Open innovation represents the shift many companies are making from relying exclusively on internal R&D to instead incorporating expertise, ideas and skills from external partners. Companies that embrace open innovation are reaping the benefits, which is why corporate venture capital is on the rise. In fact, for the second quarter in a row in 2Q16, CVCs participated in over 25% of all deals worldwide.
One company taking this route is Faurecia, the fourth largest distributor of products for automobile manufacturers. Their investment in supply chain innovation has helped them forward their position and profits. We spoke to Dana Lowell, Faurecia’s Global Director of Open Innovation & Technology Ventures, to reveal three reasons why open innovation is an option worth exploring.
#1: It encourages autonomy.
At Faurecia, keeping pace with supply chain management technology is critical for maintaining a competitive edge, says Lowell. To do just that, Faurecia launched its award-winning xWorks Innovation Centers, a global open innovation network that sources new technologies, concepts and companies for collaboration and technology incubation.
The innovation hub operates out of a building that is some distance away from corporate headquarters. This distance enables xWorks to take on almost a start-up mentality, allowing it to be agile and flexible, something the company’s leadership fully supports. “It’s hard to put innovation teams inside large R&D footprints—they get swamped by the crisis of the day and existing budget concerns, as well as production and customer issues,” says Lowell.
#2: It helps minimize risk aversion and stay ahead of the curve.
Creating a corporate culture that is open to new ideas will help fend off possible disruption and keep your business ahead of the curve. Faurecia’s xWorks Innovation Centers provide a pipeline of creativity for the company, Lowell says. Many companies settle into a cycle of repetition, which might be fine for a while, but could end up hurting the bottom line if a new innovation comes along. Instead, xWorks welcomes outside ideas into the company.
“xWorks makes our company aware of disruption that can affect what we are doing,” Lowell says. At that point, the team can collaborate with startups from the standpoint of investing, joint development agreements, licensing agreements and royalty agreements.
A recent result of the tech incubation team’s efforts is Faurecia’s new Active Wellness™ 2.0 seat, introduced at the 2016 Paris Motor Show. This automobile seat of the future fuses information from sensors for heart and respiration rates and then adjusts its position, altering the heating, ambient lighting and audio environment to maximize individualized comfort and alleviate drowsiness. Such enhancements might not have happened without access to open innovation.
#3: It reduces the risk of being blindsided by emerging competitive threats.
There’s a risk factor in not engaging in corporate venturing now that 80-90 percent of companies are doing it in some form, says Lowell. “You’re perceived as a dinosaur if you’re not doing it.” In order for businesses to survive, innovation needs to become much more open.
For Faurecia, embracing open innovation has helped protect its core business from technological disruptors, while bringing new ideas into the organization.
How ProSeeder is powering innovation
As evidenced by Faurecia’s success, embracing innovation is key to ensuring future growth and profits, as is utilizing a purpose-built platform to manage your corporation’s venture and innovation ecosystem. “It took us quite some time to find a solution to help us track and quantify our initiatives on innovation, especially one that would match our unique needs from a strategic alignment standpoint,” says Lowell.
When the ProSeeder team stepped in to work closely with the Faurecia team, however, that all changed. “Together we were able to identify areas to build efficiencies and after ProSeeder analyzed our operating procedures, they configured our platform to fit our needs like a tailor-made suit,” he says.
The partnership has proven successful. “Since launching our ProSeeder platform, we have seen our processes become incredibly streamlined. Having all of our data and documents in a centralized repository has enabled us to provide the C-suite with precise reports on our progress,” says Lowell.
Curious on how ProSeeder can empower your company’s venture and innovation ecosystem? Get started today with our Pilot Program.