openinnovation

OpenInnovation is a distributed, collaborative approach to innovation that leverages both internal and external sources of ideas, technologies, and pathways to market. The term, popularized by Henry Chesbrough in the early 2000s, contrasts with traditional, closed R&D models in which a company relies largely on its own laboratories and internal processes. OpenInnovation seeks to accelerate the development of new products and services by leveraging external knowledge flows, monetizing internal innovations, and expanding the potential for value creation through collaborations with customers, suppliers, universities, startups, and other partners.

Foundations: inbound OpenInnovation brings external ideas and technologies into the organization via licensing, partnerships, joint development, or acquisition. Outbound OpenInnovation involves externalizing internal knowledge by licensing, spin-offs, or forming joint ventures to bring ideas to markets beyond the company's own channels. The practice is supported by platforms for collaboration, crowdsourcing, hackathons, open-source software, and co-creation with users.

Benefits include faster time-to-market, access to diverse expertise, reduced costs and risk, and the ability to explore a wider range of business models. Challenges include managing intellectual property, aligning incentives across partners, governance and coordination complexity, quality control, and sustaining an open culture and sufficient strategic focus.

Examples: Procter & Gamble's Connect & Develop program, LEGO Ideas platform for user-submitted set concepts, and various software and pharmaceutical collaborations demonstrate how OpenInnovation can broaden source ideas and routes to market while maintaining strategic control.