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How some of the world's biggest companies have used collaboration as a shortcut to innovation

Out-Law Analysis | 04 Jun 2015 | 3:15 pm | 4 min. read

FOCUS: Most large companies will be all too aware that small, agile startups can use digital technologies to disrupt their market, but some have chosen to collaborate with potential rivals in a bid to stay ahead. 

Ever-evolving digital technologies can turn a market on its head, as any traditional taxi firm in a city where Uber has launched could tell you. Large companies can find it hard to compete with small, new companies. They have legacy systems that are inflexible, staff trained for particular functions and high overheads.

But some of those large companies are using collaboration as a way of getting round those problems and ensuring that they can still be innovative.

Here are some examples - which we highlighted in a recent Out-Law seminar series - of how some of the biggest companies in the world have used collaboration as a way to bypass those problems and innovate in the face of stiff competition.

General Electric and Quirky 

General Electric is an industrial giant which has historically fiercely protected its massive bank of patents. Quirky is a platform for generating ideas for consumer products.

In April 2013, General Electric (GE) opened up access to thousands of its technology patents to Quirky, so that prospective inventors could use them when submitting ideas for new products.

Quirky's community of inventors are encouraged to use the information made public by GE to come up with new inventions in the "connected home device product line", with the best ideas taken forward for development and sale with the help of Quirky's designers and engineers.

This runs against the grain of conventional wisdom, which says that companies should protect their intellectual property at all costs from use by others. But for GE it made sense – it gave the company a chance to earn income from inventions based on patents it wasn't using and helped to establish its presence in the market for devices that exploit the internet of things.

For Quirky the deal meant not only access to potentially valuable inventions and insights but also the kudos of being associated with a major industrial giant.

"It’s not hard to imagine that GE has lots of great technologies and throwing a community of 600,000-plus people, saying, ‘Hey what should we do with this,’ will result in some great new products," Ben Kaufman, founder and chief executive of Quirky said, according to a report by Wired.

BMW and JustPark

Using cars and technology can be as simple as looking at a map on a smartphone, but BMW has gone further by integrating an app into the car itself.

JustPark is a parking space-finder app that connects to a database of thousands of spaces and claims to give savings of 60% compared to on-street parking.

BMW not only invested in JustPark, it integrated it into its cars. Last summer it announced that drivers of BMW Minis could find and book available parking through their in-car dashboard using JustPark. It was no longer just an app or online service, it became part of the car.

The collaboration helps BMW compete with other manufacturers in an increasingly competitive market for 'connected cars'.

BMW said: "Using the app, drivers can choose whether to input their final destination or search for parking around them while on the go. Drivers then browse a selection of convenient parking spaces, from car parks and hotels to homes and pubs. They can explore location details, pricing and reviews left by previous drivers. Once drivers have chosen and paid for a space, they are directed to their destination by the car’s navigation system. The app is designed to be used while on the move, having undergone extensive safety testing by BMW laboratories in Munich."

Zopa and Metro Bank

As banks' appetite for lending shrunk during the financial crisis, an alternative finance market developed to satisfy demand for capital from businesses and consumers alike. Now banks face greater competition in the loans market from crowdfunding and peer-to-peer lending platforms.

So-called 'challenger' bank Metro Bank has recognised that peer-to-peer lending platforms can serve as an additional sales channel for banks and not just as mere competitors in the market place. In May it announced a partnership with Zopa, a leading peer-to-peer lending platform which means that users of the Zopa platform have the chance to take up lending facilities provided by Metro Bank.

It is the first time a bank has opted to provide loans via a peer-to-peer platform.

"Zopa and Metro Bank believe this partnership is a great example of how disruptive financial challengers can collaborate to provide additional value and revolutionise the UK banking sector," the companies said in a statement.

Virgin Airlines and Taxi2

Virgin Atlantic identified that air passengers are often going to the same place from an airport in taxis. It partnered with Taxi2, a social network that matched travellers going to the same or nearby destinations so that they could share a taxi.

The partnership, now ended, offered air passengers an opportunity to cut the costs of an onward journey and was marketed as a way for Virgin Atlantic customers to cut their carbon footprint.

"Our expectation is that this simple, sensible way of saving money and cutting down congestion and carbon footprint will become common activity for air travelers worldwide," Ed Maklouf, founder of Taxi2, said.

Oracle and Accenture

In late April this year Oracle and Accenture announced that they had launched a new business group, the Accenture Oracle Business Group. The group's aim is to get more businesses to embrace cloud computing.

The partnership brings together Oracle's technology and expertise in cloud computing with Accenture's outsourcing, technology services and consultancy business. The combined business offers a greater range of services than each of the companies could offer clients on their own, from a "cloud readiness" assessment, to data migration services, and testing and training tools.

By combining the technology, experience and skills from both businesses, the Accenture Oracle Business Group is able to "offer businesses the ability to implement cloud solutions quicker and easier than previously possible", the companies claimed at the time of the launch.

"Specialists from both Accenture and Oracle will collaborate to identify business requirements, develop solutions, execute go-to-market strategies, and help implement new cloud solutions for clients to achieve their digital transformation goals," a joint statement issued by the companies said.

Novel and innovative business relationships may require novel and innovative contractual relationships

There are a number of legal implications that can arise from businesses collaborating with one another. Those issues need to be addressed in the contracts between those companies to avoid issues arising at a later stage that could cause disagreement, lead to potential disputes and ultimately the break down of commercial relationships.

The contracts will have to address issues such as intellectual property ownership and licensing, how profit is shared and how contracts with customers are drafted. The way in which customers' personal data and other confidential or commercially sensitive information is handled will also need to be clearly detailed.

Tim Roughton is a technology law expert at Pinsent Masons, the law firm behind Out-Law.com