Open Innovation
Using external ideas and paths to market alongside internal innovation capabilities.
Also known as: Collaborative innovation, External innovation, Distributed innovation
Category: Concepts
Tags: innovations, strategies, collaboration, ecosystems, partnerships
Explanation
Open innovation, coined by Henry Chesbrough, describes organizations using external ideas and technologies alongside internal R&D, and external paths to market alongside internal channels. It contrasts with closed innovation (everything developed in-house). Open innovation takes two forms: outside-in (incorporating external knowledge - partnerships, acquisitions, licensing) and inside-out (letting internal innovations flow out - licensing, spin-offs, open-sourcing). Drivers include: distributed knowledge (no company has all the smart people), shorter product cycles (too slow to do everything internally), and active external innovation ecosystems. Open innovation requires: managing intellectual property strategically, building absorptive capacity (ability to use external knowledge), and developing partnership capabilities. Challenges include: not-invented-here syndrome, protecting core capabilities, and coordination costs. For knowledge workers, open innovation thinking means: leveraging others' work rather than reinventing, contributing to communities, and recognizing value beyond organizational boundaries.
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