Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

2021 – the year of open innovation

  By Simon Hill, CEO of innovation software & services firm Wazoku,

Being innovative has long been an objective for organisations of all sizes and in most sectors. We work in an era in which innovation is valued more than it has ever been, and an innovative approach can have a tangible impact on business outcomes such as customer engagement, market positioning and even profit margins.

Many firms have therefore put in place tools and systems that help them to be more innovative, technology that provides the best possible platform to encourage creativity and innovation. Yet innovation still mostly comes back to people and the events of the last 12 months – principally Covid-19 and its on-going aftermath – have shown that open innovation and collaboration are more important than ever in business.

What exactly is open innovation and how can businesses go about deploying such an approach?

The rise of open innovation

Organisations know that good ideas are an essential element of any innovation programme and they usually turn to the people that know their business best to capture, discuss and develop ideas. This can include employees, customers, partners and more, and providing these people with idea management tools to encourage and develop ideas has become much more common over the past decade.

Open innovation expands on this by seeking ideas from outside the organisation too, effectively creating a long tail of innovation by accessing a global crowd of experts. Open innovation is not necessarily a new discipline. It was first coined in 2003 by Professor Henry Chesbrough of the Haas Business School, who described it as ‘the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively’.

But there is little doubt that the pandemic has accelerated the use of open innovation. By working openly and collaboratively with wider external groups, any business can benefit from the collective expertise and know-how of a much bigger group, delivering hugely impactful innovation as it does so.

The growing importance of open innovation

However, the Covid-19 pandemic that emerged in early 2020 has had as significant an effect on innovation as it has on so many other areas of life and business. Organisations needed to pivot rapidly, to find new ways of delivering services and products and to try and retain relevance in the face of an unprecedented challenge.

Business leaders began to realise that no one organisation or individual has all the answers and that widening the base of experts can bring better results, even if those experts are not part of that organisation. One example is the Seoul Institute of Technology using open innovation for mask design and technologies, and other PPE equipment to prevent the transmission of coronavirus. In May 2020, it sought ideas from 500,000 engineers, scientists, students and entrepreneurs on their open innovation network of choice and was rewarded with a speedy and effective response.

Although Covid-19 has accelerated the use of open innovation, the collective intelligence it provides can help steer businesses not just through the pandemic but far beyond it too. Sustainability is for many organisations, a greater long-term concern than Covid-19 and open innovation can provide the impetus for sustainable business and sustainable innovation, canvassing and capturing ideas from a broader group with a greater collective impact.

Getting started with open innovation

Setting a proven crowd of experts a challenge around a particular issue your business is facing, is a smart and highly effective way of finding a way to address that issue. Any organisation embarking on a programme of open innovation should be mindful of the following:

Choose the right network – there are several open innovation communities to choose from, and anyone embarking on open innovation should be sure to evaluate the quality of the experts on that community. The size of the group is important, but so is diversity of opinion and background, and a proven track record in solving previous challenges in your industry is also essential.

Ask the right questions – just like the old CRM adage, rubbish in, rubbish out, if you set a poor challenge then the answers you get back will be poor too, despite the expertise of the crowd you are asking. Successful open innovation relies on your smart thinking around question design just as much as it does your crowd’s smart thinking in response to the challenge.

Metrics and reporting – metrics and reporting are vital components of any open innovation programme. Whichever method you are using for measurement you must be able to check in on both the overall success of your programme and be able to track the progress of specific ideas. Without this capability, it is virtually impossible to assess the true value and impact that open innovation is having.

Open innovation is driving value in business like never before. Combining internal communities such as employees, partners and suppliers, with external communities of engineers, entrepreneurs, academics, scientists, customers and more is a potentially transformative development.

But the benefits of open innovation go beyond even this. Open Innovation is really just one part of a bigger organisational focus on innovation at scale that provides an organisation with complete visibility over ideas and innovation, joined up and holistic across the entire business. The potential of the crowd’s collective intelligence to address challenges in 2021 is strong and open innovation is only going to increase in use over the coming years.