In the last few years, Open Innovation (OI) has become a well-known strategy for companies to expand their business and find a more profitable way to innovate, obtain more varied ideas and developments, relying on the union of diverse sources and experts as a way of expanding innovative potential and optimise results.

What is Open Innovation?

Open Innovation is a concept disseminated by Henry Chesbrough, which consists of creating a more participatory, distributed, and decentralised approach to innovation projects, relying on a range of companies and institutions to develop an idea, since a single company shall not have all the knowledge and resources necessary to innovate effectively on its own, regardless of its capacity or size. This absence paves the way for a search for other agents – external to the initial developer company – to contribute to the project, such as universities, startups, research institutes, and others, creating a business ecosystem.

Thus, we can consider that OI is an approach that aims to create variable collaborative business models, in which interaction between different partners is encouraged through a network of incentives. This synergy between partners results in an environment conducive to the development of innovative solutions and to create value simultaneously.

Types of Open Innovation: Inbound, Outbound, and Coupled

We can first separate open innovation methods into three types:

Inbound: In this process, agents from outside are incorporated into the organisation. External knowledge and technology are integrated to improve company’s internal processes.
Outbound: The organisation transfers technology and knowledge in open processes. In this case, third parties exploit internal knowledge. Furthermore, within this context, the company generates income from the sale of its private property, in a partnership system with another organisation.
Coupled: In this scenario, Inbound and Outbound operations occur simultaneously. In this context, the company acquires external technology and at the same time transfers its ideas and technological knowledge to external corporations.

What are the benefits?

Implementing Open Innovation may seem challenging, but it doesn’t necessarily have to be: firstly, you must assess your needs; next, you will need to organise a restructuring of your company’s mindset and its current processes; finally, choose the method that best suits the innovation you have in mind.

Among the advantages of this system, we can mention:

Reduction of risks and costs: by opening the innovation chain the organisation is sharing all project development with a third party. This allows all associated values and risks to be shared, without overburdening the company that owns the idea.
Acceleration in the implementation of innovations: by involving external agents in project development, the tendency is for there to be an optimization of time. In these cases, the contracted third party shares its knowledge and technologies, making development processes faster and more efficient.
Improvements to already implemented products and services: open innovation not only guarantees new products, but allows, with the acquisition of external knowledge, that products and/or services already implemented in the company are enhanced.
Strengthening Branding: in this innovation model, the company opens its doors to the entire market. Obtaining partners contribute to publicising the business, proactively strengthening branding.
Relevant Networking: collaboration brings together companies with the same profile and development objective as yours, in addition to integrating creative forces, talents and skills. It strengthens professional networking, creates relevant brand association within the market, and further spreads new ideas.
Increased ROI: Return over Investment is an indicator that allows you to know how much money the company earns with each investment made. With the implementation of Open Innovation, the company tends to have a greater return on investment, as innovation is implemented quickly, cheaply, and safely promotes a chance of obtaining greater profits.

However, it is still important to remain aware of possible challenges, such as the possibility lack of clarity on objectives being pursued, lack of communication and coordination between the parties involved, selection of ideas, and intellectual property rights resulting from collaboration.

What is happening in the rest of the world?

Open Innovation is still growing. According to Economist Impact’s 2021 Open Innovation Barometer, OI’s current framework demonstrates profound progress across all sectors studied, with an average score of 62.9 (on a scale of 0 to 100, with 100 being fully open), in which large companies demonstrate greater adoption of OI Practices. As Open Innovation ecosystems advance, so does interest and implementation in the most diverse environments: also, according to this report, 95% of respondents stated that their companies practice OI, with 54% applying the practices in all or most of their projects, and 90% that have implemented key pillars of this method or plan to implement them.

In Europe, Sopra Steria’s Open Innovation Report 2023 shows a rapid uptake of OI, with almost 3 in 4 (72%) European companies conducting projects in collaboration with startups, based on around 1,648 companies and startups from 10 countries. The data also shows 89% of objectives were achieved in corporations that managed collaborations using a dedicated business unit.

The Panorama of Open Innovation in Companies in Brazil, a study released by Softex, also indicates that Open Innovation is present in 88% of Brazilian companies, considering companies of all sizes, markets, and regions of the country, having a variety of partners: 67% startups, but also including universities, companies, among other. The concept of Open Innovation is increasingly widespread in society, with the economic and competitive landscape demanding that companies implement increasingly agile and technological processes. In this way, Open Innovation process becomes a viable and good option due its opening of the innovation chain, optimisation of processes and improvement of ideas, orbiting companies, institutions, and other pillars of the market, such as universities, innovation hubs and government.

Open Innovation: A Key Strategy for Business Expansion and Collaboration

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