"Collaboration is the most powerful innovation leverage tool there is. It is also one of the hardest to implement”.
Doug Hall, Founder of Eureka! Ranch
The concept of Open Innovation has grown in popularity over the past 15 years or so since it was originally suggested by Henry Chesbrough as a means to increase speed to market by opening up the new product development process to external input. But what do we mean really by Open Innovation? The following definition by Leila Durmaz gives some insight into what Open Innovation is all about:
“Open innovation is about building a system where ideas flow openly from your customers, employees, and other stakeholders such as partners & suppliers. This system allows you to capture and flesh out ideas collaboratively, leading to sustained innovation.”
Put even more simply, Open Innovation is about shared problem solving leading to mutually beneficial results.
Open innovation is a broad concept, however, which has given rise to some common misconceptions. Open Innovation is not:
- About unrestricted knowledge sharing - it is about exchanging information selectively, and often in a formalised way (e.g. on a contractual basis), to share the risks and rewards of innovating;
- Free - time, money and effort are still needed but additional options may be available to the innovating business when the innovation process is opened up, rather than if it remains closed to external inputs and opportunities.
Open Innovation is practised in different ways. Firstly, we have the inbound dimension which considers the flow of knowledge into a business that permits employees to explore and capture new knowledge and technologies from external sources such as customers and suppliers (most commonly) but also competitors, governments, consultants, universities or research organizations. By contrast, and much less common for companies on the Island of Ireland, outbound practices refer to the exploitation of internal ideas or technological knowledge that flow out of the company through licensing, patenting or contractual agreements in order to gain monetary of non-monetary benefits.
Most previous research on the effectiveness of Open Innovation agrees that it has a positive and significant impact on overall profitability, sustainable competitive advantage and reduced innovation risk.
So what has led to my good friend Doug Hall’s quote above? Well, there are eight broad obstacles which inhibit the uptake of Open Innovation more widely but the three most common barriers are:
1. Low awareness of the benefits which Open Innovation can bring about;
2. Insufficient resources to find appropriate organisations with whom to partner; and
3. Issues surrounding the confidentiality / trustworthiness of potential partner(s).
If these issues can be overcome, then perhaps more companies on the Island of Ireland would find that collaboration is indeed the most powerful innovation leverage tool there is.
The InterTradeIreland Challenge programme can help your business be more innovative. Aimed at ambitious SMEs, the Challenge Programme allows business leaders to transform their company’s prospects in just nine months by learning and applying the most effective methods of generating, marketing and launching new products and services.