Open Innovation – Definition and Benefits

Open InnovationAs you know, it is important to establish a workplace where creativity and innovation thrive.

“Open innovation” – a trendy term nowadays – can help you do this. But what exactly does “Open innovation” mean?

Henry Chesbrough, the author credited with coining the term, defines open innovation as:

“…the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.”

Whew, that was a mouthful! Here’s a (I hope!) simpler version:
Open innovation is about building a system where ideas flow openly from your customers, employees, and other stakeholders such as partners & suppliers. This system allows you to capture and flesh out ideas collaboratively, leading to sustained innovation.

Randall Rothenberg, President and CEO of the Interactive Advertising Bureau, believes that building upon knowledge from internal and external ideas will result in an “ongoing, evolving community of users, doers, and creators.”

Creating an open innovation community will help you build a creative culture in your workplace. Furthermore, allowing your employees to express their ideas openly will create a more engaged company culture.

Benefits of Open Innovation

  1. Profitable: It’s a profitable way to innovate. Open innovation can:
    • Reduce costs,
    • Accelerate time-to-market,
    • Increase differentiation in the market, and
    • Create new revenue streams for your company.
  2. Competitive advantage: An open innovation community can give your company a competitive advantage. This is especially important in challenging economic times.
  3. Minimize innovation risk: Open innovation allows your company to expand the “breadth of ideas, opportunities, and know-how while minimizing the technical and market risks associated with innovation.”
  4. Evolve business model: It propels your company’s business model forward in response to changes in the marketplace, through external and internal ideas.

In future posts, we will go through practical, actionable steps you can use to build an open innovation community at your company. Interested in learning more about innovation? Check out the 3 different types of innovation and the First step in managing your innovation process.

Leila Durmaz

Hello, I'm your author, Leila Durmaz. I spend a lot of my time researching the best practices for innovation management, and writing articles to share them. I hope you find them helpful! I work at Accompa - one of our products is IdeaGlow innovation management software.

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