Open innovation limits the risks and cost of innovation

By its very nature, innovation is a process with many inherent risks. In today's fast changing environments, innovation is crucial in the face of rising international competition. But innovation processes are harder to master in a society, where knowledge is easily accessible and hard to keep hold of in an exclusive manner. And while company managers push for innovation processes to become ever more efficient and speedy, their increasing complexity makes them difficult to plan and control.
One option for companies to reduce these risks and address the challenging high complexity of innovation processes consists in outsourcing part of these processes to innovation networks, collaborative projects, specialised service providers and research centres.
External cooperation to make up for missing in-house capabilities is not new to innovative companies. But the Open Innovation concept extends beyond the mere outsourcing of knowledge production: True Open Innovation tunes the very organisation of the innovation process consistently towards collaborative problem solving, transcending the borders of the own firm to include a broader number of external players. Opening up a company’s innovation process to external solutions and outsourcing tasks to external competence holders creates a host of new opportunities.

  • The own R&D department often lacks the broader view on innovation, beyond the borders of the own firm, i.e. regarding relevant trends and developments in other sectors. Yet, it often is the knowledge and understanding of ideas and solutions in other sectors that have a leveraging effect on the own innovation performance.
  • Many valuable innovative ideas from internal R&D departments are put aside and remain unexploited because they do not relate to the firm's core competences and technical capabilities. Making such ideas available to external networks for implementation can indeed represent a new source of income to the firm.
  • Including potential clients and technology users into a collaborative innovation process often allows to design solutions tailored to client needs and to significantly reduce time to market.
  • Last but not least, open innovation approaches enable companies to benefit from the geographical competitive advantage of a highly developed European R&D and industrial landscape. Using state-of-the-art expertise reduces both product development time and costs, leading to an earlier market introduction and hence a better competitive position.

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