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Catalyzing Success: Unleashing the Power of Open Innovation in Corporate Strategy?

gabrielahrasko


In today’s fast-paced environment, it is crucial to stay ahead of competition and invest heavily in innovation. An effective way to embrace new ideas and technologies is through open innovation. The concept behind open innovation is to gain access to a wide range of ideas, expertise and resources, increasing the likelihood of success. Instead of relying on siloed internal R&D activities for innovation, large multinational companies often approach innovation by connecting with outside world and collaborating with the entire innovation ecosystem – startups, universities, suppliers, vendors, inventors, customers, communities of fans.


Corporate Giants Are Using Open Innovation as a Part of Their Strategy


The concept of open innovation was first developed by Henry Chesbrough, a research professor at the University of Berkeley, in 2003. Over the past two decades, it has become a norm. Today, the majority (72%) of European corporates are involved in collaboration projects with startups according to the Open Innovation Report 2023 by Soprasteria. Examples of big corporates using open innovation include Lego (Lego Ideas), Google (Google Ventures), Samsung (Samsung Open Innovation Program), BMW (BMW Open Innovation), Porsche (Startup Autobahn), Coca-Cola (Freestyle Dispenser Machines).

Open innovation can take on various forms. It involves not only drawing inspiration, technologies and knowledge from external sources, but also commercializing own projects and technologies by selling or licensing them to external entities. Internally developed ideas and technologies can be combined with external resources or directly developed in collaboration with external partners.  


There Are at Least 10 Good Reasons to Implement Open Innovation in Your Company


Let’s exprole 10 key reasons why open innovation should be an integral part of the innovation strategy of large corporates:


1. Gaining Access to a Pool of Ideas and Expertise

Companies can make use of the widely distributed knowledge, ideas, expertise, viewpoints, and resources rather than relying solely on their internal R&D and the limited knowledge and expertise available within the company. Open innovation also helps them understand market trends and identify potential new technologies and growth areas early. Collaboration with customers provides valuable information about customer’s needs and inspires companies, dramatically increasing the likelihood of success of new products, services or business models. 


2. Lowering Innovation Costs

Access to new ideas, technologies and expertise without having to hire staff on permanent payroll leads to significant savings. However, external stakeholders require some form of incentivization (e.g., cash prizes).


3. Developing faster

Open innovation can speed up product development and significantly reduce time-to-market. Companies can solve their problems efficiently and accelerate the process by engaging external stakeholders to contribute with their ideas and expertise to the iterative testing. Large corporates, which typically have slow processes, can benefit from the speed and enthusiasm brought by startups, even though startups often lack resources.

 

4. Boosting Marketing

By incorporating external perspectives and collaborating with partners, influencers and customers, open innovation supports creativity, leads to innovative campaigns, and expands company’s reach and visibility across the market. Additionally, it boosts company’s brand image by showing adaptability, customer-centricity and building trust and loyalty. Creating a platform to invite external submissions typically gets significant media coverage.

 

5. Attracting Potential Investors

Companies using open innovation demonstrate commitment to staying at the forefront of industry trends, adaptability and proactive approach to innovation. This provides credibility to the company and can help attract investors.

 

6. Better risk management

By tapping into a large ool of external knowledge and expertise, companies can reduce the risk associated with internal R&D projects. Sharing responsibilities, resources and investments across multiple partners results in better risk management. Working with the right experts, getting valuable feedback from customers early on allows for timely adjustments, thus minimizing the risk of failure.

 

7.  Leverage Investment Opportunities

Collaboration with external partners provides an opportunity for companies to diversify their portfolios by tapping into new markets and innovative ventures led by smaller, agile enterprises that can yield significant financial gains. It opens up investment opportunities to achieve a financial ROI, particularly through investments in smaller companies.

 

8. Gaining Access to Talent and Technologies

Open innovation serves as a dynamic gateway for large corporations to gain unparalleled access to top-tier talent and cutting-edge technologies, especially in the field with traditionally significant shortages of skilled professionals - developers and IT-professionals with expertise in new technologies (e.g., blockchain). It is crucial to get the best talent without being limited only to the internal workforce. On the other hand, startups with promising technological concepts can get the resources to properly develop it and take off.

 

9. Creating Additional Revenue Streams

Some projects might be very promising, but they do not align with the company’s business model. Instead of abandoning them, the company can leverage open innovation to further develop them, gaining additional revenue streams and initiating partner businesses, without losing the integrity of the core business.

 

10. Fostering Innovative Mindset

Companies easily embed the innovative mindset in their company culture when using the open innovation approach. This goes beyond mere demographic diversity, emphasizing the integration of varied perspectives, experiences, and ideas from external collaborators. By actively engaging with a network of contributors, open innovation fosters an environment where creativity thrives, breaking down traditional barriers and encouraging collaboration among teams with diverse backgrounds.


Open Innovation has to be Implemented carefully

Open innovation has many benefits, but there are also a few things to be aware of in order to capture its full potential. Clearly set goals and KPIs are the cornerstone of successfully implementing open innovation. It takes time and effort to manage open innovation efforts effectively, especially focusing on effective coordination and communication among various stakeholders, often with conflicting incentives. Furthermore, clear rules about the intellectual property ownership have to be set.


Future of Open Innovation is driven by AI and Advanced Data Analytics

For the near future, we see trends in increased connectivity, technological advancements, diverse collaboration models, and a stronger focus on responsible and inclusive innovation practices. Especially, we expect to see the increasing implementation of Artificial Intelligence (AI) and advanced data analytics to enhance efficiency of open innovation processes. Methods such as predictive analytics and machine learning will help identify potential collaborators, trends and opportunities effectively, thus accelerating innovation. The rise of digital platforms and innovation systems facilitates connections between corporations, startups, research institutions, and individual innovators, creating dynamic ecosystems where ideas can be shared and developed collaboratively. It is essential to embrace these trends early on. Don't just adapt to change; lead it


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