Open Innovation is a business innovation paradigm which is open to external contamination. According to this model, in order to create more value and to better compete in the market, companies cannot rely only on internal ideas and resources, but must seek help from external capabilities and resources, especially from start-ups, innovative SMEs, universities and research institutes, through a two-way flow that brings mutual benefits to all involved.
There are many ways in which an Open Innovation model can be structured, and these include calls for ideas, where innovative ideas, projects and services are collected to create networks and future collaborations, hackathons, crowdfunding, strategic collaboration agreements with partners and, finally, acquisitions and corporate venture capital operations.
The opportunities and advantages of the adoption of Open Innovation lie within the “win-win logic” between companies and start-ups (Source: ‘Finanza agevolata e innovazione: strumenti di finanziamento per start up e PMI, Open Innovation e M&A’, Giuseppe Lorizzo), since the innovative capabilities of start-ups, coordinated with the ability and solidity of large companies to industrialise and implement innovations in the market, benefit both players.
The main advantages for companies that want to pursue an Open Innovation model include:
- Reduced of time to market: greater openness to innovation allows for faster access to new technologies in the ecosystem of a given industry, reducing the time that it takes to develop and commercialise an idea.
- New investment frontiers: knowledge of innovative technologies from outside one’s own company allows the company to assess the validity of potential profitable investments in advance of its competitors.
- Sharing costs and risks: collaboration with another company involves the division of responsibilities and possible losses, minimising the risk of failure.
- Creation of a new corporate culture: the co-creation of innovation enables the broadening of mutual knowledge and an increase in the level of flexibility of internal organisations, stimulating creativity and the ability to generate new ideas.
- Optimisation of brand identity and brand reputation: the connection with large businesses, following the application of OI strategies, allows start-ups to amplify their own managerial skills and capabilities, and to take advantage of the visibility and the experience of the established brands to acquire new clients and immediate credibility.
Despite the widespread benefits, the adoption of a sustainable, high value-added Open Innovation model requires a significant investment in terms of time and resources. Indeed, the transition towards a model of this type requires a step that not all companies are able or willing to make.
If you would like more information on the subject, please do not hesitate to contact us. One of our experts will be able to help you.
The BizPlace team