Think Outside Your Mind: How Open-Innovation Networks Unleash Creativity

By Raymond Chan

In today's fast-paced and ever-evolving business landscape, creativity and innovation are crucial for success. Companies must continually adapt and seek new ideas, both internally and externally. Open-innovation networks can be a powerful tool to tap into the collective creativity of individuals and organizations beyond a company's walls.

The Open-Innovation Paradigm

Open innovation is a business strategy that encourages organizations to collaborate with external partners, such as researchers, start-ups, customers and competitors, to accelerate innovation. It involves sharing ideas, resources and knowledge across organizational boundaries to create new products, services or processes.

Henry Chesbrough, a professor at the University of California, Berkeley, first coined the term “open innovation” to describe this shift from traditional closed-innovation models, where companies rely solely on their internal research and development (R&D) efforts. Open-innovation networks are an extension of this concept, focusing specifically on the connections and relationships formed between organizations and startups or individuals to foster creativity and innovation.

The Power of Open Innovation Networks

Open-innovation networks bring together people and organizations from various industries, backgrounds and disciplines. This diversity of perspectives and expertise can lead to novel ideas, solutions and approaches that might not have been discovered within a single organization's R&D department. By leveraging the collective knowledge and resources of the network, companies can reduce the time it takes to bring new ideas to market.

Furthermore, open-innovation networks can help businesses reduce their R&D costs by tapping into external resources and expertise. This can include collaborating with partners on shared projects, licensing technology from external sources or even acquiring entire start-ups with innovative solutions. Sharing the innovation process across a network of partners can help companies test and refine new ideas and technologies before fully committing to a particular path, reducing the chance of costly failures.

Examples of Open-Innovation Networks in Practice

Many companies have successfully embraced openinnovation networks to drive creativity and innovation. Some notable examples include:

• Procter & Gamble's Connect + Develop program, which encourages external innovators to submit ideas and collaborate with P&G on new product development.

• Singapore Airline KrisLab, an international brainstorming platform that connects thousands of participants from around the world to develop new ideas and solutions for the company's products and services.

• General Electric's Ecomagination Challenge, a crowdsourcing initiative that invites individuals and organizations to submit ideas for renewable energy technologies and sustainable solutions.

Outcomes of Innovation

Embracing open-innovation networks can yield a multitude of positive outcomes for organizations. These outcomes are not only limited to the development of new products and services but also extend to the creation of innovative business models, process optimization and improved collaboration.

1. Business model innovation: Open-innovation networks can lead to the creation of new business models that disrupt traditional industry norms, and create “new value” for customers and stakeholders. A classic example is the early stage of digital photography technology, which brought the new value of convenience over quality to consumers.

2. Process optimization: Collaborating with external partners can help companies identify new ways to optimize their business processes, resulting in lower costs, improved efficiency and better customer service.

3. New product development: Open-innovation networks can facilitate the development of new products and services by tapping into the collective creativity and expertise of a diverse range of partners.

Approaches to Open Innovation Execution

One of the key challenges companies face is determining how to best execute an open-innovation strategy. There are several pathways to gaining access to external innovations, each with different benefits and drawbacks.

1. Buy the Solution

The most direct approach is to buy the desired solution or technology from an external partner. This can involve acquiring a company outright or licensing their intellectual property and products. While acquisition gives you full control over the solution, it also requires significant upfront investment and risk. Licensing mitigates risk but you have less control over the solution and often pay ongoing licensing fees. For many companies, buying an existing solution is an easy way to gain new innovations that can be quickly integrated into their operations.

2. Build the Solution

Another approach is to build the solution in collaboration with external partners, co-developing technologies or products that meet your needs. This leverages the expertise and resources of partners while sharing costs and risks. However, it requires finding partners with complementary capabilities and aligning objectives which can be challenging. When done well, co-development can result in solutions that neither party could achieve alone.

3. Partner with the Company or Startup

Forming strategic partnerships with companies or startups in possession of the target innovation is another option. Partnerships allow both parties to bring a solution to market together, benefiting from each other’s strengths. While partnerships require compromise, they enable resource sharing and risk mitigation. They also provide the opportunity to gain new insights into markets or technologies from an outside perspective.

4. Participate in the Solution Through Investment

Investing in external startups developing relevant solutions is an approach that provides financial and strategic support to new companies in exchange for access to their innovations. Corporate venture capital arms are often tasked with investing in startups