How can companies tap into the vast reservoir of assets available in the wider world? Many argue that to stay ahead, companies can no longer afford to simply rely entirely on their own resources. Some people use the term ‘open innovation’ to describe the growing trend to draw ideas and resources from a much deeper well than would be available to a single company. By Patrick Reinmoeller

What is Open Innovation?
Open innovation is a relatively new term for a fundamental truth that has long been recognised: organisations do not own and cannot employ all the bright minds. There will always be precious resources outside the boundaries of organisations and tapping into them is a challenge. If you conceptualise innovation as having three phases; creating variety, selecting ideas and retaining them, i.e. implementation, then open innovation can be useful in several ways. Mostly people think in terms of capturing ideas that lie outside. While it makes sense to use external resources to enhance variety, it leaves much potential unexploited. Open innovation can do more than just enhance variety; organisations are replete with ideas that employees dare not mention because they know the selection criteria, i.e. key performance indicators, are overly restrictive. Using open innovation to allow for better selection, giving a new idea room to be considered and possibly bringing that idea to fruition, can be a breakthrough for organisations set in their ways. Similarly, where what works tends to be retained, leveraging innovative approaches practised by other parties may well offer new, promising performance opportunities.

In sum, open innovation can support all of these three main phases of the evolutionary process of breakthrough products and services. With this upside, comes the increasing complexity involved in managing external resources as well as internal resources. Listen to Patrick discussing Open Innovation here.

Patrick Reinmoeller is the Course Director for Breakthrough Strategic Thinking at Cranfield School of Management. To find out more about this and our other courses download our 2012 brochure here.