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Photo: iStock

Opinion | Open innovation can solve problems of the future

Blockchain can lend credibility and support to the pursuit of open innovation

From the 1960s till the 1990s, a disproportionate wealth of talent, knowledge, ideas and capital were confined to a select few institutions. Organizations like AT&T Bell Labs, Xerox PARC, IBM, and GE Research would attract the best and the brightest from academia, fund them on future-gazing projects, absorb failure, generate and protect intellectual property, and occasionally channelize those to commercial ends, all by themselves. Such an insular approach to managing innovation has given way to a more open one, where ideas, talent, capital, knowledge, and information have been democratized. This has happened because of the Internet, affordable computation and communication, and growth of new business models.

Open innovation is where the focal organization is the orchestrator, working with various entities to solicit ideas, talent and capital, rallying the outcome in a collaborative manner. Firms like Cisco, NASA, Dell, PepsiCo, Nike and Novartis have proved that a lower spending on internal R&D can be complemented with a networked approach towards innovation.

The adoption of an open model of innovation is, however, plagued with difficulties. There are issues around privacy, value appropriation, intellectual property management and designing contracts. Such issues are sufficient for enterprises recoiling to their time-tested, insular approaches to innovation. Can an emerging technology be of assistance? Blockchain could lend credibility and support to the pursuit of open innovation.

One of the emerging models of solving problems is through contests or challenges. Crowdsourcing models such as NineSigma and Yet2.com, connect seekers with solvers, involving transfer of intellectual property and payment of cash. A big challenge in open innovation and shared solving of problems is managing intellectual property. Since ideas and information are becoming democratized, there are occasions when multiple people come up with the same or similar idea, and others build on them. So, getting to know appropriate intellectual property and managing its transfer becomes a tricky issue. Blockchain offers promise in managing intangible asset classes, such as intellectual property, and with a transparent ledger system there is an improved visibility of ownership. According to the World Intellectual Property Organization, recording of IP rights in a distributed ledger system instead of traditional database could usher an era of smart IP rights. The entire IP lifecycle, ranging from evidence of rights, record keeping, rights transfer and conflict resolution, can be managed by adopting blockchain.

Finally, the question of value appropriation: who should get what for their contribution. An idea has little value till is it commercialized. It is often difficult to appropriate the value back to the participants, unless there are robust contracts.

One of the widely adopted applications of blockchain is smart contracts. These are automated computer programmes that carry out the terms of a contract. Together with traceability of origins and the various value add activities, it would be relatively easy to draft, update and honour contracts adopting a non-human system. Blockchain can enable innovation, especially as the pendulum swings from an insular approach to a more participative one.

Pavan Soni is the founder of Inflexion Point, an innovation and strategy consultancy.

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