Open Innovation Compared to Closed Innovation


Which method generates greater ideas?

Innovation management and its demands have changed a lot over the past several years. Traditionally, the research and development department within a company is the main source of innovation but increased demands are often better suited by opening up innovation to the outside world, which challenges the classical understanding. Here we look at both approaches: open innovation and closed innovation.

The Difference

Open and closed innovation are primarily different by the way in which innovation is generated. Closed innovation companies operate under a self-contained innovative environment while open innovation companies source external knowledge for their innovation management strategies.

Closed innovation companies operate under the view that innovations are created by staff within a company, from ideation to development and marketing. The innovative process exclusively takes place within the company. It is impossible for closed innovative companies to open to the outside for information if they remain under such a model. All technology, know-how, intellectual property and processes stay under the closed innovative company’s control. In order to implement a successful closed innovation within a company, certain factors must be taken into consideration, such as the high demands that closed innovation places on employees.

Open innovative companies expand the innovation process beyond the four walls of a business, expanding company boundaries to the outside world to increase innovative potential by making active and strategic use of the environment around them. Innovation in open innovative companies comes then through the combination of both internal and external ideas, processes, technologies and sales channels with the aim to produce the most innovative services, products and/or business models. Customers, suppliers, LEAD users, employees, competitors and companies of other industries can all influence an open innovative company’s ideation processes.

What About the Role of R&D?

Research and development departments are not done away with in open innovation. With closed innovation, R&D is responsible for the development, design and marketing of in-house innovations. This can be a benefit as it can offer a long-term competitive advantage for some companies. However, when innovation comes from both inside and outside, R&D is vital to help capture a large part of the external value and still plays an active role in the process of innovation.

Open Innovation is Constantly Growing

Closed innovation has gradually become less important over the past few years. This is due to several factors, including the increasing availability of venture capital, the mobility and availability of qualified specialists and the growing number of competent customers as well as suppliers who are specialized and available as partners in cooperation.

As a result, the innovative environment of companies is growing to be widely important and the quality and quantity of wisdom from outside sources is continually increasing, adding more and more to the improvements of a company’s innovative structure and processes.

 

2018-09-26T18:35:52+00:00September 26th, 2018|Blog|