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LEAD Innovation Blog

Read our latest articles on innovation management and innovation in a wide range of industries.

Date: 04-Oct-2018
Posted by: Michael PUTZ
Category: Innovation process

Definition Open Innovation

 

Increasing complexity, increasing uncertainties, ever-shortening product life cycles, rapid change - in short, the pressure on innovation is increasing.

Innovative success includes creativity, speed and specialist knowledge. And companies can no longer afford to do so with their own R & D department. It requires an opening up of the innovation process in order to be able to use the creatives, experts and talents outside the company and their ideas, technologies and competences.

 

Definition Open Innovation

"Open Innovation", the term was coined in 2003 by Henry Chesbrough, is the opening of the innovation process. Once new products have been developed secretly and behind closed doors, today a targeted integration of customers, researchers, suppliers and partners into the innovation activities takes place.

 

Types of Open Innovation

There is a difference between an inside-out and outside-in process. In the inside-out approach, internal knowledge is exploited externally, e.g. Licensing patents or a spin-out. The outside-in approach, on the other hand, stands for the integration of ideas and knowledge from the outside and is treated in more detail here.

Opening takes place mainly in the creative front end for the search for ideas and in the development phase of the innovation process.

Paper Innovation process

Key stakeholders and partners are consumers, customers, suppliers, universities, research institutes, students, inventors, start-ups, partner companies from other industries, technical consultants and associations.

1. Search for ideas for new products and problem solutions (front end)

It is relatively easy to reap new ideas from the environment. For this purpose, the following approaches have proved their worth:

  • Crowdsourcing stands for the wisdom of the many. Through the use of existing platforms or through their own ideas contests new ideas are generated, evaluated and further developed by the community or Crowd.
  • Workshops with customers and experts such as lead users, suppliers or researchers to develop new ideas.
  • Open-mindedness: Companies that have an image as open, cooperative and innovative are themselves the inventors and technology providers to offer new ideas and technologies.

2. Development of new technologies and products

The innovative development of new technologies and products requires special know-how and time, through closer cooperation in concrete innovation projects with consumers, customers, research institutes, universities, suppliers, competitors, partner companies from other industries or technical consultants. The external partners are integrated into the internal processes under the title Co-Creation.

There are three types of research and development cooperation:

  • Contract research: The partner is commissioned to develop a solution and is paid for it. The solution and exploitation rights belong exclusively to the commissioning company. This is comparable to outsourcing. For example, in the course of an R & D cooperation, a university develops a water-repellent glass pane for an automobile manufacturer.
  • Cooperation: The solution is developed jointly. The expenses are divided, as well as the solution. One example is the development of basic technologies together with competitors.
  • Complete integration through, for example, the acquisition and integration of start-ups.

3. Customer integration into the innovation process

The customer is the future user of an innovation, decides on the purchase and thus the success of a product. Therefore, his needs, wishes and attitudes are the key to the innovation process.

The integration of customers and also consumers into the innovation process significantly increases the success rates of innovations. Due to the power and relevance of customers, a separate point is dedicated to them.

The cooperation and integration of customers, including the direct customers, but also the customers of the customers and the consumers, takes place:

  • In the very early stages where market research needs and thus impulses for new products are collected.
  • Customers are suppliers of ideas.
  • Customer feedback is a key factor in the entire innovation process. First ideas, first concept, prototypes etc. are to be tested with customers.

Benefits of Open Innovation

Open innovation has many advantages for companies and a huge positive impact on innovation:

  • Access to more and more innovative ideas.
  • Access to knowledge, for example about customers, market and technical possibilities.
  • New perspectives and avoidance of operational blindness.
  • Faster development times.
  • Access to experts and specialists.
  • Lower development risk.
  • Potential for public subsidies through cooperation.
  • Image profit through cooperation.

Risks and success factors of Open Innovation


For Open Innovation to work successfully, some requirements have to be considered.

It requires an organizational competence to develop innovations with partners and networks.

  • Internal and external networks.
  • Innovation process with interfaces to the outside.
  • Tools for communication and cooperation with partners (e.g. IT tools).
  • Knowledge management to secure competencies and insights from outside.

Very important - and many cooperations have already been broken - are clear rules, especially regarding confidentiality, remuneration, exploitation and patents.

The soft factors also play an important role. A high degree of recognition and a positive image are the basis for external partners to approach companies at all and have an interest in working together.

In this context, the attitude and behavior of the company also plays an important role: openness towards innovation, openness towards external, cooperation, trust, win-win orientation, etc.

In sum it is a high attractiveness as a partner. In this way, ideas flow into the company and cooperation with external partners runs smoothly and thus more successfully.

When selecting a partner, especially in innovation projects, competence is not the only issue. Also the chemistry between the acting persons must fit. Because there are inter-human differences, they are also reflected in the project and ultimately in the result.

Through the networking with external partners, Open Innovation contributes to the branding and image of a company, which should keep the actors in the back head during every activity.

Example 1 "Crowdsourcing"

Crowdsourcing uses the intelligence, creativity and know-how of many people outside the company to solve problems. The principle is that as broad a mass as possible is addressed and because the mass increases the chance for a very innovative solution.

Through the development of Web 2.0, the possibilities have grown and become easily accessible. There are many existing crowdsourcing platforms that can be used for small money. Ideas are developed and evaluated at the same time.

But there are some success-relevant things to consider before the start:

  • The community must also have the competence. Requirements on, for example, a mobile phone can not define anyone, a new wire rope for cranes do not develop.
  • According to the motto "Garbage In, Garbage Out", the right questioning plays an essential role. In order to avoid reaching the goal, you should provide the crowd with as many contextual information as possible.
  • The phase of the evaluation requires the greatest amount of work and must not be underestimated during the planning phase.
  • With the results, something has to happen, they can not simply land in a drawer.
  • Respectful handling of the ideas and the submissions (timely feedback, fair remuneration ...) is meaningful, because any disgruntled participant can contribute to an imagery.
  • Clear clarification and agreements on the exploitation rights and remuneration.
 

Example 2 "Cross-Industry-Innovation"

More than three-quarters of all innovations result from the combination of already existing knowledge (according to Ellen's grandson). Through the linking of practices and knowledge about business models, technologies and processes from other industries, one tries to create new innovations. examples are

  • The iDrive system from BMW, which has captured the joystick from the game industry.
  • Transfer of surface technologies from the car paint to the wood industry.


The thesis is relatively simple: one finds with every company, no matter how foreign the industry is, overlapping points, which provide potential for innovations. The most exciting things happen at the interfaces. This requires:

  • Intensive networking and exchange with different companies and personalities.
  • Linking and the gift of linking something existing with something new, finding analogies and deriving new ideas from it.

And just as simple is the practice: If one discovers a potential partner, e.g. At conferences or trade fairs, or through internet searches, you simply sit down at a table without obligation, present yourself and your tasks, and start brainstorming.

Example 3 "Customer Workshops"

Workshops on the development of innovation together with customers are an important source for new developments. Through the personal contact with customers, one gets a deep customer understanding about his needs, problems, expectations and experiences.

And the integration of the customer signals that he is taken seriously and contributes so positively to the customer relationship. In addition, costs and costs are relatively low.

Leading users play a special role here. LEAD User

  • Are advanced customers and users,
  • Who already have needs or requirements that others will have later,
  • Are open to innovation as they benefit greatly from it, and
  • Often even try new solutions.

Workshops with customers should be regularly on the agenda of the innovators, especially with the technically experienced product developers, in order to develop understanding for the customer and market and to stimulate innovation.

Conclusion: Definition Open Innovation

Whoever renounces Open Innovation, renounces innovation.

Because the company is buzzing with ideas, potentials, technologies and competences that can deliver valuable assets for the company. Through the cooperation with customers and external specialists such as universities or suppliers the innovation speed, the degree of innovation and the quality is significantly increased, everything to the account of the innovation success.

5 tips for a future fit innovation process

Michael PUTZ

Born in the Salzkammergut. After working for Shell and Porsche, he concentrated on innovation management as a study assistant at the Innovation Department of the Vienna University of Economics and Business Administration. In 2003 he founded LEAD Innovation and manages the company as Managing Partner. Lectures at MIT, in front of companies like Google or NASA.

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