Open innovation is a way of innovating in which a company uses external ideas, skills and technologies alongside its own, instead of relying only on its internal research and development. The term is associated with Henry Chesbrough's work and today describes both a working method and a mindset open to startups, universities and partners.
TL;DR
- Open innovation brings outside ideas into the company and sends out internal ones that have no room to grow.
- There are three models: inbound (outside-in), outbound (inside-out) and coupled (both together).
- The most common forms are startup acquisitions, partnerships, innovation contests, patent licensing and joint ventures.
- An innovation manager leads the process, but an external team can play the same role.
- The Fieldwork project by Colmar, IULM and WWG is a real example of open innovation with university students.
- It only works if the company creates the internal conditions to welcome what comes from outside.
What is open innovation?
Open innovation is the approach in which a company speeds up innovation by opening its boundaries: it acquires outside ideas, tests internal ideas that are not yet structured and looks for new ways to reach the market. It does not replace internal research. It complements it with sources the company could not reach alone.
Innovation is truly open when people from different backgrounds work in a single process. Companies find that cross-functional teams, with specialities different from those inside their own structure, look at problems and opportunities from more angles. That is why the first step of any project is to define how diverse the group you want to involve should be.
The tools must be agile: they help recognise the ideas that resonate with the community, pick the ones suited to solving a challenge and test them at once. Improvement then starts in the very first phase of experimentation, not when the project is over. Anyone who has worked with the lean startup method will recognise the same logic of short experiments.
What are the three models of open innovation?
There are three models, depending on the direction in which knowledge flows. In the inbound model the company brings in outside ideas and technologies, in the outbound model it sends out its own unused ideas, and in the coupled model it combines both movements in a lasting collaboration with a partner.
Academic research has long distinguished these three processes: outside-in, inside-out and coupled. Most research has followed the first, the second is less explored and the third is attracting growing attention. The table compares them with one example each.
| Model | Direction | What the company does | Example |
|---|---|---|---|
| Inbound (outside-in) | From outside to inside | Acquires outside ideas, technologies or skills | Startup acquisition, patent licence |
| Outbound (inside-out) | From inside to outside | Makes available to others what it does not use | Licensing its own technology to a partner |
| Coupled | Both directions | Co-creates with one or more partners | Joint venture, project with a university |
Which open innovation strategies do companies use?
The most common strategies are five: startup acquisitions, partnerships, innovation contests, buying or licensing patents, and joint ventures. They are used in research and development or at product launch, when one internal team is not enough and it pays to look for other opportunities.
These paths are generally credited with a higher return on investment, higher productivity and a faster route to market than a traditional innovation path. The original 2021 version of this article made that claim without citing a specific study, so read it as a qualitative indication and not as a measured figure.
Not every company starts with an acquisition. For a small or mid-sized business a lighter format is often more accessible: a call for ideas, a crowdsourcing initiative, a hackathon, an innovation lab or a university project. These are occasions where one or more teams generate and validate new ideas quickly, and where an MVP lets you test at once what comes out.
"I suggest to consider open innovation as a philosophy or mentality that all companies can experience. WWG in the past has organized hackathon in University, crowdsourcing initiatives and in general is sensitive to everything that can help innovation processes. In this case you connect the internal resources, the external resources and you find opportunities together. It's the classic win win situation."
Mohamed Deramchi, CEO and founder at WWG
Who is the innovation manager and what do they do?
The innovation manager is the person who leads innovation in a company and turns ideas into value. In open innovation projects they look for inspiration, facilitate co-creation and help different organisations meet. It is an emerging profession and is not easy to introduce in every company.
When this profile is missing, the work can be given to an external team. A suitable team has seven qualities:
- Managing projects. It organises and delivers test projects and prototypes, continuously controlling human and financial resources.
- Accepting challenges. It treats them as the basis of its work and sustains that attitude in every phase.
- Having an overview. It is responsible for triggering change and knows what is needed to reach the goal.
- Recognising diversity. It values a wealth of ideas, creativity and the exchange of different points of view.
- Showing dedication. It believes in what it does and conveys it, inside and outside the group, with consistency and authority.
- Expressing curiosity and creativity. It spots trends early and generates ideas continuously.
- Being collaborative. Innovation is a collective phenomenon: no success comes from the work of individuals alone.
How does an open innovation project work with WWG?
A project works if the environment is managed, the right ceremonies are in place, the right people facilitate creation, obstacles are removed and prototypes arrive on the dates agreed with the client. The first step is to find, inside the company, the factors that make innovation possible.
On that basis WWG, a software house working with lean and agile methods, supports companies in six ways:
- it helps find, or create, the favourable conditions, conveying an entrepreneurial spirit and an experimental approach;
- it brings knowledge of the problems that can arise in the interaction between a company and an external team;
- it sets the main innovation activities together with the client;
- it handles scouting or the selection of partners, such as startups, associations, research centres, universities and Italian or international companies;
- it keeps the intuition alive, monitors progress and makes its experience available;
- it organises concrete occasions to generate and validate ideas: calls for ideas, crowdsourcing, hackathons, innovation labs and university projects.
Working with an external team supports a culture oriented to innovation, enhances skills and helps a company understand better what is happening outside it. Companies no longer face digitalisation and pilot projects alone: they collaborate with the outside world and know their customers, competitors and partners better.
What happened in the Fieldwork project with Colmar and IULM?
Fieldwork is the open innovation path in which Strategic Communication students at IULM worked with Colmar to make its production and distribution processes more sustainable. The project was created by WWG to celebrate ten years of collaboration with the Brianza-based brand.
It combined the energy and creativity of university students with the wish of a symbol of Made in Italy to become greener, with WWG directing the work. It ran in the 2020/2021 academic year and shows a coupled model: company, university and software house building the solution together.
The story received wide local and trade press coverage, collected on the project's dedicated page. To understand the relationship between WWG and Colmar, you can also read the Colmar case in the portfolio. Measurable results of the project are not reported here because the original source does not state them.
Shall we think together about your next open innovation project? Write to us at business@wwg.it.
Sources
- Enkel, Gassmann, Chesbrough, Open R&D and open innovation: exploring the phenomenon, R&D Management, 2009 (Crossref record): https://api.crossref.org/works/10.1111/j.1467-9310.2009.00570.x
- Wikipedia, Open innovation: https://en.wikipedia.org/wiki/Open_innovation
- MonzaToday, the open innovation project created by Colmar and WWG with IULM students: https://www.monzatoday.it/moda-e-universita-fronte-comune-per-la-sostenibilita-al-via-il-progetto-di-open-innovation-creato-dalla-brianzola-colmar-e-wwg-con-gli-studenti-dello-iulm-7759497.html
- Il Sole 24 Ore, Colmar and WWG call on IULM students: https://www.ilsole24ore.com/art/sostenibilita-colmar-e-wwg-chiamano-all-appello-studenti-iulm-ADS8UkOB
- IULM, Per una moda più green: https://www.iulm.it/it/news-ed-eventi/news/iulm-per-una-moda-piu-green
FAQ
Frequently Asked Questions
In traditional, or closed, innovation a company develops ideas and products using only its internal resources and protects them inside its own boundaries. In open innovation it also uses outside ideas, technologies and skills, and can share its own. The difference lies in the direction in which knowledge flows.
No, an in-house innovation manager is not essential, although this is the person who usually leads such projects. When there is none, the work can go to an external team able to manage projects, accept challenges, value diversity and collaborate with everyone involved in the process from start to finish.
For a small or mid-sized company the most accessible examples are a call for ideas, a hackathon, a university project or a partnership with a startup. Fieldwork, the path with IULM students for Colmar, is a concrete case: a Made in Italy brand worked with students on more sustainable production and distribution processes.
You measure it by comparing results with goals set before the start, such as validated ideas, prototypes released on the agreed dates or solutions adopted by the company. Without a goal defined upfront, the outcome gets interpreted after the fact. So agree the main activities and the success criteria with the client at the first meeting.
