Simply put, open innovation is the process of not only relying on internal knowledge for innovation, but also external sources such as customer feedback, competitors, and external agencies. The term was coined by Henry Chesbrough, in his 2003 eponymous book1, and goes entirely against the previously general concept according to which companies had to innovate with their resources only and in full confidentiality, for fear of seeing their “secrets” robbed.
As technology and digitalisation progressed at an unequalled pace, so did innovations. Corporations found themselves unable to keep up. Those that already had a strong platform culture, such as Sun Oracle, Microsoft, Apple or Facebook blazed the trail and certainly stepped ahead of the competition for a while, but others also started jumping on the open innovation bandwagon. They got in touch with thousands of innovative start-ups. At the same time, they also began reengineering their internal organisations, which were too heavy and slow to cope with an ever-faster-moving environment. This was done to find new ideas, inventions, talent, teams, processes, and market validations, and with the ultimate goal of giving birth to the next disruptive innovation ahead of the competition.
Rather than pitting David against Goliath, major corporations have now decided to have both players combine their strengths. The idea is to create the conditions for a mutually profitable exchange between industry or a corporation that needs to change, and an ecosystem of start-ups that master technology and can produce innovative services. For large companies, open innovation is a way to outsource the risks linked to any innovation process and to mitigate the consequences of possible failures – especially in financial terms-. However, it also makes them somewhat humble. As Yoan Jaffré, who heads the BNP-Paribas lab puts it: “Open innovation also means you are humble enough to admit you are no longer able to internally produce the innovation you need”2, in an environment where time-to-market gets ever shorter. Alternatively, in the words of Bill Joy, co-founder of Sun MicroSystems: “Most of the bright people don’t work for you – no matter who you are.”3