Accelerating innovation: The cross-industry collaboration trend

SMEs should seize the opportunity to leverage innovation from firms outside the business, Dan Edwards suggests.

As we continue to face economic uncertainty, how to rejuvenate business and returning the British economy to growth still dominates the media agenda. While it is widely recognised that innovation is vital to drive and sustain longer term growth, in particular SMEs, investment in innovation has not been maintained. According to Nesta, the UK economy has experienced a “lost decade” of innovation, with an estimated £24bn fall in investment in innovation last year alone.

While many UK businesses are facing the challenges that include budget constraints, globalisation and increased competition from new markets, it seems like a good time to suggest new ways of putting investment into commercially successful innovation. This is particularly the case for mid-market firms, who are often resource constrained and tied to short term milestones.

Companies such as Unilever have adopted interesting and open approaches to innovation to counter any R&D challenges that may be faced internally, such as size, procedures and expertise. Known as “open innovation” by “opening up” the business to external partners with differing expertise, these firms have been able to negotiate the innovation challenge and retain market position. By working with external partners, they developed innovative products such as the DADI hair diagnostic device to meet market demands.

Although SMEs won’t have the size, scale and budgets of blue chips like Unilever, “open innovation” is an approach that can be tailored to size and scope and should be considered by more UK businesses. In particular, collaborating with an external partner can help address some of the key challenges SMEs face during product development projects. These might include turning a novel idea into a commercially viable product, needing an external perspective, needing extra resource without taking on additional full time employees or needing to fill a specific technical expertise or skill gap. 

Most importantly, working with external partners doesn’t necessarily require huge injections of cash or large dedicated teams. By picking a few key, external partners you not only learn from other people’s experiences, but also minimises the risk of your product development and make sure that, when you do launch your product or service, it succeeds in the market.

For example, mid-market firm Photocure, a Norwegian specialty pharmaceutical focused in dermatology and cancer, worked with an external partner to develop a device that would work in combination with Photocure’s pharmaceutical as an on-surgical alternative to treat HPV and cervical pre-cancer. The result – Cevira – is a drug-device combination procedure which delivers targeted light-activated treatment that is intended to destroy tissue infected by HPV and treat pre-cancerous lesions. By embracing open innovation, Photocure has developed a viable alternative to invasive treatments that is expected to improve patient health outcomes and help reduce costs for the healthcare system.

Similarly, asset management company, OXEMS, used the open innovation approach to develop a product to register, map and track the tunnels, pipes and cables that lie underground. Underpinning the product development was the aim to provide innovative technology to address a real need in the UK: helping utilities. Major water, electricity and broadband companies will be able to manage their underground and overground assets in a much more cost-effective and efficient way. By collaborating with external experts they were able to launch a commercially and technically viable product in the market.

“As a start-up company, OXEMS potentially had a great product but the technology needed further development to be able to take it from university research and turn it into a commercial product,” said Kevin Gooding, CEO at OXEMS. “By adopting a collaborative strategy and working with external partners, we were able to leverage the commercial and technical expertise of these partners while retaining the IP and limiting the employee headcount at OXEMS – a vital consideration for any small business.”

One of the huge benefits of SMEs is that they are small enough to be flexible and agile enough to adapt product and design quickly for market demand. An open approach to innovation can help them seize on this advantage. By working with one or even several external partners to leverage the best innovation and design skills available – both inside and outside the business – firms can not only cut risks associated with product development, but also make sure that they remain one step ahead of their competitors.

Dan Edwards is managing director at Sagentia.

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