Open innovation a top priority for SMEs

Innovation has been internationally quoted as one of  the key drivers in business success for companies suffering the delayed effect  of the global financial crisis, says IQ Business.

Willie Krause from IQ Business,  says that innovation  is especially relevant for small-to-medium sized enterprises (SMEs) in South  Africa.

“Given that approximately 80 percent of the formal business sector in  South Africa can be classified as SMEs or micro enterprises, it’s critical to  the economic health of our country to identify processes such as open  innovation to support these operations,” he says.

Innovation is described as the method of exploiting  new ideas to create value through new processes, products or services.  Organisations can follow a closed innovation process where all innovation is  performed within the boundaries of the company, or through an open innovation  process where they bring in ideas or technologies from outside of the organisation  or transversely, where they out-license or sell their ideas or technologies to  other organisations.

“Open innovation can provide exciting opportunities for  smaller businesses which might not have the resources to perform extensive  research and development across the value chain,” continues Krause.

SMEs are ideally suited to open innovation due to their  entrepreneurial nature, decision making speed and flexibility due to their  smaller size. With the benefits of open innovation come a few challenges, warns  Krause.

Companies should be aware that complications do exist around  intellectual property management and the
costs can be high if proper research  and negotiation is not undertaken at the outset.

Krause uses South African company eyeSlices as a  leading example of innovation. After obtaining exclusive licensing rights to  polymer technology developed by the South Africa Council for Scientific and  Industrial Research (CSIR) and further developing the technology, eyeSlices  created a unique cryogel eye care product
which revolutionised the cosmetics  market. EyeSlices subsequently received numerous awards for innovation and  entrepreneurship under the competent leadership of CEO Kerryne Neufeldt.

The  company is South African based, but boasts distributors in 14 countries such as  Mexico, Australia, Dubai, Greece and the USA.

“Open innovation is in many respects an untapped  opportunity for South African business and I think every organisation can  benefit from new and fresh perspectives on their business models and approach,” concluded Krause.