What we’ve learned about open innovation after 10 years

Since we launched Tenity as an open innovation ecosystem in 2015, we’ve been supporting corporates with innovation by collaborating with startups. 

Over that time, we’ve refined our approach to open innovation. While we started as a non-profit (under the name F10), dedicated to connecting incumbents and startups, we’ve since developed a rigorous process for corporate innovation. 

I’m the CEO and co-founder of Tenity and, in this post, I want to share some of the key lessons we’ve learned over the last decade. I’ll cover:

• What corporates typically get wrong about open innovation
• Three things we’ve learned about open innovation
• Where open innovation will go from here
• Examples of how Tenity has helped corporates to innovation success.

‍Interested to hear more about open innovation? Reach out to us. 

What corporates often get wrong about open innovation

While open innovation is a concept that’s been around for decades now, in our experience at Tenity, corporates are still getting it wrong. That’s often through no fault of their own. But it usually comes from a fundamental misunderstanding of what open innovation actually is. 

Innovation comes in a variety of forms. For instance, you could say it’s innovative to simply buy a new solution from an innovative provider. If that solves the specific problem you’re dealing with, then that works well.

Similarly, if you already know the kind of solution you want—but it doesn’t exist yet—you could write a request for proposal and go out and speak to vendors. Again, though, while it can produce innovative results, this is not what we call open innovation. 

Instead, here’s how we use this concept at Tenity. In open innovation, corporates start with a high-level idea of what they want to achieve. Then they pursue an open-ended process of innovation. What’s critical for open innovation is that you don’t know the answers or have the solutions already. However as we’ll explore below, it’s still crucial to have a clear understanding of what you want to achieve.

So, you may have an idea about how you could create a competitive edge, or how you could tap into a value pool. But you acknowledge that you may not have the right expertise to achieve that. And so you experiment, share ideas, and see what ideas other people—startups or peers—can bring to the table. 

What corporates often get wrong about open innovation, then, is that it refers to a very specific form of innovation. And if you come to the process with false ideas of how you want it to work, you might end up disappointed.

Three things we’ve learned about open innovation

Throughout our experience working with hundreds of different financial corporates, there are three major lessons we’ve learned about open innovation. These will give you a sense of when this form of innovation works, when it doesn’t, and the factors that are necessary for success.

1. Open innovation requires a culture of real openness

In open innovation, the word “open” does a lot of important work. In my previous post about open innovation services, I defined this process as what happens “when you open up your strategy to a third party”. 

In other words, open innovation requires an openness of mindset, culture, and approach in order to work. The trouble is that many corporates don’t enter the process with such an open-mindedness—particularly when it comes to their strategy. 

This reservedness is understandable. It usually comes from a discomfort about sharing critical information with competitors. However, it remains a problem nonetheless. 

If corporates aren’t prepared to disclose some of the key elements of their approach, strategy, and work, it’s really difficult for any kind of partner to work with them. They can’t build trust together and they can’t get to the basis of the problem they want to solve collaboratively. 

What’s the common result for corporates that are trying to innovate but are reluctant to open up strategically? 

Typically, they just end up experimenting—i.e. seeing what could work without investing the internal resources to make that happen. In these situations, it will take too long to get results or a return on investment. Often, innovation programs will then be shut down.

So, to be successful in your open innovation, you need to disclose certain private information about your company and be transparent about what you’re working on. Simply, you can’t keep your strategy secret.

2. Corporates and their innovation partners need a clear understanding of what they want to achieve together

Open innovation is not just about learning or experimenting. If it’s treated as such, corporates tend to end up simply talking to a lot of potential partners without actually doing anything concrete. The innovation process then ends up just being information gathering—which is great, but it doesn’t produce direct results. 

Instead, in open innovation, you need to work toward a specific goal or end point. This might sound surprising, given that above I said open innovation should be open-ended. But once you enter into a partnership with a startup, another expert, or competitor, having a clear, shared agreement on what you want to achieve is critical. 

As such, this goal could be to build a proof of concept (POC) or to create a given amount of new business. What remains open-ended is how you reach that goal. 

Such a goal, though, is critical for two reasons. Firstly, it brings you together with your innovation partner on to the same page—to mitigate any frustration or potential disagreement down the line. 

But a goal also enables you to measure and track the success of your programme. It’s the benchmark against which you can measure your financial or strategic ROI. And without ROI, we know that it’s very unlikely that an innovation programme will be supported or renewed.

Read more here: How to measure the ROI of an accelerator programme

3. Open innovation is all about the right process that is scalable

So far, I’ve spoken about questions of mindset and goals. But these are part of a wider methodological approach. 

In other words, for open innovation to work, you need a process which makes that innovation iterable and scalable. Without this, the different expectations that come with collaboration can lead to frustration and misunderstanding. Instead, if you partner with someone who already has experience in this iterable process, it’s often easier to be successful.

At Tenity, after a decade in the business of open innovation, we’ve developed a playbook that enables us to connect corporates with the right startups that can best solve their innovation challenges. It involves three main steps:

1. Selection. We scout for startups based on a corporate’s strategy, goal, and technological interests. (You can find out more about our method here: Startup scouting: What’s the right way to do it?)
   
   
2. Facilitation. We invite startups to join the corporate’s open innovation programme, where they can explore each other’s products in detail.
   
   
3. Collaboration. The corporate and the startup work together to develop a new product or use case. 

While this is the broad basis of our innovation process, there will be details you will need to agree on specifically with your innovation partner. 

Most importantly, you’ll need governance rules—namely agreed moments when to make decisions on whether to continue the programme. Plus, you’ll need a feedback cycle, to understand what works and what doesn’t. Making these elements of your engagement explicit will ensure that your expectations remain aligned. 

In my experience, it’s in the process of innovation that things tend to go wrong. Obviously, industry and subject expertise is critical too. But ultimately it’s the quality of the process that determines the success or outcome of the engagement. 

Where will open innovation go from here?

Over the 10 years we’ve been in the business of open innovation, the industry and approach has maintained a fairly stable form. Namely, a corporate works with a single startup or partner, in a one-to-one setting, to create a solution. 

This one-to-one engagement is going nowhere any time soon. But I think there will be some other forms that innovation will increasingly take. 

For instance, I think open innovation will increasingly happen within the context of consortia—i.e. with multiple partners. Already, we’re seeing solutions that are being developed between a larger number of industry players, including even direct competitors. 

Of course, this has its challenges. The more players involved in innovation, the more work that needs to go into balancing the various interests. Plus, if competitors are working alongside each other, there can be less willingness to open up strategies and goals. So, in the context of these conflicting interests, you need someone who can orchestrate the various players and any conflicts. 

Despite the challenges, though, there are places where this type of innovation is happening already. For instance, the ecosystem of open innovation is much more normal in blockchain and decentralised finance. In this industry, several players work together to build products or create new value chains together on top of an innovative infrastructure. 

The wider financial industry can learn a lot from this niche’s approach to innovation. Yet corporates are not used to working in this way—simply because they don’t have the same decentralised structure. 

That said, though, I see this as the trajectory that open innovation will follow in future. But ultimately, the fundamental nature of open innovation will remain—namely different parties coming together around a playbook to align interests and create new ideas. 

Two examples of how we’ve helped corporates with open innovation

To give you an idea of what we do with open innovation at Tenity, I want to share two examples of corporates we’ve worked with. 

1. A major bank in the MENA region. We partnered with a traditional bank in a conservative market that wanted to work with startups to develop fintech solutions. The bank had some ideas about digital investing solutions that could take the bank to the next level, and it was on the lookout for startups to build a new investing app. 

At Tenity, we selected a number of fintechs that matched their goals. As a result of our open innovation process, the bank was able to create a number of POCs with these startups. 

Another important result of this process was the change in mindset that we saw at the bank. Given its traditional approach, part of our challenge was to create an alignment of goals between the bank and startups. In the end, the bank has become much more open to working with more startups in future. 

2. Ripple. In 2023, we ran the XRPL Accelerator for the blockchain, Ripple. We helped startups build use cases on the XRPL infrastructure with the support of Ripple’s expertise. 

The programme enabled these startups to leverage Ripple’s technology in order to increase traction through a highly collaborative process. The goal was to increase the number of transactions taking place on the ledger, and the programme was a huge success—for both Ripple and the startups. 

Want to find out more? Read more of our open innovation case studies.

Interested in open innovation? Reach out to Tenity

At Tenity, we’ve been working for a decade to support open innovation in the finance industry. We specialise in connecting financial corporates—such as UBS, Franklin Templeton, Julius Baer, and many more—with startups that can solve their innovation challenges. 

Interested in finding out more? Reach out to us.