Innovation is a crucial investment for any company.. However, it is often difficult to evaluate the return on investment (ROI)
of the expenses dedicated to innovation. In any case, we can observe the results obtained by companies after having created open innovation programs and we can notice great performances in terms of ROI. Here are some examples that were chosen to illustrate the financial peformance of an open innovation approach.
Innovate to …
… Renew the offer and boost the revenue
Procter & Gamble, one of the pioneers of open innovation, has begun a process of open innovation in 2003 and has since seen its revenue go from 43 to 83 billions in 5 years and 50% of their products were developed through collaboration with external partners.
Concretely, open innovation has allowed them to develop new products by relying on the expectations and need of the customers and on the expertise of new partners.
By following the same method, in India, the Bharat Petroleum gas station network has launched a call for ideas among their collaborators in order to develop their line of products and services. The first responses have soon led them to understand that one of the common points of their clients, heavy truck drivers, were health issues, especially diabetes, as well as their need to monitor their health. The company has therefore developed a system dedicated to clients inside the gas stations, which facilitated medical monitoring and analysis. This initiative has been rewarded by a 30% increase in their revenue.
… Solve problems faster
In 2009, Forrester Consulting performed a large survey among users of an Open Innovation platform, it revealed that companies organizing innovation challenges received a 74% return on investment for the submitted projects.
The open innovation platforms therefore represent an important opportunity for ROI but also for time saving. In fact, after publishing an issue it had for more than 15 years on one of these platforms, Groupe Roche received at 113 suggestions, allowing them to solve the problem in less than 2 months.
… Generate economies of scale
Companies can also count on their collaborators to ensure innovation actions. Within an open innovation strategy, the collaborators often prove a true engagement and propose smart ideas.
In 2013, within a challenge called « Costbusters », which aimed at reducing costs, the PSA group involved 3500 collaborators who suggested 3500 ideas, all of which aimed at improving the group’s productivity and ROI.
The cost reduction obtained were revealed by the SNCF who declared having saved 82 million Euros in 2009, after having received 25,000 ideas and after having retained 50% of those suggestions.
(picture credits https://www.flickr.com/photos/financeblue/)