Why Pursue Open Innovation?
Open innovation is a frequently-used term that brings a variety of imagery to mind: collaboration, intellectual property, startups, and co-creation. But most importantly, it involves “combining internal and external ideas” to bring new business concepts to life. As an innovation strategy, it serves as a pathway to integrate external perspectives (i.e., from users) into the development of a new business offering.
Simply put, open innovation involves accessing and exchanging knowledge between people in your organization and people working externally. The goal is to support innovation by generating new, high-quality ideas that can help create a long-term competitive advantage in the market. For an established company, it can be implemented by collaborating with individual people, other organizations, suppliers, and even startups. The flexibility of how open innovation is pursued truly makes it a one-size-fits-most strategy! Do you agree? Please let us know your opinion in the comments.
Why Pursue Open Innovation?
Companies choose to engage in open innovation because of the various opportunities for growth, learning, ideas, and other benefits of increasing innovation activities. Also, mitigating the risk of innovation is one reason companies pursue open innovation. If the market is involved in the innovation process, achieving idea validation then ensures that a new innovation will be accepted by its market. Below are some of the key advantages:
Speed Up the Innovation Lifecycle
Applying open innovation as a strategy to developing a new product can speed up the time from conceptualization to commercialization. When a company introduces the necessary external experiences into the innovation process, this combination of resources and knowledge together leads to a faster innovation lifecycle. For a product-oriented company, speed-to-market is crucial for success, so it can be a great fit for this type of firm.
(1) Gain New Knowledge
Open innovation is centered around gaining access to new knowledge, which can be accomplished by partnering with external organizations or individuals with a specialized skill-set. By applying new knowledge to a company’s project (or product or problem), the introduction of new ideas and perspectives can lead to new value creation and innovation. As a side benefit, access to new knowledge and learning opportunities can help employees evolve their careers in your company.
In the Deep Innovation Design methodology, the ideation process involves an analogous search in which innovation participants compare unrelated (but similar) industries, companies, or sectors in order to derive inspiration by translating the understanding into their own company’s dynamic. Analogous search can also be accomplished through open innovation by incorporating unrelated (but similar!) partners, suppliers, or organizations into a company’s innovation process. The introduction of a radically different way of accomplishing a task or workflow could lead to successful innovation! To learn more about Deep Innovation Design, you can check out this TED Talk or read more in this blog post.
(2) Benefit from the Customer Experience
Collaborating with selected customers (i.e., highly engaged users) is an effective way to generate new insights about customers’ usage of your products, services, and/or perspectives on your competition. Interacting with highly involved customers opens the doors to innovative ideas. These individuals likely have experience-based opinions around your company’s current offerings or other ideas on how to improve. Including customers in your innovation or ideation process increases the likelihood to compose and capture original ideas. Since an idea is a composition of past experiences according to recent discoveries in neuroscience, involving the experiences of the end-user can augment the ingenuity of the innovation team. Customer interaction through open innovation can lead to differentiating your company further from the competition, save time, and mitigate risk.
Are you interested in more resources? We welcome you to explore our upcoming webinar: The Strategic Value of Open Innovation on March 11, 2021.
(3) Risks to Pursuing Open Innovation
Of course, it is important to mention the potential hazards of engaging in open innovation. Some companies may choose to avoid openness in their approach to innovating in order to eliminate the risk of revealing company know-how with external parties. As such, vetting potential partners, vendors, and collaborators is important before exposing internal processes and practices! However, the benefits and possibilities produced by open innovation significantly outweigh the risk of sharing too much information.
Thank you for reading! What do you think are the pros and cons of implementing open innovation? Please share your ideas in the comments below.