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Open Innovation Vs Closed Innovation

If you want an accelerated innovation journey, understanding the differences between open innovation and closed innovation is critical. It can turn your business model on its head and reveal opportunities you never knew existed.

The Current State Of Innovation

Most businesses today operate using a closed innovation model. All research and development (R&D) are done internally by the company’s team of experts. The problem with this approach is that it can be very costly and time-consuming, not to mention risky.

On the other hand, open innovation is a more collaborative approach where companies work with external partners to develop new products and ideas. 

Open innovation could include working with universities, startups, or even other businesses in your industry. It’s a proactive approach that seeks out new ideas from multiple sources inside and outside your organization.

Wait, What is Innovation?

In simple terms, innovation is turning an idea into a reality. It’s about taking a new concept and making it work in the real world.

Innovation can be big or small. It can be something as simple as a new way to make a product more humancentric. Or it can be utterly disruptive, like the invention of the internet or the creation of Uber.

An innovation must address a particular need and be replicable at an economical cost. It must be able to be reproduced at a price that people are willing to pay for it.

Accelerated innovation is critical for businesses because it helps them stay relevant and competitive in today’s ever-changing marketplace. Without innovation, companies would quickly become outdated and would eventually fail.

Open Vs Closed Innovation: What You Need To Know

You need to know several things about open innovation vs closed innovation. Here are the key points:

Closed Innovation: Best For In-House Development

Closed innovation means the company does all research and development (R&D) internally. The company owns all intellectual property (IP), and there’s no sharing of ideas or knowledge with external partners.

The main advantage of closed innovation is that it allows companies to control the entire process from start to finish. Closed innovation gives them more control over the outcome and product quality.

Closed innovation is often less risky because companies can manage all aspects of the R&D process. They’re not reliant on external partners, so there’s less chance of something going wrong.

The lack of external influence can help companies move faster because they don’t have to coordinate with multiple parties.

However, closed innovation can be very costly because companies have to fund all R&D internally. They also miss out on the benefits of external partnerships, such as access to new ideas and resources.

Critics of closed innovation argue that companies can’t innovate effectively without working with external partners. They say companies must be open to new ideas to stay competitive in today’s ever-changing marketplace.

Is Closed Innovation Good For My Business?

Closed innovation thrives on the notion that internal expertise is the best source for developing new products and ideas. Every stage of the innovation process, i.e. research, development, and commercialization, is done in-house.

It gives companies more control over their intellectual property, and the process is generally faster since there are no bureaucratic delays associated with working with outside partners.

Open Innovation: Best For Fast, Fresh Ideas

Open innovation is an alternative to the traditional closed innovation approach. In recent years, it’s been growing in popularity.

Unlike closed innovation, open innovation is based on the belief that knowledge and creativity aren’t confined to your company. Experts from outside your business can also contribute to your innovation journey.

Open innovation lets partners share intellectual property. The more knowledge comes in; the more educated decisions can be. 

Is Open Innovation Good For My Business?

When you choose open innovation, you open your business up to collaboration with other companies, research institutions, and individuals. The aim is to create a more efficient, accelerated innovation process by pooling resources and ideas.

Open innovation can result in faster product development, lower costs, and access to new markets. Open innovation also can generate new ideas and approaches that wouldn’t have been possible with internal R&D alone.

The exchange of knowledge doesn’t mean external forces completely control a company’s intellectual property. In fact, companies can still maintain control while working with others by using licensing and nondisclosure agreements.

How To Choose Between Open And Closed Innovation

Deciding whether to use open or closed innovation depends on a company’s culture, resources, and goals. Here are a few questions you should ask yourself:

Do You Have A Complex Innovation?

The complexity of your innovation will help you decide whether open or closed innovation is the best option. If your innovation leans heavily on cutting-edge technology, open innovation could be tricky.

For instance, Apple relies on closed innovation to develop its new products. The company has the internal expertise and resources to bring these products to market quickly and efficiently.

Are you lacking the knowledge skills?

Most businesses cannot afford to hire a team of technologists, scholars, experts and specialists to work solely on an innovation project. The cost is simply too much to weigh on the operations of the business. 

Additionally, sometimes innovation means leaning into knowledge and skills sets that we don’t have inside our business. In cases like this, open accelerated innovation becomes an important part of the strategy.

Do You Have A Unique Innovation?

Unique innovations are often better suited for closed innovation. Companies can reap the full benefits of their intellectual property by keeping it in-house.

For instance, if you believe your innovation is game-changing, you may want to keep it close to the vest until it’s ready for launch. 

Do You Have A Lot Of Competition?

Consider the level of competition in your industry when making your decision. Open innovation could level the playing field if you’re up against many companies with deep pockets.

Collaborating with others can pool resources and ideas to help you compete with larger businesses.

Do you want to protect your intellectual property?

Closed innovation seems like a clear winner here. In closed environments, you’re able to secure all your innovation projects and intellectual property (IP) in one place. However, this does not mean that open innovation is not a secure option in innovation. 

Best practices in open innovation often dissect project challenges down into smaller ideas that in-and-of-themselves don’t hold any sensitive IP. Making the project in isolation meaningless unless grafted into the overall business innovation strategy. 

Work With A Trusted Partner To Accelerate Your Innovation Journey

Whether you choose open or closed innovation, working with a partner you can trust is essential. The right partner will help you navigate the challenges of accelerated innovation and bring your products to market quickly and efficiently.


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