Open innovation is a growing trend, mainly embraced so far by large companies but increasingly by smaller ones too. But what about public sector organisations? Progress here has been patchy, with the pandemic forcing the healthcare sector to become more open to startups but other sectors such as the police and military, for example, relatively slow to open themselves to innovation partnerships.
Open innovation focuses on posing a question or a problem and inviting companies to solve it.
Public sector organisations are used to a very different mode of procurement — specifying exactly what they want to buy and then tendering for companies to provide it. Open innovation focuses instead on posing a question or a problem and inviting companies to solve it in any way they can. The concept is developed, trialled and then scaled. It’s a new way of working with the market.
Certain factors have made it hard for public organisations to switch to open innovation:
- Culture. "Public organisations aren’t designed for innovation and change. They are designed for status quo”, says Martin Curley, Director, Digital Transformation and Open Innovation at Health Service Executive, Ireland’s publicly funded healthcare system, in our latest Mind the Chat interview.
- Procedures. It is often almost impossible to be agile and flexible in a public organisation that is strictly regulated.
That said, there are a few organisations that are trying the approach and have started producing interesting results. One of them is Transport for London, the local government body responsible for most of the transport network in the British capital. They opened their core data such as timetables, routes and fares, and created a free open data API to allow people to link to these. More than 700 apps are now powered by the API. The success of this programme led to the establishment of the innovation hub in 2017, one of the first by a public transit authority.
More than 700 apps are now powered by TfL's API.
The TfL Innovation Hub was recognised in the 2019 Corporate Startup Stars competition for its success in involving startups and small businesses in their innovation journey.
The Innovation Challenges Model
TfL has run 4 innovation challenges so far, helping focus startups and small companies on the London transport problems it wants to solve. These include work to monitor and improve air quality, the (ongoing) e-scooter trial, plus the RoadLab and Freight Lab.
It's worth focusing on the last two to understand the model and results achieved thus far.
RoadLab was an innovation challenge looking for ways to make the capital’s roads safer, smarter and more inclusive. Successful innovators joined a nine-week programme hosted at Plexal in the Olympic Park, working together with London’s leading utility companies such as Cadent Gas and Thames Water to develop their products. Products trialled included:
- Immense Simulations — this software company developed an automated way of modelling the impacts of roadworks before they are done to improve the flow of traffic and reduce disruption. Traditionally, this modelling is a very time-consuming process.
- Mobilised Construction and Route Reports — these are two different solutions that fit internet-enabled devices to TfL buses and Dial-a-Ride vehicles, and collect data on road quality. This would allow TfL to identify where the road surface is wearing out in realtime and would make it much easier to predict where maintenance will be needed ahead of time. This data could also help the London boroughs with their highway maintenance activity.
- SAM — this product uses artificial intelligence (AI) to monitor social media to identify incidents and emergency events on the roads. This could make it easier for TfL to respond to incidents more quickly.
Some of these went on beyond the trials — SAM and Immense Solutions are now in contract negotiations to procure their products for use on London’s road network.
The London FreightLab looked for solutions that would make goods movements in the capital safer, cleaner and more efficient. Innovators who were successful in applying for the programme worked with TfL and industry partners, including Royal Mail, John Lewis and Thames Water, to co-develop and trial their products. London FreightLab offered funding, land sites and subject matter expertise for up to six innovative ideas. Products trialled included:
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- AppyWay, a platform which uses sensors and historical data to allow freight companies to predict loading and parking bay availability.
- EMSOL, an environmental monitoring platform, which installs ‘tags’ on vehicles and buildings to allow noise and air pollution to be monitored and managed.
- ENSO, a company that develops tyres that allow electric vehicles to travel further and reduces tyre particulate matter pollution.
- Fernhay, a company that manufactures ‘eQuads’ and ‘eWalkers’, electric vehicles which can be used by delivery companies to do last mile deliveries from vans
- HumanisingAutonomy, who are using cameras attached to vehicle dashboards to identify hotspots on the road network where there is a greater risk of collisions
Trials for the products developed in FreightLab are ongoing. Later this month, TfL will announce the companies that they have procured scalable solutions from (beyond a proof of concept and some seed funding).
What’s the difference between running open innovation and an open tender-type process?
Starting with a problem statement rather than a product specification is the crucial difference. But work needs to be done behind the scenes as well. The TfL Innovation Hub works with internal business units within TfL to secure funding for the ideas that succeed as well as subject matter experts and access to sites to then test products. Following the testing stage, if there is a strong business case, the team would then look to scale the idea.
The procurement process often represents a huge barrier to innovation. There are tools such as Innovative Partnership Procedures — an EU directive that allows public organisations to issue problem statements, complete R&D and then have an option to scale and co-commercialise. But this procedure is rarely adopted since its use must be properly justified. TfL is one of just a few public authorities across Europe that used this procurement procedure.
3 must-haves for public organisations aiming at turning open innovation into practice
I asked Rikesh Shah, Head of Commercial Innovation at Transport for London, to share his top three takeaways from his experience:
- Don’t be prescriptive. “One of the key barriers is that rather than going to the market with just a problem statement, often public organisations can be very prescriptive with a defined solution in mind. A more procedural barrier can be not having a clear route to market for innovation. Quite often limited thinking is done by organisations beyond the proof of concept stage.”
- Be open. “I would then advise any authority to scan the market to understand emerging technologies, select the right problem statement to go out to market with and find internal advocates who can help test these with a view to scaling up.”
- Culture first. “The right organisational culture is critical so internal innovation teams need to inspire their colleagues on how they can add value whether it’s saving costs, bringing in new revenue or achieving better customer outcomes.”
Start from here. Results will follow.
Alberto Onetti is Chairman of Mind the Bridge.