Innovation has been a business buzzword for decades. The word is tossed around so often and in so many different contexts that it’s meaning and value have been muddied, but innovation is here to stay and it will be one of the tools that will get us out of our current economic mess.
Open innovation as a term is even more sensitive as it has not yet fully developed – and is not yet fully understood by most companies. Nevertheless, I believe there are several signs why open innovation is more than hype:
Open innovation rides on two global megatrends
The first one is that innovation has become a global 24/7 operation. Many companies have setup R&D and innovation labs outside their corporate headquarters. This stretches the mindset of how innovation is done, and it will make it easier for companies to take the logical next step of opening up their innovation processes to external partners.
The other megatrend is the transparency of knowledge. We all know that what really matters in our companies is knowledge. Where does it reside? You’re right. It is inside our heads. It has been very difficult distributing knowledge within an organization, and it becomes even harder when you have to reach outside the corporate boundaries as well.
This is changing as social media gets adapted by more and more companies, and it gets even more evident as the younger people, who were raised with the Web and are adept at using social media for private as well as business purposes, join the workforce in big numbers.
Innovation as a discipline is maturing
Executives might still not get open innovation – or innovation at all. They like to talk the talk but they do not always walk the walk. This is about to change as innovation as a discipline is maturing and boards and top executives begin to understand that they cannot just outsource this important part of the business to their innovation managers. They need to get their own skin in the game. As they start to look more into innovation they will stumble upon the open innovation framework and they will embrace these generally accepted benefits of open innovation:
• Faster development and market launch of new products and services, which will build revenues, market share, and profits;
• More diversity brought to innovation, which will result in uncovering more opportunities
• Improved success rate of new products and services by making the innovation process stronger; and
• Diversified risks and the sharing of both market and technological uncertainties of innovation
The number of LinkedIn profiles are grow fast
The number of LinkedIn profiles with the term open innovation is growing fast. This could be a sign of hype, but I have checked many of these profiles and there is real substance behind the profiles. If you dig further into the profiles you understand that many companies have started interesting open innovation initiatives.
Companies do not have to start from scratch
Open innovation pioneers such as Procter & Gamble and Netflix started to look into open innovation in a systematic manner 8-10 years ago and they are now reaping the benefits of leaping in early. They can win big when they improve even further and continue to get this right. But most companies have done some kind of open innovation or co-creation with their partners and customers over the years and these pockets of open innovation can be used to ramp up their open innovation strategy and initiatives.
This is my take on why we should take open innovation seriously. What do you think?