga says the company is exploring the feasibility of opening a Canadian subsidiary.

"We went global opportunistically in the beginning and then more systematically. We may open a Canadian office because being on the inside makes a big difference," says Zynga. "There's a lot of potential in Canada and a high level of interest. Canada is waiting for something like this."

Founded in 2000, NineSigma has already held seminars in Toronto and Vancouver that are typically attended by chief technology officers and VPs innovation. It has also held discussions with the Forest Products Association of Canada. About 60% of responses to RFPs the company issues on behalf of clients come from industry (mostly SMEs), followed by universities (30%) and independent laboratories (10%).

"We have a PhD provider help desk, develop technology maps for clients and provide proposals and help access them. NineSigma has a collaborative innovation platform and it's social media-based. All of our RFPs are on-line for clients and providers. It's growing quickly," says Zynga. "It's a truly international business. Similar processes can be applied across the globe."

governments funding open innovation to assist companies

With the economic downturn, governments are also looking to Open Innovation to help stimulate industry and the economy in their jurisdictions. NineSigma recently received a $2-million grant from the Ohio Third Frontier Open Innovation Centre to accelerate the adoption of open innovation among companies in its region — so-called "middle market companies" with sales between $10 million and $1 billion.

"It's an interesting contract. Mid-sized companies are realizing the benefits of open innovation," says Zynga. "Most large companies are able to take the open innovation risk (but) smaller corporates are catching on. For the cost of servicing these firms, that's where the government comes in."

NineSigma is seeing the beginnings of government involvement in open innovation throughout North America and the European Union and Zynga says governments can also benefit from Open Innovation.

"Governments are a promising potential market for us. It's definitely a new trend and growth area," he says.

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