Open Innovation: definition and explanation

Open Innovation

What is open innovation?

The term open innovation means a situation where an organisation doesn’t just rely on their own internal knowledge, sources and resources (such as their own staff or R&D for example) for innovation (of products, services, business models, processes etc.) but also uses multiple external sources (such as customer feedback, published patents, competitors, external agencies, the public etc.) to drive innovation.

 

There are two types of open innovation

There are considered to be two types of open innovation:

1. Inbound open innovation, and
2. Outbound open innovation.

 

Inbound open innovation

Inbound innovation is about sourcing and acquiring expertise from outside the organisation, and scanning the external environment for new information to identify, select, utilise and internalise ideas.

 

Outbound open innovation

Outbound innovation is the purposive commercialisation and capture of internally developed ideas in the organisation’s external environment. This might be through selective revealing of a product to journalists and reviewers or selectively selling the technology or service to customers with a view to getting feedback.

 

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References

Naqshbandi, M. M., & Kamel, Y. (2017). Intervening role of realized absorptive capacity in organizational culture–open innovation relationship: Evidence from an emerging market. Journal of General Management, 42(3), 5-20.

Chesbrough, H., & Bogers, M. 2014. Explicating open innovation: Clarifying an emerging paradigm for understanding innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), New Frontiers in Open Innovation: 3-28. Oxford: Oxford University Press. Page 17.

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