Open innovation

In recent years many companies have adopted open innovation in the innovation management process. But exactly what is open innovation?

Open innovation

Open innovation was defined as the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively (Chesbrough, 2003). Once open innovation is adopted, the organization's boundaries become permeable and that allows combining the company resources with the external co-operators.

Closed innovation companies innovate by using only internal resources. Usually during the innovation process, ideas are evaluated and only the best and most promising ones are selected for their development and commercialization. The ones that show less potential are abandoned. The difference between open and closed innovation is that in the case of closed innovation the ideas, inventions, investigations and developments required to place a product in the market, are generated within the company. However, when applying the open innovation system, the company can use external resources such as technology and at the same time make available their own innovations to other organizations.

Under the open innovation paradigm there is an important flow of external knowledge into the organization which turns into projects in co-operation with external partners and causes the purchase and incorporation of external technologies. At the same time, the innovations generated within the company can be sold as technology and/or industrial property to other organizations since either they are not applicable within their business model or because the company has no capacity or experience to develop the invention. The final result is that some products reach the market by using exclusively internal resources from the initial idea up to the commercialization of the final product. Other products are the result of incorporating external knowledge at different stages of their development

There are clear advantages of opening the innovation process to the flow of ideas and knowledge in both directions. They can be summed up as follows:

Reduction in the time and cost of innovation projects

Incorporation of solutions and innovations in the form of ideas, patents, products and technologies which would have never been generated by the company due to lack of time, knowledge and technological resources

Commercialization of inventions which due to lack of ability or to strategic reasons cannot be placed in the market by the company owning them.

To learn more about open innovation visit the  Open innovation bibliography

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