An open approach leading to opportunity
Open innovation is an approach to business strategy in which companies look for new technology and ideas outside of the firm itself. The term was coined by Henry Chesbrough, the author of a book published in 2003 entitled, ‘Open Innovation: The New Imperative for Creating and Profiting from Technology’. In the book, Chesbrough explains that open innovation has replaced closed innovation, which relies entirely on internal research and ideas. Open innovation, on the other hand, encourages co-operation with suppliers, competitors and other parties to improve customer value.
Collaboration has emerged as a key trend in business strategy. Companies are willing to share their intellectual property (IP) if it leads to an improved service or product. In the automotive industry, for example, automakers have partnered up with software companies to enhance their autonomous technology. Businesses across all industries have also teamed up with academic institutions to use their expertise. Open-source software is another demonstration of the changing attitude to innovation, allowing external developers to work on and presumably improve systems.
Open innovation has been enabled by the growing accessibility of information, and the availability of venture capital funding. Knowledge is no longer confined to labs, and companies can gain investment for their projects without needing the extensive resources of a major business. Instead of jealously guarding IP, it is traded as an important tool. Businesses can benefit from open innovation in a number of ways. Firstly, it saves time, effort and money. It also widens the scope for potential development. Companies don’t necessarily have to come up with the initial idea to benefit from it, and can profit from the work of other parties. This approach is especially useful when negotiating the rise of disruptive technology, as multiple parties need to follow the same standards and regulations to allow for responsible adoption.