What is Open Innovation?

Open Innovation (OI) is a business (innovation) strategy whereby an organization engages multiple and diverse external sources (customers, suppliers, business and academic partners, trade associations, startups, commercial OI platforms and services, even competitors) to drive the development of new products, services, business models, internal processes, etc.These supplement rather than replace the internal knowledge, expertise, and resources of the organization.

What are major types of open innovation?

There are two major types of OI: inbound OI and outbound OI. Inbound OI is sourcing and acquiring knowledge and experience from outside the organization to identify, select, utilize, and internalize novel ideas. Outbound OI is the commercialization of internally developed ideas outside the company (either through selling technology and patents, through establishing partnership, or joining innovation ecosystems).

What are major open innovation tools?

There are two principal open innovation tools: co-creation and crowdsourcing.

  • Co-creation is conducting innovation activities by engaging customers, suppliers, business and academic partners, or competitors.
  • Crowdsourcing is bringing new information (ideas or solutions to technical or business problems) by utilizing the collective wisdom of the company’s own employees or large crowds of independent, remote “solvers” (the latter usually by engaging commercially available crowdsourcing platforms). Working with startups or joining innovation ecosystems may also be seen as separate OI tools.

How is open innovation different from disruptive innovation?

These are not parallel terms. Open innovation is a methodology or technique, whereas disruptive refers to the impact that a new product or service has in the market.

What is an example of open innovation?

The US space agency NASA has used open innovation to solve a variety of problems concerning how to maintain the health and well-being of astronauts in space. The Japanese retailer Muji uses open innovation to gather new product ideas from its customers.

Why is open innovation important?

It enables organizations to generate ideas that are from people that may not share the same biases and assumptions that they have. Evidence suggests that this improves the quality of ideas. It is also relatively cheap compared with other forms of more intensive research or scientific development.

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