DARPA was formed in 1958 shortly after the Soviet Union launched Sputnik with a simple original mission ‘to prevent and create strategic surprise’. What makes DARPA remarkable for both governments and corporations is its consistent track record of radical breakthroughs with modest resources.

Partnerships & Consensus Will Determine the Success of Innovation Policy

In the private sector, the closed innovation paradigm which dominated the 20^th century has been replaced with a new collaborative, partnership orientated approach, open innovation. This new approach stresses partnerships expand access to opportunity and provide the opportunity for greater value creation. Strategic partnerships are thus a source of competitive advantage. Yet innovation partnerships/programs consistently under deliver on expectations. By analysing the cause of failure in the private sector, we have found successful government innovation policy must prioritise building the right partnerships and consensus to succeed, both, internally within the existing public sector infrastructure and externally with industry stakeholders.

Why partnerships are important:

Pushing the frontiers of entire industries requires more than technology, business environments, ecosystems and smart public policies. Transformational change in major industries requires small and big companies to overcome their competitiveness concerns and utilise their complementary strengths. This is compounded in industries which have complicated value chains such as agriculture and manufacturing, which requires cooperation between multiple stakeholders. Utilising complementary strengths expand the opportunity for greater value creation. Collaboration with small companies provides incumbents with insights of emerging consumer needs and insights on underserved market segments. For small companies, partnerships are an invaluable source of distribution, manufacturing and leverage. Involving stakeholders from the value chains ensures a greater chance of adoption and implementation. Successful innovation partnerships occur when the value of mutual collaboration is bigger than the cost and risk.

The depth of intercompany collaborations continues to strengthen. Strategic partnerships are also manifesting themselves through corporate venture funds of which we have seen a 25% year on year compound growth rate to $25billion globally in 2017 since 2012.

Famous Examples

Why open innovation fails in the private sector:

Yet a significant percentage of open innovation programs and innovation partnerships under deliver. A recent survey by Accenture found more than 50% surveyed said these partnerships did not yield as many new product and benefits they had hoped. The success of innovation programs are measured by impact, adoption and implementation yet internal political and cultural barriers are preventing the realisation of innovation programs. An open innovation plan that does not include methods for overcoming internal barriers to adoption are doomed to fail.

Without a multi-layered internal network of supporters, advocates and stakeholders, innovation programs risk silo thinking and will not take into the account the diverse thinking, expertise and ownership required. To ensure implementation, successful innovation programs ensure ownership from all stakeholders. The politics of ‘we did not invent it’, disruption of change and technical implementation challenges are preventing innovations efforts being realised.

What Governments Can Learn:

Partnerships and consensus are a prerequisite for innovation policy success. Our experience dealing with government policy has identified internal and external multi-stakeholder networks, and relationships which must be incorporated into policy to maximise success.

The networks, partnerships and consensus building are split into three categories, Horizontal, Vertical and Intersectional. Networks are either internal where the capacity lies) within the existing infrastructure (public sector, universities etc) or external where the capacity lies outside of the current domain (industry supply chains, venture capitalists etc)

Consensus:

Internal: Public Sector

Policy must focus on building internal consensus within the existing public sector infrastructure. Different government departments, innovation initiatives and innovation assets (such as the university research base), must be aligned to utilise complementary strengths and resources.

• A break away from traditional research areas, and greater focus on high growth potential areas
• Consensus between government departments to utilise complementary strengths, resources and avoid overlap
• Consensus between funding bodies and research base

External: Industry

Policy must also focus on creating external consensus within the industry to create a culture of mutual value creation between stakeholders. Deep industry partnerships will maximise the chances of adoption. In practice this may look like

• Alliances with corporate venture funds
• Joint R&D
• Collaborations with industry supply chains

Multi-layered Networks

Both internal and external networks and partnerships must involve multi-layered networks to avoid a top down approach to innovation. Partnerships must involve customers/researchers, field agents, management and executives. Multi-layered networks will foster equal ownership, provide a diverse set of insights and address adoption hurdles before they arise.