WHAT IS OPEN INNOVATION?

Open innovation is a business management model whereby companies commercialize internal and external sources of innovation beyond their traditional organizational boundaries. It contrasts closed innovation models reliant solely on internal research and development activities.

The concept recognizes that useful knowledge today is widely distributed, and even the largest research teams cannot match collective intelligence from extended networks. As such, open innovation leverages creative ideas sourced from customers, external partners, universities, startup incubators and even rival firms during ideation and commercialization.

Strategic benefits of open innovation include risk and cost sharing for resource intensive activities like technology R&D, accelerated time-to-market for new products/services via licensed solutions and deeper market insights by actively engaging diverse stakeholders during development.

Various practices underpin different types of open innovation frameworks. Innovation contests crowd-source ideas openly from broad external networks, offering prizes while retaining IP rights over winning entries. Startup incubation programs and university partnerships facilitate technology transfer spinning out ideas with commercial merit.

Strategic alliances allow collaborative R&D with other companies, including co-creation of new IP assets via joint ventures that both organizations commercialize thereafter. Licensing agreements let firms access patented technologies from partners against royalty payments too.

Inbound open innovation sources good ideas discovered externally and brought into the organization, while outbound innovation commercializes under-utilized IP by allowing external partners to further develop in-house innovations deemed non-core through licensing deals.

Implementing open innovation strategies requires strong change management given cultural shifts towards external collaboration versus closed siloed systems. Companies also need holistic data management, access governance and legal frameworks to protect proprietary information and IP assets during joint innovation activities involving sensitive information exchange between partners.

The practice basically fosters greater interconnectedness, powers synergies across organizations and drives marketplace dynamism by enhancing accessibility to leading ideas and technologies through collaboration.