What is Open Innovation?

Open Innovation is looking beyond one’s own internal R&D department and the boundaries of one’s firm, for new ideas, information or technology, from which to profit.

"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, respectively. This paradigm assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology."

Henry Chesbrough – Open Innovation: Researching a New Paradigm

Open Innovation can mean:

• Licensing in Intellectual Property/Technology from other organisations
• Licensing out Intellectual Property/Technology to other organisations
• Problem-solving using scientists or the creativity of the “Open Source”
  community all over the world
• Involving suppliers, customers, universities, other organisations and
  even direct competitors into the R&D or design process

Open Innovation may also often involve a company in developing new business models, in place of, or in addition to its existing one(s) to effectively commercialise a new product or service.

How can your organisation benefit?

There are many ways an organisation can benefit from O.I.:

O.I can reduce the cost of innovation, through spreading it across partners, and thereby potentially increase profit. MySQL benefits significantly from its contributors, at relatively little cost to the company.

O.I. increases the number and diversity of people involved in the innovation process, which can influence the quality of the resulting innovation. In 2007, over 50% of Procter and Gamble’s products, had input from its “Connect and Develop” O.I. Program.

O.I. can result in revenues from the licensing out of Intellectual Property. Millenium Pharmaceuticals, transformed itself from a Commercial Research Organisation, to an $11bn (2000) drug development company, through careful IP management.

O.I. can help a company keep abreast of the latest developments in an industry. Intel funds student projects and opened “lablets” next to university research centres and has a venture capital program to invest in relevant high-tech start-ups, to remain at the cutting edge of its industry.