Open Innovation Accelerates Digital Transformation

IN the month of May this year, I had the opportunity to attend Vivatech, one of the world’s rendez-vous for startups. Despite the fact that it’s an event for startups, there was clear predominance of corporate pavilions. Major banks and transport, insurance, logistics, or luxury companies, etc. were represented. None of them was exposing their products or such, however. Their pavilions were hosting mini-stands occupied by startups.

The first one I visited, the pavilion of La Poste, the French postal service, was hosting a dozen startups. I particularly got attracted by one (the Visible Patient’s stand) which was displaying an incenting screen, showing three-dimensional imaginary. As I approached the stand, I was received by one of the startup’s geeks who very enthusiastically started to explain how their technology helps doctors share, securely and privately, their patients’ high-precision body scans in three-dimensional format, allowing for awesome visualisations. When he concluded his pitch, only one question was scratching my mind, and I asked him: “Why are you in this La Poste pavillion?” He went on to explain: “You see, La Poste has been distributing courier to the French for centuries and today there is nobody who can worry that their courier will be opened and read before it’s delivered. This has built a strong brand and confidence in the service. Now La Poste has been undergoing digital transformation and leverages that strong confidence in it to be a key player in digital exchange of private and sensitive information like medical records. It is in this context that our company got integrated within La Poste Open Innovation programme, which they leverage to accelerate their digital transformation by co-innovating with startups.”

La Poste was not the only non-tech brand to have a pavilion in Vivatech hosting startups in their Open Innovation programme. Others included banks like BNP and SG, the Italian insurance company Generali, and luxury brand Louis Vuitton. But big tech companies also showcased tech startups they were co-innovating with – these included IBM, Microsoft, and MasterCard.

I had heard about the concept of Open Innovation but hadn’t paid enough much attention to it, so I went on to do some research to gain a new level of understanding and evaluate how such approach could contribute to accelerating Rwanda’s digital agenda.

As defined by Wikipedia, Open Innovation is a term used to promote an information-age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs.

The term was coined by Henry Chesbrough, in his 2003 eponymous book, and goes completely against the previously prevailing concept according to which companies had to innovate with their own resources and in full confidentiality, for fear of having their “secrets” robbed. The idea is to create the conditions for a mutually profitable exchange between an industry or a corporation that needs to change, and an ecosystem of startups that master technology and are able to produce innovative services. For large companies, Open Innovation is a way to outsource the risks linked to any innovation process, and to mitigate the consequences of possible failures. For startups, by leveraging the corporate assets (reputation, infrastructure, customer base, and funds), Open Innovation is a way to access a playground that allows them to accelerate the go-to-market pace of their products.

As I did more research and started to evaluate the state of Open Innovation in Rwanda, something very clearly stood out: the Government of Rwanda has been an avid practitioner of the principles of Open Innovation to advance digital transformation – and it’s probably the reason why Rwanda has been ranked first globally in Government Success in ICT promotion to drive social and economic transformation. To illustrate, I look at the three most-talked-about Rwanda-based technology startups and products in 2018:

1. Zipline made news headlines as the first case of commercial drone use and Rwanda as the first home to a civil drone-port. This was made possible by the boldness of the government which imagined that this could greatly impact delivery of emergency healthcare products and allowed Zipline to pilot the service in the country. This also required opening all doors to bring together all the relevant government institutions to fast-track the launch.
2. Tap&Go has transformed the way people pay for public transport in Kigali. This was enabled by the boldness of the public transport regulatory bodies, encouraging transport companies to adopt change whenever there is a product that proves to work and add value to all ecosystem players. The company that emerged as providing a proven contract, AC Group, was able to scale the product very quickly.
3. Irembo has changed the way citizens interact with Government services and is arguably perceived as the most successful implementation of e-Government in Africa (The UN eGov Online Service index increased the Rwanda’s index from 0.46 in 2016 to 0.72 in 2018). This was enabled by the Government of Rwanda choice to enter into a Public-Private partnership to deliver the program.

This trend has perceivably placed the Rwandan government at the forefront of digital transformation in comparison to private sector, but also to most governments.

The good news is that the private sector can quickly catch up if they adopt and apply the principles of Open Innovation, as they have the tools and ability to do so. Most important, based on many interactions I have had with business leaders, there is a thirst to adopt digital technology, but the limitation remains on mobilising the internal and external resources to do so.

In his twenty-sixteen WIRED article, Astro Teller (Head of X, the innovation arm of Google) rightly explains a critical challenge: “Often, I stand in front of a group of people who want to innovate, who are cajoled by their bosses and boards and shareholders to innovate more and faster, yet they face a nearly insurmountable obstacle: they don’t really feel that their bosses are supportive of the risks that come with dreaming big.”

The principles of Open Innovation present the advantages to make it easier to mobilise those key resources to innovate:

• First, it makes it easier to mobilise financial resources. In general, an organisation that wants to kickstart a digital project and start sourcing quotes and proposals will see the program becoming very costly without guaranteeing any success. Approaching it through Open Innovation allows organisations to spend less or no money and may gradually invest more but not to build some technology but rather to accelerate outcome, because the program has already given them the feedback to prove the concept. With some bulk numbers, I estimate an accelerator program that brings in three startups of four people, each on a period of six months, would cost around 21 million Rwandan francs (less than 30,000 U.S. dollars). The worst case scenario would be if there were no outcome, but the insights and learnings that organisations would have acquired through different research during the program would still be worth more than that.
• Second, it makes it easier to mobilise human resources. Some initiatives to innovate internally will most of the time go very slowly or stall due to the fact that the teams assigned to them still have day-to-day work on their table. Open Innovation principles rather encourage to spin off the teams and allow them to re-organize themselves into new ways of working, as opposed to the bureaucracy of large organisations. It helps accelerate the pace to expected outcomes of the program.
• Lastly, it makes it easier to mobilise an ecosystem of partners. One of the key aspects of digital transformation is the ability to integrate different technologies or digital services and design new business models.

THERE is a real opportunity in Open Innovation for digital innovation and transformation. In many cases, the Rwandan government has proven it; now the private sector needs to tap into it as fast as possible – starting with medium and large organisations. The question is which player on the market can facilitate organisations to identify, design, and run Open Innovation programmes. I think existing and future accelerators should seriously evaluate the potential. This will surely be the subject of my next writing.

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