Open innovation is a broad concept with various practices. In this report, we elaborate our approach to categorize the concept.
Open innovation became popular after Henry Chesbrough’s book in 2003. Although he did not invent the open innovation, his research inspired many others. As a result, the concept has become one of the most exciting topics in innovation management. Also, the corporate world has adopted it as a strategic priority of the innovation journey. There were four trends to explain this interest; sophisticated demand from consumers, ease of prototyping with the new technology, global competition, and startups, and last of all, an accessible pool of talent.
Corporate-startup collaboration is the hottest trend of open innovation. However, there are multiple options to explore outside insights and capabilities. In Startup Intellect, we categorize the open innovation practices in three dimensions; sources, tools, and structures.
- Open Innovation Sources: The sources are the locations of new technology or market capabilities to search. They answer the question of “where” to get a new ability. Startups, users and communities, suppliers, and partners are sources in our approach.
- Open Innovation Tools: The tools answer the question of “how to do” and how to handle the collaboration and create the output. Platforms, crowdsourcing, contests, co-creation, and R&D cooperation are tools.
- Open Innovation Structures: The structures are organizational units inside or outside of the company. Corporate accelerators, corporate venture capitals are hubs for corporations to run collaboration with startups.
Open Innovation Sources
- Startups: Corporates and startups have a diverse set of incentives. The startups are hurry to build a product, validate a strong market and scale their revenue and organization. On the other hand, time slows down in the corporate environment. Decisions are made within the corporate rooms. Functional units need to work in harmony to nurture internal support. Understanding the strategic fit between the core business and the startup value proposition takes time. Both sides should manage those dissimilarities for long-term success.
- Users and Communities: Regular customer insights into new product needs and potential solutions are constrained by real-world experience, whereas lead users are early adopters to be consulted for innovation. Lego is an excellent example of user innovation. Innovation through communities enables the online sourcing and assembly of distributed knowledge resources held by a large and diverse pool of self-selected contributors beyond the formal boundaries of an organization. Open innovation platforms house users and communities, help define and validate the problems, structure the review and award of the solutions.
- Suppliers and Partners: Competition and technology forced to transform traditional supply chains into lean. The open supply chain is the next destination where the collaboration has extended into the product development process. In an open supply chain, suppliers, research providers test prototypes with the customers. Critical success factors include integrating the network of suppliers and partners early, avoiding a rigid procurement approach, developing a collaborative trust, and applying simultaneous, interactive product design processes.
Open Innovation Maturity Framework
There are five levels in the open innovation maturity framework. Level one is the beginning stage of the open innovation, where the company pursues ad-hoc opportunities without any structure. Level two, three, and four means improving governance along with the accelerating intensity of partner network. Level 5 is the most advanced stage where the company culture internalizes open innovation with mature governance.