Highlights

Open Innovation for Regaining SME Power in Japan
Prof.Kazuyuki Motohashi,The University of Tokyo

4th Article: Open Innovation with Large Companies

In the previous three articles, I regarded that open innovation of SMEs as "redefining client relationships", and that in order to achieve this, it is critical to “know deeply about your own technology" and the need to "establish a position as a technical partner with your client companies in the commercial chain of the ecosystem". In this article, I will reflect on the "Open Innovation Process Model for Regional SMEs" (Professor Motohashi also participated as chairman), compiled by the Kanto Bureau of Economy, Trade and Industry, to elucidate how to proceed with open innovation with client companies (large companies).

"Open Innovation Process Model for Regional SMEs" describes the process for achieving open innovation (matching the technological seeds of SMEs with the needs of large companies) in the following four steps:
(1) Strategy formulation (access to network)
(2) Matching needs and seeds
(3) Discussion / Negotiation / Contract
(4) Implementation and commercialization of a joint venture

1)If we were to interchange the contents explained in the first three articles with the above steps, a company shall thoroughly learn about its own technology and begin considering applicable sectors in the first “Strategy formulation” step.

2)In the second stage, we will proceed with matching of the seeds and needs (customer development) formulated in stage (1), but in order to obtain contact opportunities, I encourage you to take full advantage of coordinators at your local support organizations and universities whose specialty is industry-academia collaboration. Furthermore, approaching major companies is a tall order and difficult, but many coordinators involved in industry-academia collaboration are from large companies, so there is a further possibility of utilizing their network as well.

3)The “Discussion/Negotiation/Contract” step is after a specificity is decided for a joint project. At this point, it would be a good idea to approach the discussion as a technical partner rather than having a vertical customer and the supplier relationship. However, large companies are more experienced in the legality of contracts and the handling of intellectual property, so if you have any concerns, you may consider seeking external support from advisors at supporting organizations, or inquiring a local bar association or patent attorney associations.

4)In the fourth step, “Implementation and commercialization of a joint venture”, the business should proceed while making the best use of the strengths of both parties. It would be a great success if the goal is achieved seamlessly as planned, but unfortunately, when working on a joint project there may be cases where the project itself does not make any progress due to changes in the situation that were not initially expected. As a preventive measure for such a situation, at the contract stage in step (3), clarify the relationship of rights, the duties of both parties, and the person in charge of the business, among others, and identify problems on both sides, and formulate alliance management so that remedial measures can be devised.

It is not easy to reach the final goal, but it is important to use the knowledge of the company and the support of the surroundings in each situation to promote open innovation with large companies.

In the next article, fifth and the last of the series, I will define the type of SME management required in the new era.

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