Creating an all-island open innovation ecosystem

INNOVATION PROFILE: InterTradeIrelandInterTradeIreland knows how valuable innovation can be for firms – it just needs to get the word out

Firms that engage in innovation are three times as successful as those that do not, according to a new report from InterTradeIreland. It also found that firms are seeking to create competitive advantage by finding ways to increase the efficiency and effectiveness of their innovation processes. “We need to get more businesses innovating,” says Aidan Gough, strategy and policy director with InterTradeIreland.

“What we have found is that not enough businesses are involved in innovative activity and we are seeking to address this.”

Open innovation

Part of the solution to this issue lies in open innovation, he says. “Open innovation means expanding the pool of participants in the innovation process to all types of outsiders and tapping into the resources they can provide. This approach takes in organisations outside the firm that can act as catalysts, contributors or collaborators for innovation. These organisations form a wider community – an innovation ecosystem – that firms can leverage.”

The cross-border study, Leveraging the Innovation Ecosystem for Business Advantage, covers the experiences of over 1,100 firms on the island of Ireland on their engagement with the innovation ecosystem and on their capabilities, in order to understand how these factors shape the behaviour of firms. The study found that a high proportion of firms (62 per cent) have engaged in innovation activity in the past three years and confirms the strong link between innovation and growth.

The findings also debunk the myths that innovation is applicable only to large high-tech industries, and is all about doing RD and inventing new products.

“Sometimes innovation can be mixed up with research and development,” Gough says. “We take a very broad view of innovation, and product or service RD is only one part of it. The majority of businesses do not engage in RD but can still be very innovative in other areas . . . Also, the research shows that most innovative firms are micro-enterprises with less than 10 employees and that they come from all sectors of the economy.”

The report also found evidence that firms that export display a higher level of innovation activity than those that do not.

In the context of open innovation, the study found that almost half of firms that innovated in the past leverage external resources and supports and that they do so within the broad phases of the innovation process: idea generation; development; and launch/commercialisation.

Larger firms (55 per cent) are more likely to be outward looking than smaller firms (36 per cent) while the same holds for exporters (58 per cent) and cross-border traders (53 per cent) compared to domestic firms (31 per cent).

Despite the incentives for firms to take an open approach to innovation and the availability of supports, just over half of firms innovate without formally leveraging external resources. “Our study has found that only one in three firms engaged in any formal innovation processes. However, we have all of the components of a full functioning innovation ecosystem in place here on the island of Ireland and we are looking at improving the management of the relationships within it at present.”

An open innovation system working across Ireland can offer SMEs the potential to source and connect with a wider variety of relevant expertise than that currently available as well as opening up international opportunities, Gough adds.

“The innovation ecosystem envisaged by InterTradeIreland will provide for better use of existing resources by putting the firm at the centre of the process. Ours is a very practical approach which involves companies drawing on third-level institutions for intellectual property and taking on the financial resources of venture capitalists and the skills of other companies, consultants, suppliers and customers to create the innovation ecosystem,” he says.

Centre of innovation excellence

This well connected all-island innovation system that puts enterprise at its centre will ensure creative ideas are nurtured quickly to successful commercialisation. The aim is to have Ireland recognised internationally as a centre of innovation excellence.

However, achieving this aim will require companies be given the help they need to gain access to external knowledge, draw on alternative pathways to bring ideas to market, gain greater access to innovation capabilities, and increase speed to market.

“Ireland is an innovation follower in many ways,” says Gough. “This is not necessarily a bad thing. We are doing okay when it comes to innovation and we are doing particularly well on a number of fronts. However, it is now a question of how we can become an innovation leader rather than a follower. To do this we need to look at the relationships between all of the actors in the innovation ecosystem and analyse how good they are. And where they are weak, we have to look at how they can be improved.”

Some higher education institutions are good at working with SMEs and other external partners as part of the system of open innovation while others are not.

“This is what we have to address in the future: how we can improve the relationships between the different partners and always with the focus on the individual firm. InterTradeIreland already has a number of programmes designed not only to improve innovation capability at the firm level but also to encourage the development of strong partnership relationships between different actors in the overall ecosystem.”

One of the key capabilities in need of improvement is networking. “The ecosystem is being used quite narrowly and its full breadth is not being fully exploited,” says Gough. “We need to get this message across. Thankfully, getting firms to engage in innovation is a relatively easy sell. We just have to ask them if they want to grow and succeed and point to the finding that innovative firms are three times as successful as firms which do not engage in innovation to get their attention. The aim is to build the connections, both technical and financial, across the island that will deliver the best resources available to innovative firms with creative ideas to commercialise.”