According to Innovation Excellence, “Despite the challenges, the open innovation can payoff for B2B companies is significant if done correctly, especially in today’s resource-constrained R&D environments. There are four dimensions of value to consider:
Faster, More Successful Technology Development
Invention and innovation are not synonymous (see my blog post on Foundation for Open Innovation, Part 1: Invention vs. Innovation). Invention is discovering something truly new to the world, while innovation allows you to leverage a solution that already exists in a new way to address a challenge.
Increased Probability of Breakthrough Ideas
Think of all the smart people within your company. They are capable of some amazing results, given the focus and time to solve difficult problems. Now consider how many smart people work outside your company. Is there a specific skill set lacking on your team today? Could a fresh set of experienced eyes bring a new approach or solution to a problem? How can you connect to and harness external creativity in a productive way? Open innovation can increase the probability of breakthrough products by expanding your talent pool and inspiring your team to systematically redefine challenges in a thoughtful manner (see my blog post on Foundation for Open Innovation Part 2: Where will breakthrough ideas come from).
Improved Team Productivity
Open innovation boosts team productivity in two ways. First by keeping your top technical talent motivated, and second by engaging top talent from outside your firm. The opportunity to work with even more smart people from other organizations or industries on very important projects is quite a carrot for a researcher or key engineer. In today’s dynamic workplace where top talent can easily change employers, it is critical to keep your best talent invigorated and engaged on your innovation initiatives.
Expanded Revenue Opportunities
Open innovation enables additional revenue opportunities for intellectual property (IP) and technology developed within your firm. Your internal R&D investments can create additional revenue streams, including licensing, selling, establishing a joint venture, or even starting up a spin out company. To accomplish any of these possibilities, you need external perspectives, relationships and partners to bring significant ideas of their own to the table. As Henry Chesbrough said in his book, ‘if we make the best use of internal and external ideas, we win.’
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