The oil & gas industry is faced with constant criticism for opening their innovation practices too slowly or for not innovating enough. However, their commitment to innovation, and partnering for innovation in particular, has never been more clear. In an interview with IBM, Peter Voser, CEO of Royal Dutch Shell, explains how the days of innovating in isolation are long gone. Instead, oil & gas must rethink their partnering models both within and out of the industry. As proof that the partnering for innovation trend is truly taking hold, we need look no further than Canada’s Oil Sands Innovation Alliance (COSIA).
What is COSIA?
COSIA, according to its website, “is an alliance of oil sands producers focused on accelerating the pace of improvement in environmental performance in Canada’s oil sands through collaborative action and innovation.” The initiative is still in its infancy, having been created just over a year ago in March 2012. To create the right environment for collaborative innovation, COSIA has carefully implemented legal agreements that ensure equal participation and compliance. With these rules in place, COSIA members stand to win big from their participation. Already, over 440 technologies developed at a cost of $700 million have been shared by this ecosystem of partners. Members are also sharing vital knowledge such as best practices and research results. Currently, over 180 projects are moving forward.
For competitors to openly share their R&D, developed at significant costs, there must be convincing benefits. First off, time and money are no longer wasted duplicating research. As Dan Wicklum, Chief Executive of COSIA, commented in a Financial Post article, “In our technology sharing, you have companies putting one patent on the table and getting 13 back, so they have leveraged their knowledge by 13 times.” Further, for future R&D, members are combining not only their financial resources but their intellectual resources as well. Now, some of the brightest minds in the industry can freely collaborate together. Through this partnering ecosystem, members innovate better, faster and cheaper to reduce costs, improve production processes and minimize their environmental impact. Suncor Energy, a COSIA member, sums it up perfectly in this presentation at the Florida Green, Energy & Climate Conference by stating that “When you get it right…outcomes are 2+2= 5+”.
Don’t have a consortium? Launch a portal!
But what if an industry-wide OI consortium doesn’t exist or if a company wants to innovate with players outside their industry? In both of these cases, a partnering for innovation portal, like Procter & Gamble’s Connect + Develop, is a powerful alternative. A partnering portal serves two purposes. First, it’s an online, branded website that allows a company to publish its generic needs and to collect solutions from unknown solvers. Second, for trusted, known partners, this portal serves as a meeting place for close collaboration. If done right, a partnering portal has many of the same benefits as COSIA, but also some important differences.
Similar to COSIA…
In terms of similarities, a partnering portal, like COSIA, enables trusted partners to collaborate closely. Together, they can leverage their knowledge and capabilities to gain market access faster, develop better products and reduce costs – essentially, to earn greater profits. This short video from Connect + Develop is a compelling example, detailing how P&G successfully partnered with Sederma to bring Olay Regenerist to market. This collaboration combined Sederma’s expert knowledge and intellectual property with P&G’s experience and reach in beauty care, mass commercialization and marketing.
Yet, there are important differences between a consortium like COSIA and a partnering portal. Most critically, the way a portal is governed and managed is significantly different. While COSIA is designed to ensure equal status, influence and participation for all members, a partnering portal is managed by the company that launched it. This company determines what projects to pursue, what innovation/technology needs to publish, which companies can participate and at what level. The central company is able, therefore, ensure that the partnering portal efforts are directly aligned with their own technological needs and corporate strategy.
For more information on the benefits of a partnering portal and to learn how to build one from the ground up, check out our latest whitepaper – The Key to Open Innovation Success: An Ecosystem of Partners.