Saturday, November 15, 2014

Shaping The Future of Open Innovation

Shaping the future of Open Innovation(September, 2014)

  Open innovation, which we define as the process of innovating with others for shared risk and reward to produce mutual benefits, has evolved significantly over the last two decades.
‘Open access’ or ‘open source’ are important phenomena, but this report focuses on how open collaborations in life sciences are developing. This trend is driven by the declining productivity of the pharmaceutical industry, the emergence of technologies that all players need to be successful, the recognition of the wastefulness of duplicated programmes and – most importantly – the search for innovative yet affordable therapies for untreated, complex, life-limiting diseases.

Partnerships between a wide range of life sciences organisations are becoming ever more numerous, cross-disciplinary and open (in terms of data and knowledge sharing), and are reaching further down the value chain. The purpose of this report is to explore and evaluate these trends and suggest what the future might hold.

Four open innovation goals are being pursued – creating products, developing tools and models, building information databases, and accessing the skills and support of the ‘crowd’ in problem solving. Using a combination of literature analysis, surveys and structured interviews with more than 40 organisations, and multi-stakeholder workshops – and having been guided by a senior group of open innovation practitioners – we have identified the following four actions as being of key importance to successful collaboration:

1. Aligning objectives: Organisations engage in open innovation for a number of scientific, economic and altruistic reasons. The most important factor in avoiding failure when entering a partnership is ensuring that the objectives of the partners are truly aligned.

2. Managing intellectual property (IP): While divergent attitudes to IP and its importance in innovation can hold back open innovation, in practice there are mechanisms, like ‘protected commons’ and patent pools, that can enable partners to balance the need for openness on research results with the ultimate need for a clear IP position on products requiring major investment. The key is for partners to anticipate and discuss their respective IP needs in advance and incorporate the right design into their partnership agreement. A wide range of potential solutions are available.

3. Bridging cultures: Inherent cultural differences between groups can be a barrier to open innovation. Academics are motivated by publications and can misunderstand the commercial relevance of a project; industry participants can be reluctant to share know-how and can suffer from the ‘not invented here’ syndrome; health providers can be difficult to engage and often aren’t incentivised to innovate. Research charities and patient organisations are becoming more active in the search for new treatments and are increasingly holding other participants to account.
As open innovation becomes more accepted, all these groups are learning to work together more effectively and to recognise one another’s expertise, constraints and motivations – both as organisations and as individuals. We found that university technology transfer offices are more often cited as barriers than as facilitators. Likewise, although health services such as the NHS are being encouraged to innovate, and there are a few successful academic–industry–health service projects, their incentives and cultures still hold back partnerships. We need further change on both fronts if open innovation is to flourish. Of all the tools available, partners spending real time together focused on shared scientific and clinical goals is the most powerful, and this is obviously easiest to do when they are located close together.

4. Structuring for success: Professional management is as important in collaborations as in any o her enterprise, but needs to be genuinely joint and goal-oriented. Specific techniques and metrics of success vary depending on the structure, objectives, R&D stage and maturity of a partnership. There need to be clearly defined roles, strong leadership and agreed milestones in order for a collaboration to run smoothly. Tough-minded joint go/no-go decisions are critical to avoid ‘consortium fatigue’. Having a neutral convener can help create a trusted environment and facilitate productive partner relationships, but there is no substitute for regular in-person review meetings, focused initially on leading indicators of success but increasingly on the ultimate outputs. Most of the initiatives we reviewed gave themselves high marks for success to date, but many would acknowledge it is too early to assess overall outcomes.

Emerging models: The last few years have seen the rapid development of crowdsourcing, and to some extent crowdfunding, in life sciences. We found a great deal of early promise and excitement, including among established companies, as well as a plethora of models. Skilled set-up, thoughtful marketing and the judicious use of financial rewards are all important, but it was acknowledged, even by those directly involved, that we still understand little about the motivations of those contributing (whether ideas or money). Further research on this topic could greatly increase the impact of these developments. Looking beyond the sector, we see initiatives to create IP exchanges and auctions, patent pools and clearinghouses, and these are beginning to make an impact in life sciences. More facile databases and artificial intelligence are likely to accelerate this trend, so that less and less knowledge is hidden from the rest of the field.

Tool kit: We have created a tool kit (Appendix 1) to answer two questions for practitioners: should we take an open innovation path to address our problem, and, if so, how should we structure the collaboration? We hope that our step-by-step approach to confront the key questions at the outset will improve the chances of future open initiatives succeeding. Future ecosystem: We are moving towards a more open world, which organisations must engage in in order to survive. The traditional linear, in-house R&D model is being abandoned and is being replaced by a dynamic network of partnerships. The boundary of what is being conducted in an ‘open’ fashion is being pushed towards later stages in the development pipeline, and there is also a greater focus on open source and open access approaches to knowledge sharing. Open innovation is beginning to have a major impact on both discovery and development; we predict that this will extend to the critical third step of securing beneficial patient outcomes. The outline of the radically different, and very intriguing, life sciences ‘ecosystem’ of the future is beginning to appear.

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