How to Increase the Success Rate of Open Innovation

Recently, open innovation (a business development approach that incorporates knowledge and technology from external partners) has garnered significant attention in the new business development departments of large corporations.

Effectively utilizing open innovation can unlock assets that remain untapped within a company's existing operations and provide access to novel ideas and perspectives from partners.

It also offers various benefits and potential from a business growth perspective.
For example, it enables entry into "attractive markets that the company alone could not enter" by creating "products and services that could not be developed as an extension of normal production activities."

This time, I will share some methods to increase the success rate of open innovation, drawn from my own experience.

<Table of Contents>
▼Five Key Elements for Strategic Planning
▼Case Study: Dentsu Inc.'s Open Innovation Initiatives

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Five Key Elements for Strategic Alignment

Open innovation involves collaborating with external partners outside your usual network, and it's also a new business venture.

To achieve tangible results, it requires mobilizing and securing cooperation from numerous individuals both inside and outside the company.

The key to this internal and external coordination is persuasiveness. Therefore, we will outline the fundamental methods for persuading stakeholders.

First, the general flow of open innovation can be organized as follows:

① Strategic Planning
↓
② (Approval)
↓
③ Partner Matching
↓
④ Prototyping and PoC (Proof of Concept)

Within this process, the most critical step for building persuasiveness and ensuring business success is the strategic planning phase in ①.

The fundamental elements required for the business strategy outlined in a business plan are covered in general MBA and business management textbooks and reference materials, so we will omit them here. This time, we will specifically share the five key points of "strategy refinement" that are particularly important in open innovation.

These are: ① Significance of Targeting the Market, ② Clarification of Resource Status, ③ Alignment of Expectations, ④ Alignment on the Degree of Openness of the Business, and ⑤ Mutual Recognition of Cultures.

① Significance of Targeting the Market
・What meaning does entering that market and market segment hold, based on the company's management philosophy and vision?
・What is the gap between your company and the market?
• What specifically is lacking within the company, and what synergies exist?
・How is the product or service attractive to partners, consumers, or clients?

② Clarifying Resource Status
・What assets can the company provide, and conversely, what does it want partners to provide?
・How does having that product or service create competitive advantage for your company?

③ Aligning Expectations
・What level of economic benefit and what type of exit (investment recovery method) does your company aim for at each phase and goal of the business?
・What kind of business partnership and commercial flow does the partner seek, and what economic scale do they likely expect from this partnership?

④ Aligning on the Degree of Business Openness
・Is it possible for additional partners or desired companies to join or replace existing partners if better options arise?
・Accepting non-compete obligations for partners
・What criteria will guide the above considerations?

⑤ Mutual cultural recognition
・Are there any conflicts between our company's culture and the partner's culture?
・If conflicts exist, from what perspective, what risks are involved, and what countermeasures can be taken?

The key to increasing success probability is translating these five points into a common language that can be explained to all stakeholders. This aims to make all involved parties feel personally invested.

To achieve this, it is essential to maintain your company's own intentions and objectives while thoroughly organizing and thinking through what value you can provide to the other party.

Dentsu Inc.'s Open Innovation Initiatives

Agile business operations and new venture planning styles are currently popular, and I believe these are excellent approaches. However, regarding open innovation, it fundamentally operates on the premise of having partners. I hope it becomes clear that, except for frameworks where the entire process is already standardized—such as OEM, intellectual property acquisition, or agency sales—open innovation is a method requiring advanced strategic thinking during planning.

Lately, we see numerous examples where the means become the end, such as acceleration programs lacking clear objectives. Precisely because it's open innovation, it's impossible to be passive or simply wait for good ideas to come to you and build a business.

This may sound like a matter of mindset, but I believe it's essential to have a strong resolve and determination as your mindset: "We are going to create new businesses within our company," while being fully aware of the difficulty and risks involved.

Incidentally, at Dentsu Inc., we are also undertaking various open innovation initiatives by forming project teams and changing the implementing entities and the ultimate objectives/targets.

Dentsu Group Open Innovation Projects
(As of March 2019)BASE Q
Supporting large corporate intrapreneurs in creating new businesses through open innovation. A collaborative platform business involving three companies: Mitsui Fudosan (which runs an innovation building program), Ernst & Young, and Dentsu Inc.

DENTSU JAM!
A co-creation project supporting the emergence of new businesses and industries. Promotes co-creation through a "NtoN (many-to-many) model" involving multiple companies and organizations—such as startups, companies from different industries, and even competitors—in collaboration with external partners.

GRASSHOPPER
An acceleration program supporting startup growth, primarily through creative development. Provides multifaceted support, including business co-creation through collaborations between startups and large corporations.

NewsPicks Studios
Collaborates with NewsPicks in planning, production, and management of post-text content, primarily video, through a business partnership.

TANTEKI
A team supporting collaboration by designing "what you want to convey" into a "form that resonates" with people who haven't heard it before, targeting those responsible for management planning/business development at startups and large corporations.

SPORTS TECH TOKYO
A program recruiting outstanding startups worldwide focused on Sports × Technology. Supports business growth and facilitates collaboration with major corporations. Japan's first global open innovation platform hosted by Dentsu Inc.

Open Innovation Lab (InnoLab)
A technology boutique of Dentsu Inc. International Information Services (ISID) that collaborates with domestic and international companies, ventures, and universities to solve various social challenges. It combines technological seeds with societal needs to pioneer the implementation of future cities and societies worldwide.

Co-Creation Innovation Lab
A joint organization by the University of Tokyo's Research Center for Advanced Science and Technology and Dentsu Digital Inc. researching better approaches to open innovation

Dentsu Inc. B Team
An "alternative approach" team where employees possessing top-tier "B-side" expertise in various fields gather to propose plan B—methods to break through the various challenges and stagnation that cannot be overcome by conventional "A-side" approaches—for companies and organizations.

Dentsu Inc. Growth Design Unit
An internal organization of business growth support specialists that systematizes business growth support services for startups and provides "360-degree business support services" primarily for media and platform operators

Dentsu Inc. Growth Hack Project
Provides full-layer/full-funnel internal improvements—from business design and KPI/KGI design to providing optimal tools and resources for operations, and analyzing/executing detailed tactics like A/B testing—covering customer acquisition, monetization, and retention.

Dentsu Inc. Ventures
A corporate venture capital fund that invests globally in ventures, primarily in Europe, the US, and Asia. It promotes open innovation within the Dentsu Group itself through hands-on support and business development leveraging Dentsu Inc.'s core resources.

※1: Includes initiatives that were not explicitly pursued for open innovation or are not core solutions, but are provided or implemented as a result.
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※2: Numerous other open innovation support projects are individually contracted with client companies beyond those listed above, but these are all omitted.

Next time, in the final installment of this series, we will introduce a framework useful for evaluating digital technologies. This framework can be applied in business development, solution product development, and open innovation settings.