How should you proceed if you want to start working with open innovation? A first step is to understand the difference between different types of open innovation. In this article we try to sort out some of the concepts.
Open innovation is a term coined by Dr. Henry Chesbrough. In his book Open Innovation: The new imperative for creating and profiting from technology, from 2003, he describes open innovation like this:
“Open innovation is a paradigm whereby companies can and should use external as well as internal ideas, and internal and external paths to market, as companies develop their technology.”
Simply put, open innovation is about sharing your needs and ideas to find potential collaborators and receive valuable feedback, in order to develop better products or services. The opposite, closed innovation, means that knowledge will be restricted, as the development process is closed and only utilises internal expertise. If you would like to apply open innovation, there are several ways to do this.
Outside-in or inside-out?
Companies and organizations can make use of open innovation both by utilising external expertise and ideas (outside-in) in their innovation processes, or by making internal expertise and ideas available to external actors (inside-out). Of course, the same company can apply both models.
Benefits from the outside-in concept are, for example, a faster rate of development, as well as an increased amount of available ideas and skills. The inside-out concept can be interesting for companies that have difficulty taking their ideas to market, or for companies with unused resources, such as idle patents.
Crowdsourcing means that a company or an organization outsources a task to a crowd of people. This often entails a wider range of ideas and quicker solutions to complex problems. In addition, crowdsourcing be economically favourable, even though the best ideas are rewarded, as companies avoid the use of expensive consultants who otherwise would have carried out the task.
Several large companies have their own crowdsourcing sites, such as Proctor&Gamble and Unilever, but there are also many companies that solely work with facilitating open innovation. Examples are NineSigma and InnoCentive, where you can turn to with more complex problems, while 99designs and CrowdSpring are examples of creative platforms for people who need design help.
Crowdfunding is a method for funding ideas or projects via a large number of small investors. It can for example mean that you allow your consumer to pay for their goods before it is produced. Examples of crowdfunding platforms are Kickstarter, FundedByMe and IndieGoGo.
Co-creation means that companies and organizations interact with individuals, for example, their employees or consumers, to further develop their products. It can also mean that individuals help to develop each other’s ideas. Co-creation is an active, creative and social process, which can also increase individual’s commitment and interest for companies and their products or services.
Some examples of co-creation platforms are Quirky, where you can share your idea and let the community vote for, design or develop your product. Users earn money based on their commitment and when their ideas become reality. Another example is Threadless, where users share their clothing designs, and the one who gets the most votes earns money and fame. Wikipedia is one of the most famous and best examples of co-creation. It is a web-based encyclopaedia with over 30 million articles that continually are developed and refined by its users.
Open source software is a program whose source code is available to the public to use and/or alter from its original form, without any charge. Open source is a collaboration (a form of co-creation) where programmers improve program code and then share their changes within a community.
Mozilla Thunderbird is an example of an email program developed via open source and Drupal is a CMS system based on open source, where everyone can participate and contribute to development of web pages.