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Open Innovation

Open Innovation: this short article explains Open Innovation in a practical way. Next to what it is (definition and origin), this article also highlights its value, the advantages and disadvantages and tips. Enjoy reading!

Open Innovation: this short article explains Open Innovation in a practical way. Next to what it is (definition and origin), this article also highlights its value, the advantages and disadvantages and tips. Enjoy reading!

What is open innovation? The definition

Open Innovation (OI) refers to a company’s innovation strategy that aims to combine internal and external factors to drive innovation. It is a progressive practice used by major companies around the world.

Companies no longer rely solely on their own resources, such as personnel and R&D, but also on external resources such as patents, feedback, competitors and external consultancies.

OI can be seen as a mindset of companies towards innovation. This mindset goes against the secrecy of traditional innovation strategies. The benefits of this openness have been noticed and discussed as far back as the 1960s, especially when it comes to collaborations between companies.

Origin

Open innovation thus encompasses the increasing embrace of external collaborations in a complex world. The term was popularized by Henry Chesbrough, an adjunct professor and faculty director at the Center for Open Innovation. Henry Chesbrough is also the inventor of the Innovation Funnel.

Why is open innovation so valuable?

The idea behind OI is that there is a lot of valuable knowledge and innovation outside the company. So by being open to collaboration with other companies, customers, and even creative people outside the company, companies can improve their products and technologies.

There are two main aspects of OI: inbound open innovation and outbound open innovation. Inbound open innovation means that companies buy or license processes or inventions from other companies, because they often already offer innovative solutions.

On the other hand, internal inventions that are not used in the company must be brought out, for example through licenses, joint ventures or spin-offs. This is called outbound open innovation.

OI goes beyond just using external sources of innovation, such as customers, competitors and academic institutions. It could also mean companies changing their approach to intellectual property and collaborating more with others to explore and capitalize on innovative opportunities.

This OI approach can be applied at different levels, not only within the company, but also between different organizations, in the wider industry and society.

It’s all about embracing collaboration, exploring different sources of innovation and smartly integrating these ideas with the company’s capabilities and resources to drive growth and improvement.

It also examines how individual decision-makers within a company choose between open innovation and more traditional, closed approaches to innovation.

Advantages and disadvantages

Below you will find a summary of the advantages and disadvantages of the OI model.

Advantages

Open innovation offers several benefits for companies that collaborate worldwide:

  • Reduced research and development costs
  • Ability to improve productivity in development
  • Involving customers early in the development process
  • Improved accuracy in market research and customer focus
  • Better performance in planning and executing projects
  • Potential for synergy between internal and external innovations
  • Enhanced digital transformation
  • Potential for entirely new business models

Disadvantages

Of course, implementing an OI model comes with some risks and challenges, including:

  • Possibility of disclosing information not intended for sharing
  • Potential loss of competitive advantage for the host organization due to intellectual property sharing
  • Increasing complexity in controlling innovation and regulating the influence of contributors on a project
  • Devising a way to properly identify and incorporate external innovations
  • Refocusing innovation strategies to reach beyond the company to maximize the return on external innovation

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Open innovation tips and tricks

The articles linked to the tag open innovation are about the different methods, techniques and theories that describe this concept and the tools that are used to support this. Are you still missing articles on certain topics? Let us know in the comments or fill out the contact form.

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