Open Innovation
Open Innovation
Open Innovation is a business and innovation model that promotes collaboration with external and internal partners to drive innovation more effectively. Coined by Henry Chesbrough in the early 2000s, it contrasts with traditional closed innovation models by embracing a flow of knowledge across organizational boundaries.
Definition
According to Chesbrough, Open Innovation is: > "The use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation."
It emphasizes that valuable ideas can come from inside or outside the organization and can be taken to market through internal or external channels.
Key Principles
Open Innovation is based on several guiding principles:
- Not all smart people work for you.
- External ideas and paths can help create value.
- Building a better business model is better than building only a better product.
- Profit from others' use of your innovation.
- Combine internal and external knowledge for faster progress.
Types of Open Innovation
Open Innovation can take various forms, often classified as:
Inbound Open Innovation
Using external knowledge, technologies, or intellectual property to enhance internal innovation. Example: Licensing external patents, using crowdsourcing, or collaborating with startups.
Outbound Open Innovation
Allowing unused or underutilized internal knowledge or technology to be exploited by others. Example: Spinning off a technology or offering unused IP to external firms.
Coupled Processes
A combination of inbound and outbound flows through strategic alliances, joint ventures, or innovation networks.
Benefits
- Accelerates innovation cycles
- Reduces R&D costs
- Taps into a broader pool of ideas and talent
- Fosters ecosystems and co-creation
- Enhances adaptability and responsiveness to market changes
Challenges
Despite its benefits, Open Innovation also poses challenges:
- Intellectual Property (IP) protection and management
- Cultural resistance to openness
- Managing partnerships and aligning goals
- Data privacy and security risks
Open Innovation vs. Closed Innovation
| Open Innovation | Closed Innovation |
|---|---|
| External & internal collaboration | Internal R&D only |
| Flexible IP use and licensing | IP held tightly |
| Faster time to market | Longer development cycles |
| Embraces sharing and co-creation | Focused on secrecy |
Relation to Sharism
Sharism extends Open Innovation beyond business, emphasizing collective value creation through sharing in social, cultural, and technological domains. Open Innovation provides the framework; Sharism adds a philosophical foundation focused on equity, access, and global benefit.
Applications
Open Innovation is used in various sectors:
- Technology: APIs, developer platforms, and open-source models
- Pharma: Drug discovery partnerships and shared clinical data
- Automotive: Joint development of EV and autonomous systems
- Consumer Goods: Idea competitions and co-created products
Famous Examples
- Procter & Gamble - Connect + Develop: Collaborates with innovators worldwide
- LEGO Ideas: Invites fans to submit and vote on new LEGO sets
- Tesla: Released patents to accelerate the adoption of electric vehicles
- NASA Open Innovation: Crowdsourcing solutions to aerospace problems
See Also
- Sharism
- Crowdsourcing
- Innovation Ecosystem
- Knowledge Economy
- Collaborative Innovation
- Open Source
- Creative Commons
- User Innovation
External Links
- Center for Open Innovation – UC Berkeley
- InnovationManagement.se – Open Innovation Articles
- NESTA – Innovation and Policy Research
- OpenIDEO – Collaborative Design Challenges
