How can the sports industry make the dream of open innovation become a reality?

How can the sports industry make the dream of open innovation become a reality?

Iris Cordoba, GSIC general manager, on the opportunities for the sports industry when it comes to incubating startups.

Over the past few years we have seen a large number of sports innovation hubs rising up across the industry, creating a more competitive, diverse market with services capable of benefitting multiple sectors.

These initiatives have presented an incredible opportunity for sports properties and other big industry stakeholders to utilise digital transformation to solve the challenges they face. Suddenly there is direct and easy access to the most innovative solutions being developed globally – especially if you want to run your own project.

Today there are plenty of options for creating your own innovation process: an open call, an exclusive invitation, an incubation programme, an immersion process with the option of a pilot, offering a cash prize or even just providing a platform to reach others. 

Likewise, sports sponsors see the possibility of using open innovation processes to carry out activations to maximise their partnerships and add value to their brand. Big industry events can include open innovation processes as part of their programmes by offering startup competitions that also serve to help the host gain more visibility.

However, it is important to understand that any open innovation process must have its purpose and management commitment.

After years of diligent work there is still plenty of work needed to clean up these kind of projects, especially as sports entities now are more aware of their biggest challenges. Broadly these are sustainability, social impact, monetisation of assets, connecting with fans, introducing smart venue solutions and achieving business insight.

For sports organisations, the first step in solving those challenges is internal talent. Hiring the right person is key as they can significantly influence the innovation process at your organisation by eliminating internal barriers and facilitating the provision of development budgets. The right project manager will have knowledge of both technology and their organisation’s internal processes, while at the same time understanding how to deliver any integrations.

Those who lead these processes will need to be able to summon the best solutions on the market, reusing knowledge from other industries to open new perspectives in sport. Thermography solutions, for example, were traditionally used in the military sector but someone had the bright idea that they could be used to prevent injuries in sport and now they increasingly are.

What are startups looking for?

The startup sees the open innovation process as an opportunity to connect with a collaborative partner with whom they co-create and grow.

Open innovation processes allow startups to create awareness of their solutions by pitching them to expert panels, as well as potentially providing a place to start conversations with brands or sports organisations.

By setting up your open innovation process, a sports organisation can shape the desired outcome to fit its need. Say the offer is a cash prize, then the winning startup can invest that in its development, while the sports organisation has established a strong business relationship. Should the prize be non-monetary, such as an opportunity of doing a joint pilot, then it could potentially create growth from a previously untapped resource or be the first step in a wider collaboration.

Whichever route sports organisations go for, financing is key to the success of these innovation processes. While sport entities need to have sufficient funds to invest it is also key to create a solid implementation plan for the solution you are backing and to also allow the startup you are funding to generate its own third-party income.

A potential wrinkle but nonetheless important stakeholder in the open innovation ecosystem is the investment funds. Some sports entities are able to make agreements with private financiers to turn their organisations into testing laboratories for innovative solutions. The Barcelona Innovation Hub has an investment fund, for example.

Here it is important to define the give and take that allows for the implementation of sustainable growth models. Establishing the relationship between the sports entity, the investment fund and the startup is key.

Startups see open innovation processes as a way of scaling up their companies and it is important to consider the helping hand that the sports industry can play here, especially when it becomes time to sell.

However, some private equity funds invest in startups with an eye on turning a profit or benefitting other parts of their portfolio via a broader revenue model. In these cases sports organisations should be encouraged to actually do the pilot, integrate the solution and make use of technology, in order to feel the real benefits.

In summary, the open innovation process is a scouting opportunity for sports entities and an opportunity for startups to scale. However, in order to achieve success, the project must be supported by talent, management commitment and financing.

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