We’re all familiar with crowd-funding platforms such as GoFundMe and Kickstarter. Open innovation has a similar concept, built on the assumption that great ideas can come from anywhere if you know how to ask. As global development and sustainable business challenges grow ever more complex, organizations need bright ideas and new perspectives.
Open innovation taps local and global innovators to implement ideas, solutions, and business models to address specific international development or business challenges.
Through open innovation competitions, companies, foundations, and global development organizations are opening their doors to outside collaboration and inspiration to more efficiently shape better, smarter solutions.
The term “open innovation” was coined by former Harvard Business School professor Henry Chesbrough in 2003 to describe how a firm can bring external ideas or technologies into its innovation process.
In other words, open innovation occurs when an organization solicits external stakeholders to put forward or help design a solution to a specific challenge.
Another way to understand open innovation? Compare it to “closed innovation,” or the standard process through which companies and organizations translate expertise and ideas from their internal teams into new solutions, strategies, and products. Open innovation, conversely, engages with stakeholders outside the organization—soliciting and benefiting from outside ideas, input, and expertise.
There is a range of ways that companies, foundations, and global development organizations can engage in competitions for open innovation to solve complex challenges. These vary in purpose, how wide they cast their net, the level and type of engagement from the soliciting organization, and the maturity of the ideas they seek.
Through our Design & Innovation client journey, we start by understanding the problem clients hope to solve and their relevant internal resources, opportunities, and constraints. Then, we help them tailor an approach that fits their needs.
Helping companies, foundations, and global development clients to:
These activities are often mutually reinforcing and can be pursued in tandem; however, this guide will focus on the final bullet: Competitions for open innovation.
Below, we’ll dig into the ins and outs of open innovation competitions and their promise and potential for solving complex business and global development challenges.
An open innovation competition solicits ideas or proposals from outside stakeholders around a specific theme or answer to a particular problem or challenge. They can vary widely in their structure—in terms of whom they reach, the types of ideas or solutions they seek to solicit, and how they reward or engage with winning competitors.
Open innovative competitions typically take the form of a challenge or prize:
When working in emerging markets, even the most innovative companies and organizations brush up against complex problems beyond their power to solve them alone. Organizations can use open innovation to seek and engage external inspiration, ideas, and problem solvers for these situations.
You might want to consider an open innovation competition if your problem:
In emerging markets, open innovation competitions can invite participation from across the local innovation ecosystem—opening up access to critical partners and perspectives that outside organizations may otherwise lack.
Through the Intelligent Forecasting Prize, we worked with USAID to identify and reward high-performing models for predicting contraceptive use at health delivery sites in Cote D’Ivoire—to boost supply chain efficiency and ensure the availability of family planning supplies. To provide local partnerships and perspective, the competition also featured a second-stage field implementation grant to pair winning innovations with local partners and data scientists in Cote D’Ivoire, to customize and test high-performing models within local systems and contexts.
Successful companies may boast world-class talent, but even the best can’t claim all the brightest minds and ideas. Complex problems often benefit from partners with diverse expertise tackling the same issue from different angles. In many ways, open innovation is, at its essence, a tool to help large organizations identify and engage innovative social enterprises and impact entrepreneurs and SMEs.
PepsiCo and Pioneer Foods launched the SSA Development Fund to identify new partners to co-create and scale solutions for South Africa’s food system. The Development Fund will focus on agricultural development, education, and enterprise development for Black-owned food innovation startups. Meanwhile, Unilever, Colgate-Palmolive, and The Coca-Cola Company have joined AB InBev on the 100+ Accelerator to identify innovative startups with solutions for circular packaging, smart agriculture, water stewardship, climate action, and upcycling.
Sometimes you need all hands on deck as soon as possible. Pandemics, political turmoil, and natural disasters are all situations that can worsen in a matter of weeks. Open innovation competitions can accelerate the process of sourcing and scaling new solutions to burgeoning crises. Challenges allow partners to solicit widely and test new approaches rapidly when time is of the essence.
The BetterTogether/Juntos Es Mejor Challenge aims to address Venezuela’s regional migration crisis by crowdsourcing, funding, and scaling ideas from innovators worldwide, with a particular focus on elevating the voices and solutions of those closest to the issue: Venezuelans who fled the country and Latin American host communities receiving the greatest influx of migrants.
If a problem continues to thwart all attempts to solve it, decade after decade, it’s time to try something new. Open innovation competitions can be an effective way to introduce new or more locally appropriate solutions.
The Innovation for WASH in Urban Settings Challenge sought breakthrough solutions to help cities expand access to clean water and affordable sanitation for the urban poor. This long-standing problem has only worsened as more people move to informal urban settlements with limited water, sanitation, and hygiene facilities.
Here are a few types of organizations that typically use open innovation competitions.
Open innovation has long been a method for private sector R&D and collaboration. And now, increasingly, multinational corporations also deploy open innovation competitions to advance sustainability and purpose-driven goals. Prominent examples include:
Open innovation has become a powerful tool across the global development community—from the U.S. Government, Australia’s DFAT, and Sweden’s Sida to development finance institutions like the World Bank and foundations like the Bill & Melinda Gates Foundation. These players apply open innovation competitions to various complex challenges, from small-scale farming improvements to scaling digital innovation to advancing climate resilience.
The world’s largest aid agency, the U.S. Agency for International Development (USAID), also prioritizes open innovation. USAID has created a $25 million buy-in mechanism to spur the adoption of open innovation across the Agency. The USAID Catalyst project designs and manages open innovation competitions; provides support for innovators; and helps improve monitoring, evaluation, and learning (MEL) for innovation programming across the Agency’s global portfolio. USAID’s flagship open innovation programs include the Development Innovative Ventures (DIV) and Grand Challenges for Development.
Open innovation competitions offer an efficient way to prototype solutions to advance progress on tough challenges. The cornerstone of any successful competition is a well-thought-out design. You’ll save resources in the long run by devoting time up front to clarify what you hope to achieve and how. Opening up the design phase to others is especially important with open innovation competitions. An inclusive design approach will help mitigate challenges down the road.
The following sections outline common components of open innovation competition design and implementation. However, the order and nature of these components may change depending on the client, the challenge, and the context.
By developing a deep understanding of the problem sets you seek to solve, you are in a much better position to achieve lasting results. A thorough investigation will allow you to answer the following questions:
As you approach problem definition, remember: There’s no better way to understand a problem than from those who experience it firsthand. But in emerging markets, the end users or consumers who would benefit most from targeted solutions are often left out of the design process.
Use an inclusive design methodology, such as human-centered design, to ensure these voices are heard. Regarding open innovation competitions, it’s also essential to assess the innovation ecosystem—local, regional, global, or sector-specific—and consult problem solvers who are well-placed to address the issue from various angles.
Depending on the nature and scope of your competition, you may want to consider launching it with a partner (or several) who can help you maximize your impact and reach. When selecting a partner, give thought to why and how you should include them:
To determine your structure, ask yourself: (a) how developed is the relevant innovation ecosystem in the target geography, and (b) what part of the innovation ecosystem do you hope to engage? Are you looking to scale proven solutions, or are you hoping to kickstart new ideas and early-stage innovators?
Your approach will likely be different if there is already a highly sophisticated ecosystem of solvers, innovators, and support networks focused on your problem, compared to a relatively undeveloped innovation ecosystem, with few known players. Here are a few tips on structuring your open innovation competition.
If your problem is well-defined and you’re looking to select the best solution from a wide pool of applicants (i.e., a well-developed innovation ecosystem), a prize may be your best bet.
Benefits of open innovation prize competitions:
The solutions to some problems are not as clear. In these instances, you are better off developing a challenge that incentivizes different problem-solving approaches and ways to define success.
Benefits of open innovation challenge competitions:
Whether you choose a prize or a challenge, is the price right to incentivize the people who can solve your problem? Are the reporting requirements reasonable? Your award should correlate with the expectations and capacities of your solver universe to ensure that you receive plenty of high-quality applications. Before you promote your challenge, you’ll want to determine:
Promoting your open innovation competition is about knowing whom you want to attract and where they get their information.
Your outreach strategy will also need to be tailored to the needs and realities of your target innovation ecosystem: Is there a known, core group of players whom you can engage directly? Or is the innovation ecosystem large and diffuse, requiring broad outreach strategies? For efficient communications—and more successful outreach and engagement—know your target audience and hone your strategy and tools to meet them where they are.
The following tools can help you target and reach innovators working on the problem you’re attempting to solve.
From country to country—and niche to niche—the social media platforms innovators use to connect and share ideas vary widely. Explore the social tendencies of your solver universe and meet them where they’re at, whether it’s trading quips on Twitter or sending messages through WhatsApp. Where applicable, consider boosting outreach through targeted social advertising or influencer marketing.
As you made your way through the design phase of your competition, you likely discovered a world of potential partners and associations. If they are actively involved, ask how many would consider “boosting your signal” by promoting your competition on their website, newsletter, or social platforms.
Once innovators get wind of an attractive open innovation prize or challenge, they’ll want to learn more to see if applying is worth their while. After drawing people to your website, collect email addresses and notify potential applicants about any webinars you plan to host to answer questions and help innovators determine if they’re a good fit for your competition.
Promote and cross-promote the achievements of those who are already working with you! Not only will this attract new interest for future competitions, but it also helps provide color and context to your monitoring and evaluation efforts.
You now have a great communications plan and probably feel ready to shout it from the rooftops, but don’t launch your open innovation competition just yet. You should have a clear idea of how you will screen applicants and evaluate finalists before finalizing your messaging and launching your competition. That way, you’ll be sure to set your selected innovators up for success.
It would help if you also established stages for your competition to determine when and how to engage expert judges as part of your review process.
Here are a few tips for building effective evaluation criteria.
Innovation isn’t always about the shiny new thing. Often, very little technology is involved. Sometimes the solution is just a better approach or new way of looking at a problem. What kind of innovation are you looking to incentivize?
The answer to this question will depend on the nature of the problem, as well as the region and context. Some solutions require entirely new technology or approach, some create or reimagine markets, while others adapt methods that have been applied successfully elsewhere.
Whether public- or private-sector-driven, each innovation must be financially viable to be truly effective. Simply put: how will the innovator’s solution generate or secure the revenue to pay for itself? How will that revenue or funding model allow the solution to reach more people (or the same amount of people, more effectively) over time? Problem solvers should demonstrate their capacity to execute the solution based on a sound business model and implementation plan. They should also provide examples of their experience and capability in working on similar problems or solutions.
Not every solution needs to be market-driven (or revenue-generating)—but every innovator should be able to articulate a clear plan for how the solution will secure the funding and support it needs for long-term sustainability.
Once an innovator’s organization is up and running, they need to entice people to use its solution to scale its impact. Prize winners have already demonstrated their effectiveness. But for challenging applicants, your evaluation process should include an assessment of how many users—or another metric to define successful scale—the innovator expects to reach and how they will reach them. Innovators should specify what networks they will leverage and how to accelerate their impact.
Solvers should also be able to articulate the barriers to scaling their innovation and how they will overcome them. But they don’t need to do it alone. Partnership is key. (USAID’s Pathways to Scale provides examples of how global health initiatives, for example, can scale up with the support of public and/or private sector partners.)
Your judges should thoroughly understand the nature of the problem and, ideally, have expertise in attempting to solve it. At least one of the judges—if not all—should be grounded in the local context. It’s also essential to select a wide range of judges who can assess an innovation’s potential from different angles. Look for a good mix of visionaries and pragmatists.
When you recruit your judges, be clear on your expectations. Make it easy for them and less subjective for applicants by defining and documenting clear judging criteria. A point scale can help ensure that the process is fair.
When evaluating your open innovation competition, it’s just as important to learn from what isn’t working as what is. You will likely want to have a monitoring, evaluation, and learning (MEL) plan at three levels:
You will want to ensure that the reporting requirements you set for selected innovators align with your MEL needs. It would help if you also established checkpoints and two-way communication channels with innovators to understand better how the competition helps them (or could do more to help them) reach target users and partners.
In this way, you can gain the insight you need to pivot in real-time and/or strengthen future iterations of the competition.
The crowning achievement of any open innovation competition is that its awardees are successful long after the prize or challenge funds have come and gone. You can help set innovators up for success after your competition is over by supplementing financial awards with acceleration support, technical assistance, and partner matchmaking. Common assistance includes:
Open innovation can unlock growth potential and scale business and global development impact. Open innovation competitions can be framed around a wide range of sustainable impact challenges—helping organizations bring new ideas and partners into their ecosystem.
The guide above walks you through how to begin to frame and execute a successful open innovation competition. But if you want to go deeper, we’re here to help. At Resonance, we help diverse clients strategically engage relevant innovation ecosystems to meet their goals and deepen their impact. To get more and go further with open innovation, reach out to Design & Innovation Associate Jay Chikobe.
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Want to know more about how companies can engage in open innovation? Contact Jay Chikobe to discuss further.
Jay Chikobe leads Resonance's Design & Innovation practice. At Resonance, he advises private- and public-sector clients on building shared-value partnerships within innovation and entrepreneurship ecosystems, to achieve impact and sustainability goals.
He brings over 11 years of experience in innovation and entrepreneurship ecosystem development in emerging markets. He has advised over five hundred startups, social enterprises, incubators, and accelerators on growth strategy and partnerships in sub-Saharan Africa, the Middle East & North Africa, Southeast Asia, and Latin America.
An avid entrepreneur and ecosystem developer, he has co-founded three ecosystem development organizations in the U.S. and sub-Saharan Africa.