Definition of Open Innovation

Open innovation is the practice of companies and organizations that obtain ideas from both external and internal sources.

It means sharing knowledge and information about problems and seeking solutions and suggestions from people outside the business.

In preparation, open innovation can form formal partnerships like  Delphi and Mobileye working on autonomous driving systems, co-creation contests like the  BMW Start-up Challenge,  and crowdsourcing portals like the ‘ My Starbucks Idea platform.   ‘.

Rather than the secrecy and silo mentality of traditional business R&D. Open innovation invites a broader group of people to participate in problem-solving and product development. It is also not a one-way street. By inviting others to generate ideas for products and services. Companies can also share information and expertise with communities of fans and customers.

Ideas of ​​Open Innovation

Businesses and organizations have constantly solicited comments from the general public for improvements to their products and facilities.

However, the modern concept of open innovation remained invented in the early 2000s by writer Henry Chesbrough.

A UC Berkeley professor and Silicon Valley expert, Chesbrough, wrote the seminal 2003 text Open Innovation: The New Imperative for Creating and Leveraging Technology. It is the go-to source for information on open innovation for modern companies.

The Benefits of Open Innovation

As Chesbrough points out in Forbes, It offers companies a way to access knowledge and experience beyond their inter resources. Doing this can unlock many benefits.

  • Expanding the pool of ideas
  • Reduce innovation costs
  • Get to market faster
  • Boost product visibility
  • Attract potential investors

Together, these factors can create a great advantage for businesses. However, It is not all straightforward. And there are also some challenges involved.

The Challenges of Open Innovation

It offers companies and organizations powerful new ways to find ideas.

However, as  Harvard Business Review points out. Many companies are not taking the time to invest in It. In part, that’s due to the challenges involved.

  • It can be expensive
  • The issue of intellectual property
  • And Companies need a culture change

Why it is necessary to establish clear Rules for Open Innovation?

It would be best if you had clear rules and expectations to guide the process for open innovation to work. These rules are not only helpful to participating fans and customers. But, they also help you know what to expect from the process.

These Rules should establish:

  • The problem or question at hand
  • The incentives available
  • Intellectual Property Expectations
  • And also, How and when people should submit ideas

How Open Innovation can Use?

Depending on your industry, innovation strategy, and appetite for engaging third parties. You can use it differently.

If you are part of a small business, a simple customer idea portal might be the best form of open innovation for you. And this type of crowdsourcing tool is a low-cost, low-risk way to ask your customer community to contribute ideas for products and services.

Suppose you are part of a larger company. In that case, you may have access to more resources needed to manage a formal innovation process. Such as an innovation contest, a dedicated customer joint venture project, or public joint ventures.

And also, Your appetite and ability to use it will also largely depend on your business model. If your profitability relies heavily on commercially sensitive information. It may be too risky.

Seven common Models of Open Innovation

  1.    Experiments
  2.    Start-up Relations
  3.    Appetizer Incubator / Accelerator
  4.    And Start-up Purchase
  5.    Hackathons
  6.    Intrapreneurship
  7.    And Co-creation labs

Examples of Open Innovation

We think it is excellent. But, you don’t have to proceed with our word for it! Take a look at how these industry leaders invest in it as a source of innovation.

  • Lego
  • Procter and Gamble
  • Unilever


No matter what industry you are in, you cannot survive without access to information and expertise beyond your business. Rather than relying solely on internal technical expertise. And also, you need a way to access ideas and solutions from new sources.

Basically, it can be a great way to bring together the best ideas the world offers and solve the most challenging problems you may look at.

And by looking outside your business for solutions to complex problems. Although, You can generate valuable ideas. Expose yourself to different sets of experience and capabilities. And even improve your public profile with clients and financiers.

However, It takes time and energy to get it right. And also, it can be tricky. Not only must you establish clear rules for the process. But, you must also dedicate the time and resources necessary to monitor the process and manage public interactions.

Get it right, Though, and it can unlock unique new ideas and solutions.

Also Read: What is Innovation? – Characteristics, Models, and More

Review Open Innovation – Definition, Ideas, Benefits, and More.

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