Open Innovation: 9 Benefits, 12 Case Studies and 12 Books

Ekaterina Novoseltseva / 16 min read.

November 14, 2017
Datafloq AI Score
floq.to/1iwR2

Today we hear a lot Open Innovation , but there are a lot of people who are not
sure what it means exactly. As this topic is important nowadays, we decided to
write an article about it to clarify all your doubts.

What is Open innovation?

Open innovation is about combining internal resources with external ones to
boost innovation culture in the company.1 For example, big companies like GE,
Cisco or Microsoft, etc. tend to have 8-12 different value pools, for instance,
think suppliers, startups, customers or universities, etc. to consider for their
open innovation efforts.

In other words, open innovation is a business model that encourages you to

connect with outside sources so you can profit from exciting new startups and
product opportunities, get a broader pool of talent, collaborate with others to
come up with innovation that you could never do just by yourself.

Now, large multinationals including Kraft, KLM, Pfizer, and Siemens actively
and openly participate in collaborative, online innovation communities where
seekers and solution providers work together. Much the way tech companies use
hackathons to get outsiders to contribute to their goals, OI-committed
businesses announce proudly that they’re taking full advantage of the global
innovation community. That transparency demonstrates to the market that they
have a clear strategy for the future and they’re aggressively pursuing it out in
the open.

Open innovation may seem to be for big business. But it is an approach that can
be used by all companies, especially start-ups and small businesses. It may be as
simple as inviting a trusted supplier to help you develop ideas or launching a
website, etc.

So, find the right collaborators! One of the most visible open innovation actions
these days are suggested websites or special places on the web that invite
customers and the general public to submit ideas on how to improve a
company’s products and services. And then, on these websites companies
publish a hackathon info to find the right partner with the most brilliant idea.

9 Benefits of Open Innovation

1. Creating new products and services
Especially when you’re a startup, there’s nothing more exciting than getting
your first product out on the market. But it’s easy to get stuck, focusing all your
efforts on selling your first product rather than thinking of what else you could
provide for your customers. It can be scary to invest time and resources into
creating a new product, especially taking into account that startups have a
limited budget. Yet, by investing your resources and the resources of the third
parties into creating something new, that you know will bring value to your
community. This move may help you increase your profits and create buzz
around you.

2. Innovating old products and services

Sometimes, you don’t need to create new products. Sometimes, your older
service has a potential to be better, has potential to attract a lot of clients. This is
when you need to get a creative team together to improve your idea. One of the
benefits of open innovation is that the process never ends. You’re always
thinking about how you can make your organisation better.

3. Building a strong community

Lego is a great example of how a company can engage their fans on a wide
scale by using open innovation. No matter the size of your organisation, a great
benefit of open innovation is taking the time to get in touch with your fans and
your soulmates, news talents. Get to know what your community wants, and
then give it to them. In the process, you will find that enthusiastic community
members are willing to dedicate their time and ideas to help you create
something better. These relationships are key and will help your company build
a strong community dedicated to your project.

4. Keeping your employees engaged

One of the main sources of employee dissatisfaction is a lack of feeling of
ownership on the projects they work on. Sometimes, your team may have some
great ideas but might not feel comfortable bringing them forward. By bringing
an open innovation initiative to your workplace, your team can get involved in
big picture planning, make it their project. When people feel more invested in
the bigger goals of the organisation, it makes them more excited to come to
work in the morning and put their heart and their soul in it.

5. Staying ahead of the competition

By keeping your team and your community engaged and on the lookout for new
ideas, you make sure that your organisation stays helpful and relevant to your
community. Using open innovation can help you find your niche that makes
your organisation uniquely valuable to the community.

6. Costs reduction
When you work with other companies, you split the costs. Moreover, you
become more efficient because of each company; each member works on what
he is good at.

7. Time-to-market acceleration
Instead of figuring out how to make the desired product, train your people, buy
equipment, etc., you just start a collaboration with a company that already has
all this, that allows you to bring a product to market faster.

8. New revenue streams

Did you know that some businesses get more revenue from secondary products
rather than from the primary ones? Working with other companies will allow
you to enter a new market with an idea and product you have.
9. Innovation risk reduction
Any innovation has risks, but if you work with experts, you minimise your risk
of failure, especially if you agile and get feedback from your target on a regular
basis.

Let’s look at open innovation case studies.

GE
GE is one of the leading companies implementing different open innovation
models. Their Open Innovation Manifesto focuses on the collaboration between
experts and entrepreneurs from everywhere to share ideas and passionately
solve problems. Based on their innovation Ecomagination project that aims to
address environmental challenges through innovative solutions, GE has spent
$17 billion on R&D and received total revenues of $232 billion over the last
decade. GE is famous for their open innovation challenges and initiatives on
their open innovation page. Through these challenges, GE familiarises itself to
future potential talents.

For example the Unimpossible Missions: The University Edition challenge is

targeted for students that are creative, have a certain level of technical skills and
a clear recruitment motivation. Through the challenge, GE aims to get three
smart and creative students to have their internship at GE.

Another example is GE’s project First Build, a co-create collaboration platform,

which connects designers, engineers, and thinkers to share ideas with other
members who can discuss it together. It is one of the open innovation models
that aims to provide a platform that can help both external and internal
individuals to collaborate in terms of ideas sharing and manufacturing to reach
innovative ideas for products and services.

NASA
Open innovation was also adopted by NASA to build a mathematical algorithm
that can determine the optimal content of medical kits for NASA’s future
manned missions. To reach an innovative software who can solve this problem,
NASA collaborated with TopCoder, Harvard Business School, and London
Business School. The application of open innovation created a cost-effective
and time-effective solution that could not be reached using the internal team
alone.

Coca-Cola
Currently, the company is adopting open innovation models on levels between
the team and other entrepreneurs from one side and the company and its
consumers from the other. The Coca-Cola Accelerator program aims to help
start-ups in eight cities around the world; Sydney, Buenos Aires, Rio de Janeiro,
Berlin, Singapore, Istanbul, San Francisco, and Bangalore. Those start-ups aim
to think in innovative ways to build a the Happiness Coca-Cola brand.

Another open innovation model presented by Coca-Cola is the Freestyle

dispenser machine that allows users from around the world to mix their flavors
and suggest a new flavour for Coca-Cola products. The new product records the
consumer flavour so they can get it from other Freestyle machines located
around the world using the Coca-Cola mobile application. This model of open
innovation puts the consumers in the heart of the production process as the
company uses the suggested flavours as part the external ideas that can be
evaluated and processed as a new product line.

LEGO
The new LEGO strategy aimed to focus on the consumer by linking both
business and creativity. This strategy was known as, LEGO’s Shared Vision. To
innovative new LEGO sets that can achieve success in the market, LEGO
started the LEGO Ideas, an initiative based on a co-create open innovation
model. In this online website, LEGO consumers can design their own LEGO
sets either using LEGO bricks or computer 3D applications. Other users start to
discuss the idea and vote for it, once the idea reaches a targeted vote, LEGO can
consider it as a new product with giving a small part of the revenues to the
creator of the set. This model contributes putting the consumer at the heart of
the innovation process and help the team to target sets that can achieve success
based on the LEGO Ideas votes and comments. This co-create platform can also
contribute reducing the risk of innovation as these feedback from the website
can give business analysts idea about the viability of the new product.
Another great open innovation step LEGO did was building a partnership
between the company and MIT Media Lab to deliver programmable bricks,
which was introduced as LEGO Windstorm.

Samsung
Samsung adopts an open innovation to build their external innovation strengths
through Samsung Accelerator program. The initiative aims to build a
collaboration between designers, innovators, and thinkers to focus on different
solutions. The program provides office spaces, statical capital, and product
support to entrepreneurs to help them to build software and services. Samsung
does open innovation collaboration, especially with startups.

Interested in what the future will bring? Download our 2023 Technology Trends
eBook for free.
Name*
Email*
Consent
Subscribe to our newsletter.
The distinctive part of Samsung’s open innovation collaboration is that
Samsung divides it into four categories: partnerships, ventures, accelerators,
acquisitions. Typically Samsung partnerships aim for new features or
integrations within Samsung’s existing products. Ventures can be described as
investments in early-stage startups. These investments can bring revenue in case
of exits, but also provide access to new technologies that Samsung can learn and
benefit from. For example, Samsung has invested in Mobeam, a mobile
payment company.

Accelerators provide startups with an innovative and empowering environment

to create new things. Samsung offers these startups an initial investment,
facilities to work in, as well as some resources from their vast pool. The idea is
that the products coming from the internal startups could become a part of
Samsung’s product portfolio over time or just serve as learning experiences for
the company.
Acquisitions aim to bring in startups working on innovations that are at the core
of Samsung’s strategic areas of the future. These acquisitions often remain
independent units and can even join the Accelerator program.

As an example of Samsung’s collaboration with startups, Samsung has acquired

an IoT company called SmartThings to gain an IoT platform without having to
spend the money, and more importantly, time on R&D. Samsung sees potential
in the IoT industry and views it as a strategically important part of their future
business and thus an area where they want to be the forerunner. For Smart
Things, it continues to operate as an independent startup fueled with the
resources of a big company. With the investment potential and home electronics
of Samsung, SmartThings can be developed into an integral part of Samsung
products, by creating new IoT possibilities for homes.

By collaborating with startups, Samsung aims to benefit from the variety of

innovations that smaller companies have already come up with. These
companies often have products that can complement or be integrated into
Samsung’s products, creating value for both parties.

Cisco
The Entrepreneurs in Residence program allows Cisco to invite early-stage
entrepreneurs with big ideas for enterprise solutions to join their startup
incubation program. This includes access funding from Cisco, potential
opportunities to collaborate with their product & engineering teams, co-working
space in Silicon Valley and much more.

Telefonica
Wayra by Telefonica has been around for three years, and today, it is present in
11 countries across Latin America and Europe. It seems to be very well
organised, and it is very active with more than 300 startups engaged so far.

Hewlett Packard
It is one company in particular that has embraced the ideals of open innovation.
It has developed labs where open innovation thrives. It has created an open
innovation team that links collaborators that are researchers and entrepreneurs
in business, government and academia, to come up with innovative solutions to
hard problems with a goal of developing breakthrough technologies.

Peugeot Citro”n
The French car manufacturer has launched a collaborative project to design the
cars of the future and aimed at multiplying the company’s partnerships with
scientific laboratories all around the world. This project materialised into the
creation of a network of OpenLabs. These structures are designed to allow the
encounter between the group’s research centres and the external partners. They
have a goal of thinking about the future of the automotive industry, particularly
according to scientific advances.

P&G
P&G’s open innovation with external partners culminates in their
Connect+Develop website. Through this platform, P&G communicates their
needs to innovators that can access detailed information related to specific
needs and submit their ideas to the site. P&G recruits solutions for various
problems all the time. Connect+Develop has generated multiple partnerships
and produced relevant products.

Nivea
The idea for Nivea’s B&W deodorant was coined together with Nivea’s users
through social media. The way Nivea collaborated with its users throughout the
R&D process is very interesting. They pretty much said that okay, we know that
our current product can be connected to stains in clothes. Could you share your
stories and home remedies so that we can develop a better product? Nivea then
partnered up with a company they found via pearl finder and developed,
together with the users, the B&W deodorant. This admittance of issues in their
product could have been seen as a sign of weakness. However, users were very
active in collaborating with Nivea, and the end-product ended up being a great
success.

Telegram
Telegram is a messenger application that works on computers and smartphones
very much like WhatsApp and Line. However, what makes Telegram different
is how much users can contribute to its content openly. Users with any
developing skills can create their stickers and bots on the Telegram platform.
Telegram also promotes the best stickers updating an in-app list of the trending
stickers.

Open Innovation Books

To learn more about Open Innovation, I recommend you to read these
interesting books about open innovation.

1. A Guide to Open Innovation and Crowdsourcing: Advice from Leading

Experts in the Field by Paul Sloane
Open innovation is one of the hottest topics in strategy and management today.
The concept of capturing ideas in a hub of collaboration, together with the
outsourcing of tasks is a revolution that is rapidly changing our culture. A Guide
to Open Innovation explains how to use the power of the internet to build and
innovate to introduce a consumer democracy that has never existed before. With
corporate case studies and best practice advice, this book is a vital read for
anyone who wants to find innovative products and services from outside their
organizations, make them work and overcome the practical difficulties that lie in
the way.

2. Open Business Models: How To Thrive In The New Innovation Landscape by

Henry W Chesbrough
In his book, the author demonstrated that because useful knowledge is no longer
concentrated in a few large organisations, business leaders must adopt a new,
open innovation model. Using this model, companies look outside their
boundaries for ideas.

3. Open Services Innovation: Rethinking Your Business to Grow and Compete

in a New Era by Henry Chesbrough
Chesbrough shows how companies in any industry can make the critical shift
from product- to service-centric thinking, from closed to open innovation where
co-creating with customers enables sustainable business models that drive
continuous value creation for customers. He maps out a strategic approach and
proven framework that any individual, business unit, company, or industry can
put to work for renewed growth and profits. The book includes guidance and
compelling examples for small and large companies, services businesses, and
emerging economies, as well as a path forward for the innovation industry.

4. Open Innovation: Researching a New Paradigm by Henry Chesbrough, Wim

Vanhaverbeke and Joel West
Authors describe an emergent model of innovation in which firms draw on
research and development that may lie outside their boundaries. The book will
be key reading for academics, researchers, and graduate students of innovation
and technology management.

5. The Open Innovation Revolution: Essentials, Roadblocks, and Leadership

Skills by Stefan Lindegaard, Guy Kawasaki
This practical guide reveals that, without the right people to drive innovation
processes, your odds of success shrink dramatically. And as open innovation
becomes the norm, developing the right people skills networking,
communicating with stakeholders, building your brand and the ability to sell
ideas is essential for your innovation leaders and intrapreneurs.

6. The Open Innovation Marketplace: Creating Value in the Challenge Driven

Enterprise by Alpheus Bingham and Dwayne Spradlin
Authors Alpheus Bingham and Dwayne Spradlin draw on their own experience
building InnoCentive, the pioneering global platform for open innovation.
Writing for business executives, R&D leaders, and innovation strategists,
Bingham and Spradlin demonstrate how to dramatically increase the flow of
high-value ideas and innovative solutions both within enterprises and beyond
their boundaries.

7. Online Communities and Open Innovation: Governance and Symbolic Value

Creation by Linus Dahlander, Lars Frederiksen, Francesco Rullani
This book brings together distinguished scholars from different disciplines:
economics, organisation theory, innovation studies and marketing to provide an
improved understanding of how technological as well as symbolic value is
created and appropriated at the intersection between online communities and
firms. Empirical examples are presented from different industries, including
software, services and manufacturing. The book offers food for thought for
academics and managers to an important phenomenon that challenges many
conventional pearls of wisdom for how business can be done.

8. Motivation in Open Innovation: An Exploratory Study on User Innovators by

Robert Motzek
Robert Motzek’s study investigates most important factors controlling user
innovators’ motivation and will derive suggestions on how manufacturers can
address these points to tap the full potential of user innovation for their new
product development.

9. Constructing Openness on Open Innovation Platforms: Creation of a Toolbox

for designing Openness on Open Innovation Platforms in the Life Science
Industry by Emelie Kuusk-Jonsson, Pernilla Book
The work benchmarks a model for designing Open Innovation Platforms and
takes a theoretical standpoint in the socio-legal approach, viewing regulatory
interventions and constructions of contractual and intellectual property law as
the legal framework enabling the creation of openness, which in turn affects the
choices made in the business arena.

10. SMEs and Open Innovation: Global Cases and Initiatives by Hakikur
Rahman, Isabel Ramos
Open innovation has been widely implemented in small and medium enterprises
with the aim of influencing business promotion, value gain, and economic
empowerment. However, little is known about the processes used to implement
open innovation in SMEs and the associated challenges and benefits. This book
unites knowledge on how SMEs can apply open innovation strategies to
development by incorporating academic, entrepreneurial, institutional, research,
and empirical cases. This book discusses diverse policy, economic, and cultural
issues, including numerous opportunities and challenges surrounding open
innovation strategies; studies relevant risks and risk management; analyses
SMEs evolution pattern on adopting open innovation strategies through
available measurable criteria; and assists practitioners in designing action plans
to empower SMEs.

11. Open Innovation Essentials for Small and Medium Enterprises: A Guide to
Help Entrepreneurs in Adopting the Open Innovation Paradigm in Their
Business by Luca Escoffier, Adriano La Vopa, Phyllis Speser, Daniel Stainsky
Small and Medium Enterprises have to approach open innovation differently
than large companies. This practical guide to open innovation is expressly for
entrepreneurs and managers in SMEs. The authors provide strategies,
techniques, and tricks of the trade enabling SMEs to practice open innovation
systems profitability and enhance the long-term value of their company.

12. Open Innovation: The New Imperative for Creating And Profiting from
Technology by Henry W Chesbrough
This book represents a powerful synthesis of that work in the form of a new
paradigm for managing corporate research and bringing new technologies to
market. Chesbrough impressively articulates his ideas and how they connect to
each other, weaving several disparate areas of work R&D, corporate venturing,
spinoffs, licensing and intellectual property into a single coherent framework.

Categories: Strategy
Tags: digital analytics, disruptive, innovation, strategy