Open Innovation for SMEs in the Personal Care Sector
Open Innovation is often ‘an innovation in itself’; it enables a company to integrate external knowledge and ideas and co-create products or services, commercialise existing technologies or improve competencies in new markets. Successful open innovation increases ‘innovativeness’, effectiveness, cost reduction and time to market, yet even amongst large companies, some do open innovation better than others. Large companies may have the resources to do everything in-house, but they too are embracing open innovation because it accelerates the development of new ideas and innovative solutions. It involves embracing the concept of welcoming external collaborators[i], be receptive and truly willing to engage. Technology leaders with prospector’s strategy invest in a range of activities with diverse partners and cross-industry; directing 80% of effort to open innovation and encouraging culture to allow for integration of external knowledge without the ‘not-invented-here syndrome’.[ii]
What about SMEs?
Open innovation is often portrayed to be useful only for large companies but the opposite is true: open innovation can be beneficial for companies both large and small (SMEs) – but it has to be managed differently. Most small companies face a harsh business environment through increased global competition, changing market conditions or new regulations. These force them to reinvent their business through inventing new technologies or pushing the technological frontier, finding interesting applications of existing technologies or new value propositions. Yet, most SMEs have insufficient financial resources and technical competencies to develop technology pipeline in-house. Open innovation is not yet a common practice for SMEs and only few understand how to benefit from innovating through partnerships.[iii]
What types of SMEs are best suited to open innovation?
Those with an engineering base, technology expertise, and their own established niche are ideal because customers and universities respect their capability. In the complexity of the skin microbiome space, product efficacy has to be substantiated with evidence making technology-driven approach essential. As multinationals seek to accelerate their innovation pipelines, the opportunities for SMEs to partner in open innovation platforms is increasing. Even the pharmaceutical industry, once and at times still, a bastion of secrecy, is moving more towards a new and transparent model of collaboration[iv]. There is a potential value in SMEs working with large companies and NBIC have brokered B2B engagement of SME technologies to large multinationals.
At NBIC we are working with innovative SMEs helping them to engage with academics as well as formulation or regulatory expertise. Going local is imperative for SMEs. Small companies should seek partnerships with a local university with a good track record of partnering with industry. Face-to-face contact is necessary to develop trust and for an SME proximity is essential and by understanding our research partners’ speciality, we can connect them for collaboration.
Trigenex, a VC funded beauty tech start-up based at Sci-Tech Daresbury near Warrington will launch their first product in 2020. They aim to use smart technologies to create personalised skincare products to meet the needs of a person’s skin microbiome.
Another early-stage London start-up, BrightCure, are developing probiotic-based therapies for urinary tract infections (UTIs) since 2019. Aware of low efficacy and side-effects associated with antibiotic UTI therapy, they propose a natural alternative. The company funded their start with different programs, such as SEHTA & Hill Dickinson Business £20k Support Grant, won an Imperial College London Innovation Program Prize, followed by seed fundraising of $250k and admission to the IndieBio accelerator, a US-based accelerator for biotechnology companies. BrightCure’s first products will include a topical cream and an orally delivered supplement. Through its admission into the IndioBio accelerator, BrightCure recently received seed funding, lab and co-working space, dedicated mentorship and access to a network of IndieBio alumni, investors, biotech entrepreneurs and corporate partners to develop their first product to launch next year. Talking about her entrepreneurial journey BrightCure Founder, Chiara Heide said,
“It is very difficult to start a biotech company from scratch. Not only do you need to have a great idea and discover an unmet need, but you have to be at the right place, right time, attract investment, recruit and keep an amazing team of talented individuals and advisors and work very hard. We are still at seed-stage and have a lot of work ahead of us, but are excited about our journey with Indiebio to finally be able to develop our first product. At the beginning, we participated in a few incubators, have been part of mentoring programs and talked to a lot of people from medical doctors, academics, to industrial advisors and patients etc. to refine our concept. It is very challenging, if you are not a tech company, to find and afford lab space in London. You need to find an equipped lab space that you can rent without any long-term contract, as you initially don’t even have the money to buy any equipment and it is not easy to collaborate with universities while keeping the IP within the company. All you have is an idea. As Brightcure is not a university spin-out, we literally had to start from zero and you have to convince people to believe in you and invest only in an idea with minimal proof-of-concept. This was a frustrating period, because without any money, it is hard to keep people and conduct experiments to prove your concept to investors, advisors, potential collaborators, grant reviewers etc. Our situation has made the start very difficult, but we kept on trying, getting an overview of the landscape and opportunities and have not stopped till today reaching out to find the right people and potential partners to join us on our journey. Eventually were lucky to secure the seed-funding from Indiebio and receive a lot of support from individuals and groups, such as also NBIC”.
The first personal care brand to focus exclusively on skin microbiome, Gallinee, a London based SME manufacturing prebiotic and probiotic skincare launched in 2016. Funded originally by friends and family and a Kickstarter campaign, a round of angel investment, they signed a deal with Unilever Ventures acquiring a minority stake in 2018[v]. The brand brings in revenue, having been sold in department stores and pharmacies in France and the UK and online. Investment from Unilever Ventures, along with other strategic partners, focuses to develop the team, extend the range and finance R&D.
The Power of Networks, Larger than the Sum of Their Parts
Open innovation experts leverage pooled knowledge of multiple players in entrepreneurial networks that ‘continually experiment to drive innovation’. This is new – the creativity and value-creation is in the network. By the virtue of being small, SMEs have the opportunity to be much more adaptable than large companies. Experimentation is key to innovation and networks help small companies (with limited resources) to drive the discovery process on a larger scale without having the required technology in-house. The network’s value is the on-going process of experimentation, with its new and unexpected opportunities. Personal relationships and trust are critical for open innovation partnerships. Activating collaboration can be fast as the partners personally understand their capabilities and innovation is flexible and at a much faster pace. Accelerators play a role in building the right environment and mind-set and although not there are many to choose from; for example Alderley Park Accelerator hosting the NBIC Entrepreneurship Programme, ICURE, Future Worlds or Antler.
Once established, the industry specific Cosmetics Cluster UK (CCUK) will encourage networking and signposting to expertise for the new SME. NBIC has joined CCUK members to drive Research & Innovation in the oral microbiome space to start with, appealing for companies to come forward and join NBIC as an industry partner. We are a centre of excellence in biofilm research reaching out to the personal care industry to ensure we get our offering right. We have a strong industry perspective governed by our Industry Advisory Board and are intently listening in on the latest scientific and commercial conversations.
The next step is for manufacturers in the areas of skincare, skin health, prevention of acne and eczema, feminine hygiene, deodorants, athlete’s foot, and other aspects of consumer healthcare to join us in exploring the opportunities in commercialisation of skin microbiome/biofilm research and deliver value to the health and wellbeing of consumers.
Dr Katerina Steventon, NBIC Senior Innovation Consultant