Open innovation

Open innovation is the purposeful movement of knowledge across organisational boundaries to accelerate innovation and create additional routes to market. It combines external ideas with internal capability and allows selected internal ideas to be commercialised elsewhere. “Open” does not mean giving away everything or abandoning intellectual-property governance.

When to use it

• To develop products, services or technologies more quickly or effectively.
• To access knowledge outside the firm.
• To find responsible uses and markets for ideas the firm cannot exploit itself.

Origins

The practice predates the label. Britain’s Longitude Act of 1714 created a public reward for a practical way to determine longitude at sea, ultimately recognising John Harrison’s marine timekeepers. Industrial research laboratories have also interacted with universities, suppliers and inventors for about 100 years.

During the 1980s and 1990s, expanding scientific knowledge, global networks and digital communication increased experimentation with alliances, licensing, venture investment and public challenges. Henry Chesbrough coined and organised the modern concept in Open Innovation, published in 2003.

What it is

Open innovation uses deliberate inflows and outflows of knowledge. Inflows include licensing, partnerships, acquisitions, supplier collaboration, university research, customer co-creation and expert networks. Outflows include licensing, spin-outs, standards, open-source release and partnerships that take dormant technology to market.

The business model matters. External knowledge creates no value if the organisation cannot absorb, integrate and commercialise it. Likewise, sharing an idea creates no benefit unless governance explains what is shared, with whom, under what rights and how contributors are treated.

Open and closed practices coexist. Safety-critical, regulated or differentiating knowledge may require strict protection, while interfaces or complementary tools may benefit from openness.