The landscape of innovation has evolved, presenting an extraordinary era for businesses to embrace digital transformation with an accelerating demand for creativity. However, for early-stage startups or those venturing into innovation possibilities, the decision between open and closed innovation can be challenging.
This post delves into the two primary types of innovation and aids in determining the suitable path for your business. The conversation surrounding open versus closed innovation has been ongoing in the corporate world, so let’s explore the fundamental distinctions between the two.
Closed Innovation:
Closed innovation entails the development of innovation within a company’s internal team, confined within its defined boundaries. The entire innovation process, from inception to completion, occurs exclusively within the organization, with control over technology and intellectual property retained internally. Critics argue against closed innovation, advocating for businesses to open their doors to external expertise to drive change.
Organizations opt for closed innovation based on the belief that internal expertise can generate new business opportunities. The responsibility to innovate is internalized, encompassing development, testing, marketing, and other stages within the team. This approach safeguards intellectual properties, technology, and marketing materials from external control.
However, the origin of ideas in closed innovation is often centralized in higher management, limiting broader organizational involvement in shaping the innovative future.
Open Innovation:
In contrast, open innovation acknowledges that knowledge and creativity extend beyond a company’s confines. It welcomes external contributions to the innovation process, fostering a collaborative approach. Intellectual property is shared bidirectionally, facilitating a flow of knowledge that enhances decision-making.
Choosing open innovation provides businesses with a higher capacity for improvement by tapping into diverse knowledge and expertise. It is important to note that this collaboration involves additional costs, such as licenses, to protect business property.
Deciding for Your Business:
Choosing between open and closed innovation hinges on your business, goals, and innovation strategy. While open innovation offers diverse growth opportunities, it is not without risks. Considerations include:
- Innovation Complexity:
Assess the complexity of your innovation strategy. If heavily reliant on technology, closed innovation may be preferable to avoid potential complications and risks. - Innovation Uniqueness:
Evaluate how unique your innovation is in the market. Closed innovation may be suitable for fundamental technological improvements that require protection from external interference. - Competition Level:
Consider the intensity of competition in your industry. In highly competitive environments, businesses may lean towards closed innovation to safeguard ideas from exploitation.
Shift from Closed to Open Innovation:
Fifteen years ago, closed innovation was predominant, viewed as the standard for protecting businesses. However, in the past decade, a transition towards open innovation has been observed. The belief that the best creativity arises solely from within a company is becoming outdated, with businesses recognizing the value of external contributions.
Reasons for this shift include the limited internal talent pool, the high pressure on internal teams, and the need for faster innovation to keep pace with rapidly evolving industries. The increased connectivity in the digital era, facilitated by social media and digital networking, has made external collaboration more accessible.
Encouraging Innovation with Idea Management Software:
Whether adopting a closed or open innovation process, leveraging idea management software is crucial for success. This software captures and collects fresh ideas year-round, fostering an innovative culture within the company. Regardless of your chosen innovation approach, idea management software can enhance your company’s ability to generate, organize, and implement innovative ideas.
For more insights into idea management software and its transformative potential for your company’s innovation, connect with a representative from the Submit team. They can guide you through the capabilities of idea software, demonstrating how it can contribute to building a company culture that values and supports innovation.
