He who shares, wins - the new way to ensure your company stays ahead

"Innovation today requires a collaborative, transparent approach - not building walls around your own company and seeking ways to keep others locked out," says IBM Vice President Communications, Exploration, David Yaun.

Open innovation is a rapidly emerging, though challenging, business model. First coined by US Professor Henry Chesbrough, it states that in a world of widely distributed knowledge, companies need to look beyond their own research labs for ideas. One of those already convinced is IBM. Here, David Yaun explains IBM's radical interpretation, the Innovationjam.

The innovation sieve

The innovation process used to be a bit like a sieve. Colleagues threw in lots of ideas and the odd one made it through the filter. Knowledge was power so amid top secrecy, the company alone developed, manufactured, marketed and distributed their discovery.

Today, it's impossible to keep ideas under wraps, such is the speed and ease with which information can be transferred.

Powerless to stop the phenomenon, companies must instead take advantage and harness good ideas from inside or outside of the business - so states the 'open innovation' model.

That also means accepting that good ideas can likewise go to market from inside or outside. So ideas which might previously have died at the bottom of the sieve - unable to fit within a company's own plans - can, after all, be commercialised.

We're jamming

One of those pioneering this new business model is IBM. Their Innovationjam brought together 150,000 people – including representatives from 67 external groups - from 104 countries to spark and build ideas.

More than just a massive on-line brainstorm, Innovationjam aimed to identify new market opportunities and to create real solutions to some of today's most pressing issues, from the environment to transportation.

"By in effect running the largest focus group ever, we benefit from unprecedented shared insight. It helps us to be smarter, to ensure we anticipate, not react," says David Yaun.

"Ideas go round the globe in seconds anyway, whether you like it or not. Companies today compete on the basis of their ability to execute these ideas.

"It means that the nature of innovation has changed. The winners will be businesses that are collaborative, open, global and multi-disciplinary in their approach."

Innovationjam - How it worked:

Phase One: Idea Generation - In 72 hours, IBMers, clients, business partners and even family members came together online and produced 46,000 ideas.

Phase Two: Idea Refinement - Jammers discussed how to improve and validate the top ideas, rating which ones had most impact and potential for near-term success.

Phase Three: Development - IBM invested $100 million to incubate the top 10 ideas.

Building trust

"We are seeing a shift towards open innovation but we understand that not everyone is yet ready. Some are curious but hesitant," David acknowledges.

"A few external organisations didn't participate as fully as others. When we asked why not, they told us: 'We're not quite sure about it yet. We didn't know whether our ideas would be used fairly.'

"Of course, we have to ensure that our partners know they will get the credit for their ideas. But the truth is - there are no secrets any more. Information gets out regardless.

"So let's embrace it, build trust and follow through on good ideas, rather than have them sit there going mouldy."

Reaping the rewards

And it is this mission – to ensure they execute the wealth of good ideas to arise from the Innovationjam – that is IBM's current challenge.

It has established separate teams to develop the top 10, which range from projects around urban transport systems and 3-D internet to a banking service specifically for the four billion people worldwide living off less than four dollars a day.

"Some of the ideas seemed to come from nowhere," David says. "A year ago, no one was talking about 3-D internet. Now we have the potential to create a platform in which the virtual world can inter-operate, where consumers can seamlessly move from one area to another, where commerce can be done in a next generation of internet."

Integral to success is the 'loose reign' given to each team, he maintains. "With this kind of blue-skies thinking, you have to be flexible and patient. When you take risks, you have to accept the occasional failure."

Scratching the surface

David adds: "There are challenges: the process has to be transparent and open, everyone needs to feel they have a stake in it. Between us, we've had to sort 46,000 ideas into 31 potential projects before deciding on the 10 in which to invest $100 million. No small task.

"But Innovationjam has had a profound effect on the way we do business - both the way we innovate and the approach we take to get ideas to market.

"And the real beauty of open innovation? It's that we are all only just scratching the surface!"

Our NESTA Connect programme also shares the belief that collaboration has the potential to generate radical, transformational innovation. The programme, which launches in June 2007, will initially focus on three core themes: interdisciplinary research, corporate open innovation and online innovation communities.

NESTA Connect will be inviting proposals that enable us to learn and scale more open and interdisciplinary collaboration across the UK.