Innovation isn’t as simple as it once was, and the demand for creativity is accelerating in this extraordinary era of digital transformation. However, for early-stage startups or businesses embarking on their innovation journey, the path forward can be daunting.

So, what should you do?

In this post, we break down the two main types of innovation: Open vs. Closed innovation. These concepts have sparked long-standing discussions in the corporate world, and we’re here to guide you through their fundamental differences.

What is Closed Innovation?

Closed innovation is all about keeping the innovation process within the confines of your organization. It means that your internal team is responsible for developing innovations, and everything, from inception to execution, happens in-house. This approach allows your company to maintain control over its intellectual property and technology.

Why do organizations choose closed innovation?

Closed innovation is based on the belief that your internal team possesses the expertise required to generate new opportunities and businesses. It’s the idea that innovation is an internal responsibility from start to finish, keeping all processes within your team’s grasp. Plus, it safeguards your intellectual property from external influence.

What is Open Innovation?

Open innovation, in contrast, embraces external knowledge and creativity. It recognizes that innovation can come from anywhere, not just within your organization’s walls. When you opt for open innovation, you invite external experts and ideas into your innovation process, fostering a collaborative environment where intellectual property can flow both ways.

Why use open innovation and who uses it?

Open innovation enhances your capacity for improvement by tapping into a wealth of external knowledge and expertise. This approach allows you to take your innovation management to new heights. However, it’s important to note that open innovation doesn’t mean giving external entities unrestricted access; it’s a collaborative effort, often involving licensing agreements to protect your business’s interests.

Open vs. Closed Innovation: Which Is Right for Your Business?

Choosing between open and closed innovation hinges on your business’s goals and innovation strategy. Consider the following factors:

1. Complexity of Innovation: If your project heavily relies on proprietary technology, closed innovation may be the safer choice, as it minimizes potential complications and risks.

2. Uniqueness of Innovation: Closed innovation is often favored when you possess a groundbreaking innovation that could give you a competitive edge, as it shields your ideas from external interference.

3. Level of Competition: In highly competitive industries, closed innovation might be preferred to protect your intellectual property and ideas from exploitation by rivals.

Why Businesses Are Moving Away from Closed Innovation

While closed innovation was once the norm, the belief that the best knowledge resides solely within a company is becoming outdated. New entrepreneurs and established businesses alike are questioning traditional innovation approaches.

One of the key reasons for this shift is the increased connectivity of our digital era. Social media, digital networking, and communication make external collaboration easier than ever. Additional reasons include:

1. Limited Talent Pool: With billions of people worldwide, relying solely on internal talent may not be sufficient to meet your innovative goals.

2. High Pressure on Employees: Keeping innovation in-house can overwhelm your internal team, leading to employee burnout.

3. Need for Faster Innovation: In fast-paced industries, internal teams may struggle to keep up with market demands, necessitating external collaboration.

Encourage a Culture of Innovation

Whether you choose open or closed innovation, nurturing a culture of innovation is vital. Idea management software can be a valuable tool in this endeavor. It allows you to capture and collect fresh ideas throughout the year, fostering a culture of innovative thinkers and doers.

Learn more about how idea management software can transform your company’s innovation possibilities by scheduling a conversation with someone from the team. We’ll guide you through the capabilities of idea software and demonstrate how it can help you build a company culture that values and supports innovation.

Book a call today!