Very few enterprises have become successful on the back of their own ideas and resources. These businesses have benefited from the cross-fertilization of ideas and collaborative effort. And with Open Innovation, the business world has opened its doors to exchanging productive ideas.
The result is improved scope for research and development. Product and process efficiency and countless other workplace advantages are also gained. This article dives into the concept of Open Innovation and how it has changed the face of today's corporate space.
What is it?
Open Innovation is the practice of engaging people, ideas, and resources from inside (beyond the R&D department) or outside a company. The aim is to create better plans, processes, and products. It allows businesses to collect innovative and valuable ideas that may not have been available within a company or a particular sector. These ideas give rise to more effective work operations and efficient products.
With open Innovation, companies rely on diverse knowledge and skills sources to enhance more effective and informed decision-making. This strategy has proven most important for research and development. And then it has also helped many companies attract top talents and improve their brand image.
An Open innovation strategy is often applied in any of the following ways.
Intraparty
Sourcing ideas from departments, branches, and sectors within the same company. It can involve crowdsourcing and partnerships to collect perspectives on innovative ideas and products.
Interparty
Sourcing ideas and solutions from other (or multiple) companies. It can involve a team of colleagues or an innovation lab for prospecting on defined solutions to workplace problems.
Expert
Sourcing ideas from people (mostly outside your organization) with requisite knowledge, skills, and experience for specific purposes.
Publicly open
Sourcing ideas from people with different (or specific) capabilities and from different places. This open innovation type is sometimes seen as Hackathons, Ideation/Solution Contests, etc.
When do we use it?
Below are a few instances where open Innovation can make a world of difference in the workplace.
To find talent
Many big companies have attracted the best hands and brains after initiating an open-door policy. Tech companies, like Facebook, use wide outreaches like hackathons and idea contests as fertile ground for scouting top talents. And it has proved effective for the most part.
To aid in more efficient product development
Some of the best and most inventive products have come from open Innovation. It gives room to collect superior ideas and R&D insights from outside your organization. And these ideas can become the fuel that drives you to build that innovative product/solution.
To build lucrative partnerships
Open Innovation creates a space where companies can build sustainable and mutually beneficial relationships. The parties can pool resources to create more efficient work processes and better market opportunities.
To aid company growth and expansion
Many companies have built their portfolios and grown rapidly after taking up open Innovation. These companies can benefit from the improved capacity and market coverage that is provided. And it also helps them achieve better brand positioning.
What business questions is it helping us to answer?
How can I find better ideas?
Open Innovation aims to enable the exchange of ideas and information to create better solutions and products. These ideas give rise to the products that make a massive societal impact.
How do I build productive partnerships?
Open Innovation has, over time, become the "ground zero" for some of the business world's most successful alliances. By combining resources and sharing ideas, these businesses build bigger brands, enter bigger markets and take up massive projects together.
How do I get the best hands?
The space provided by Open Innovation can sometimes be the hunting ground for the best talents. People with big ideas and expertise can be identified from the larger pool and absorbed by organizations needing those skills.
How do I cover more financial grounds?
Some companies engage in open Innovation to lessen the cost and capacity burden incurred from taking up huge projects. The money spent on R&D, product design, and process efficiency for such projects can take massive tolls on one company. And joining forces with one another can lessen the impact.
How do we use it?
Below are a few steps to take when using an open innovation strategy for your business.
Define the objectives
The scope covered by your objective definition will determine how far (and where) you source ideas from. Your objectives may be increased process efficiency, product development, or market coverage. And they will influence the open innovation strategy's direction.
Open the doors
Opening the doors means you're ready for business, and there are several ways to show this. You can execute your open innovation strategy by towing any of the following paths: Intraparty, interparty, expert, and publicly open, as earlier discussed.
Create a strategy execution roadmap
This process helps to get ahead of any potential conflicts that come up while carrying out the ideas gotten from open Innovation. The ideas must be fine-tuned to fit into your corporate policy and practice. And they must also be deployed in the right capacity. Issues like structure control, strategy execution, and revenue sharing must be discussed. And agreements can now be reached by all parties.
Practical Example
Facebook organizes in-house and open-door hackathons to find innovative ideas to drive operations. These well-curated competitions provide an avenue for creative thinking and effective problem-solving—qualities in high demand.
Through these avenues, Facebook has hired exciting talents, unlocked new potential in staff, and built a culture of sustained excellence. It has helped them welcome and implement many ideas that add more exciting features and users to their platform.
Advantages
Enhanced cost efficiency
Companies that line up huge projects can benefit from the financial leverage gained from open Innovation. They can offset costs incurred during research and development and other technological advances.
Improved process and product efficiency
Open Innovation lets you draw from another person's (or company's) resource pool to improve operations in your workplace. You can borrow ideas to make your work more effective, faster, and easier.
Increased marketing leverage
Open Innovation creates room for a more sustainable and expansive market positioning. The parties involved will bring in their market pull and push out accepted products across the divide. And this means they can cover more market grounds.
Potential for groundbreaking innovation
With the doors thrown open, you can take in expert and brilliant ideas to help make innovative advances in the workplace. The possibilities regarding the quality of ideas, insight, and skills you can leverage are limitless.
Disadvantages
Loss of exclusivity
Open Innovation calls for sharing of ideas and the pooling of resources among the partnering parties. And this can often lead to losing competitive advantage for some businesses. There's the possibility of losing that "secret sauce" to the other party.
Difficulty in aligning interests
For open Innovation to work, the parties involved must agree on all the terms of their work process. And this might be difficult for parties with contrasting work practices, ethics, and structure.
Conflict of purposes
The parties to an open innovation must agree on what they bring to the table and their influence in the scheme of things. They'd have to agree on what ideas are superior and what processes are more efficient. And this is not always easy to achieve.
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