Open innovation is the process of sourcing ideas and solutions to problems from outside an organisation. Read our guide to how it can benefit your business.
Innovation has traditionally followed a silo and secrecy mentality. Keen to hide their ideas from others for fear of them being copied, internal research and development departments would work on ideas, develop them into something real and only then make these public.
To prevent this secrecy and facilitate the sharing of ideas, patents were introduced with the inventor given sole rights to commercialise the idea for a limited period. That system has been in place for 200 years and while it mostly works, it has its critics.
The open-source software movement was developed in the 1990s with the belief that source code should not be owned by a single organisation. Linus Torvalds created the Linux software operating system in 1991 and it now runs on 90% of cloud infrastructure and 75% of smartphones.
In the 21st century, the pressure and pace of global competition rapidly increased, and we began to see more sharing of ideas through open innovation.
The term 'open innovation' was first coined in 2003 by Haas School of Business professor Henry Chesbrough in his book, Open Innovation: The New Imperative for Creating and Profiting from Technology. He described open innovation as, A paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.
Chesbrough added: "No one has a monopoly on knowledge the way that, say, IBM had in the 1960s in computing, or that Bell Labs had through the 1970s in communications. When useful knowledge exists in companies of all sizes and also in universities, non-profits and individual minds, it makes sense to orient your innovation efforts to accessing, building upon and integrating that external knowledge into useful products and services."
We recently spoke to Mat Hunter, Co-founder and Co-CEO of Plus X, to learn more about why open innovation is so important. "Open innovation occurs when a business that is working on new ideas seeks engagement from other people, including those outside of the organisation," he tells us. "Great, modern business leaders realise that they can't create enough innovation only from their internal people. "
The Benefits of Open Innovation
Open innovation has many advantages, including:
1. More opportunities to develop ideas
By embracing an open innovation strategy, businesses can access ideas they might never have come up with otherwise. Many big brands have already made great use of open innovation, including:
- Proctor & Gamble's innovation model Connect and Develop is a great example of a large business seeking external ideas. Connect and Develop was set up for inventors, small businesses and large companies to submit innovative products and technologies for a potential partnership.
- LEGO Ideas is a platform for fans of the plastic bricks brand to share creations, enter competitions, submit proposals for new LEGO sets and vote on models built by fellow customers.
- For nine years until 2018, Starbucks ran MyStarbucksIdea.com, an online community for customers to share and discuss ideas on how to enhance the Starbucks experience. Over 150,000 ideas were submitted with many being put into action. In 2013, Starbucks reported it was selling an annual 5.8 million 'cake pop treats', the idea for which was originally submitted by customers through its My Starbucks Idea platform.
But open innovation isn't only beneficial for big businesses. As Mat says, "There is often a psychological hurdle among small businesses about open innovation because they believe it's not for their type of business. That's where innovation hubs like Plus X can help. They provide a place to meet, connect, engage and collaborate making innovation part and parcel of growing a business."
"Once founders see other people with similar scale businesses having the same challenges, it demonstrates that they are not alone and they realise they have peers who can help", Hunter added.
2. Lower costs
Doing your own research and development can be expensive. Open innovation helps to cut costs because you can develop ideas with others without having to employ your own expensive experts.
"The Plus X Innovation Brighton workshop is a great example of this. The state-of-the-art prototyping, product development, and batch production facilities give small businesses access to world-class machinery and a specialist workshop team that would normally cost thousands."
"Plus X Innovation has been set up in a way to cope with the fact that small businesses need support", Hunter explained. "They often really struggle with the time and the money to try new stuff. We make it cheap, easy, quick and safe to do innovative things."
3. Attract customers and investors
An open innovation strategy can raise the profile of your business and attract interest.
By widening your network when developing ideas, businesses can build connections with influential people such as investors looking to back companies like yours.
Open innovation can also help to attract sales. Businesses that open themselves up to feedback and ideas from customers often build a strong community. It helps to develop customer loyalty and a tribe of fans who are happy to spread the word about your product or services to others.
How to deliver open innovation
There are various ways to practice open innovation. Your options include:
- Online community platforms: Use these to gather feedback and ideas from customers.
- Startup/corporate partnerships: Large and small businesses come together to develop new products or services.
- Startup incubators and accelerators: Get access to business experts and funding.
- Intrapreneurship: Encourage innovation amongst your employees by giving them support and funding to develop new ideas.
Open Innovation at Plus X Innovation
Some specific examples of open innovation we offer within the Plus X Innovation hubs network are:
Plus X corporate innovation
Whether corporate businesses need to fix a big organisational innovation challenge, generate better ideas, move more quickly, embed agile thinking or attract talent, Plus X corporate innovation can help.
Through our extensive network, we provide access to startups and scaleups with solutions ready to plug into, the opportunity to reach a new audience and tools to cultivate a culture of intrapreneurship by motivating staff and unlocking new ideas.
James Edwards, Innovation Lead at Kimberly-Clark, said: For any startup looking to work with an organisation like Kimberly-Clark, my one piece of advice to you is to come prepared with what your roadmap looks like for your end solution. It's about the startup coming to us and helping us understand how we can be a part of that future and part of that overall vision that you have for that product or solution.
KPMG's Nicole Lowe also shared her experiences of open innovation with Plus X Innovation: "It was a pleasure to work with Plus X Innovation to deliver a startup programme helping businesses to raise their first major round of investment. The team are brilliant to work with, passionate and knowledgeable. The quality of the startups they recruited was really high, and the programme received extremely good feedback."
CRL Accelerator
The CRL Accelerator is a programme for product makers and hardware pioneers. Held at the Central Research Laboratory, participants benefit from access to experts in product design, manufacturing, customer testing, marketing and investment.
Previous cohorts have greatly benefitted from access to the experienced product development team, and gained access to expertise that opened doors for their innovations.
Chris Chavasse and Florian Richter, Co-Founders of Muddy Machines and recent CRL Accelerator alumni said of the programme, Being in an environment that allowed us to make new connections and build a network has proven to be really useful. The PD team added a lot of value: a year ago we asked for quotes to get an MVP and we were asked £30,000, and we got an MVP basically for free thanks to the PD team and the programme."
Others have praised the programme for creating connections with big names. Founders of O-Innovations, Matt Taylor and Dominic Taylor, said, We got many exciting contacts (KPMG, developers, Gatwick Airport, etc) out of the Gala. Inviting our guests was great and discussing O-innovations plans in a more relaxed setting was extremely helpful. There were many people there but the CRL team did a great job at suggesting who we should speak to and making the connections after the event. Extremely useful!
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