Open Innovation, also known as
external or networked innovation, represents a shift from the traditional model
where 100% of a company's innovation originates from within, to a more open model
where both internal and external ideas are combined to create a more collaborative
advantage. In 2003, Dr. Henry Chesbrough coined the term "open innovation" as a
paradigm that assumes firms should use external and internal ideas to support a
firm’s innovation goals, as well as internal and external paths to market in order
to advance their technology. Sometimes called "External" or "Networked" Innovation,
this model has many facets that continue to evolve today.
Open Innovation is focused on uncovering new ideas, reducing risk, increasing speed
and leveraging scarce resources. With a better understanding of what is "out there,"
a company is able to lower risk by combining external capabilities with internal
innovation resources. The old question of "Why reinvent the wheel?" clearly applies,
as Open Innovation enables a company to connect with someone who has already developed
the technology in need or who is further along the development path.
Although companies have been collaborating with external partners for years, Open
Innovation has become a core management discipline because of the breadth of external
knowledge and the speed at which it can be transferred. Some of the most notable
drivers of Open Innovation include:
- Global talent mobility
- Increase of VC and government spending enabling small company innovation
- More market-focused academic research
- Push for commercial applications by government labs
- Emergence of private research institutes
- Internet and search technology
- The need to optimize existing supplier networks for strategic value
The following table depicts the new "Open" Innovation viewpoint against the old
"Closed" Innovation model:
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"Closed" Innovation Viewpoint
|
"Open" Innovation Viewpoint
|
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Nobody can know what we are innovating
|
Nobody can know the confidential ideas that we are working on
|
|
Spending more on internal R&D will improve our market position and help us grow
|
"Smart" innovators engage with the global innovation community and reap the highest
returns
|
|
First-to-patent = highest profit
|
First-to-market = highest profit
|
|
We need more R&D staff to close our knowledge gaps
|
We need our R&D staff focused on our core competencies, allowing outside solution
providers to provide the rest
|
NineSigma began work with networked innovation in 2000, long before the term "Open
Innovation" was coined. NineSigma has made the benefits of open innovation accessible
to organizations around the globe through a series of proven and successful
open innovation services delivered by a professional team of Ph.D. level
program managers.
The following diagram depicts the open innovation universe, as viewed by NineSigma.
Most practitioners view open innovation as the ability to
Engage the global
innovation community to find outside solutions for challenges that their organizations
are unable to resolve on their own. It is our experience that this is simply not
sufficient. Many organizations, while successful in finding new knowledge, fall
short at
Enabling their organization to integrate that knowledge successfully
into their organizations. All too often, external innovation processes are not in
place to create buy-in. Purchasing and Legal departments are not prepared to expedite
negotiations with the smaller solution provider, and budgets are not established
to act quickly on the new deal. Before you know it, the deal falls through, and
no value has been realized.
Whether you are seeking an intermediary service provider for the first time, or
preparing to build out your own internal open innovation capability, NineSigma has
the right solution for you.
Contact us for a free consultation.
Related links:
http://www.openinnovation.eu/