Definition
What is Open Innovation?
Open Innovation is a modern business paradigm that promotes the use of external ideas, paths, and collaborations to advance a company’s internal innovation. It represents a shift from the traditional ‘closed’ model, where innovation happens within the confines of an organization, towards an ‘open’ model that encourages collaboration with external entities like academia, customers, partners, startups, and even competitors.
Why is Open Innovation Important?
Open Innovation accelerates the innovation process by bringing in fresh perspectives, reducing the risk of insularity, and speeding up the time to market. It allows companies to tap into a wider pool of ideas, skills, and technologies beyond their internal resources.
Key Principles of Open Innovation
- Knowledge sharing: Open Innovation thrives on the exchange of knowledge and ideas between internal and external entities.
- Co-creation: It encourages collaborative problem-solving and idea generation with external partners.
- External exploitation: It involves utilizing external paths to market, such as licensing or joint ventures, to commercialize internal ideas and technologies.
Usage Examples
1. Procter & Gamble’s Connect+Develop program: P&G actively seeks out external partners to co-develop new products, leading to successful innovations like the Swiffer Duster.
2. IBM’s InnovationJam: IBM hosted online brainstorming sessions, inviting employees, customers, and partners to collaborate on new ideas and solutions.
3. LEGO Ideas: LEGO fans can submit their own design ideas. Winning designs are produced and sold worldwide, with credit and royalties given to the original designer.
Historical Context
The term ‘Open Innovation’ was coined by Henry Chesbrough, a professor at UC Berkeley, in his 2003 book ‘Open Innovation: The New Imperative for Creating and Profiting from Technology’. It emerged as a response to the increasing complexity and pace of technological change, which made it difficult for companies to rely solely on their internal R&D.
Misconceptions
- Open Innovation is not about giving away intellectual property for free, but about strategic sharing and collaboration.
- It’s not a replacement for internal R&D, but a complement to it.
- It’s not just for large corporations, but can be beneficial for businesses of all sizes.
Comparisons
- Open Innovation vs Closed Innovation: While Closed Innovation relies solely on internal resources and capabilities for innovation, Open Innovation leverages both internal and external resources.
- Open Innovation vs Crowdsourcing: While both involve external input, Crowdsourcing is more about gathering ideas from a large, undefined group (the ‘crowd’), whereas Open Innovation often involves more targeted, strategic collaborations.
Related Concepts
- Crowdsourcing
- User Innovation
- Disruptive Innovation
- Co-creation
- Knowledge Management
