In the world of innovation, two opposing forces shape how companies create: open innovation thrives on external collaboration and fresh perspectives, while closed innovation relies on tight control and internal expertise. Each has its strengths, but which one will unlock your company’s full potential? Dive into this article to uncover the strategy that fits your vision and ambitions.
Open innovation: a collaborative and flexible approach
Open innovation, is an approach that invites companies to broaden their horizons by collaborating with external partners. Start-ups, universities, even consumers: everyone can contribute to enriching the innovation process.
Open innovation operates on a straightforward principle: sharing knowledge to foster more effective and creative innovation.
This approach comes with numerous advantages:
- Diverse perspectives: by welcoming external contributions, companies can tap into a wider pool of ideas and fresh insights;
- Lower costs and faster results: collaborating with external experts helps reduce R&D expenses while accelerating the innovation process;
- Strategic partnerships: open innovation facilitates the creation of networks with key partners, enhancing the company’s ecosystem;
- Market alignment: engaging with end-users or customers ensures the final product better meets real-world needs.
That said, embracing open innovation often comes with its share of organizational shifts.
To start, seamless collaboration with external partners demands robust coordination, ensuring every contributor stays aligned and delivers value to the project.
Equally important is setting crystal-clear guidelines around intellectual property. This not only safeguards contributions but also ensures every partner benefits fairly and transparently.
Open innovation softwares can be a game-changer in this process. They offer companies a streamlined way to tap into external talent, enriching the innovation journey while keeping budgets in check.
Closed innovation: control and confidentiality at the service of innovation
Closed innovation sticks to the traditional playbook, where the entire development process happens exclusively within the company. Relying solely on internal resources, teams, and infrastructure, this approach keeps everything in-house—from brainstorming to final execution.
| Take Apple, for example: the company epitomizes closed innovation with its legendary secrecy around internal projects. This veil of confidentiality not only fuels immense anticipation for new products but also ensures Apple retains absolute control over every detail right up to launch day. |
The biggest strength of closed innovation? Ironclad protection of ideas and technologies—a critical advantage in industries where intellectual property is the ultimate competitive edge.
However, this strategy isn’t without its challenges. Relying solely on internal capabilities can narrow the pool of ideas and significantly lengthen development timelines. On top of that, closed innovation requires hefty investments in R&D, making it a more feasible choice for companies with deep pockets.
Which model to choose: open or closed innovation?
Analysis of the company’s needs
Deciding between open and closed innovation largely hinges on the company’s industry and specific needs.
In sectors like aerospace or pharmaceuticals, where safeguarding industrial secrets is paramount, closed innovation often takes center stage. This approach ensures companies retain full control over their creative processes while minimizing the risk of exposing sensitive information.
On the flip side, industries such as technology or fashion, where speed and a constant flow of fresh ideas drive success, open innovation can be a game-changer, offering a competitive edge through agility and diverse perspectives.
Company size also plays a pivotal role. Large corporations with robust R&D budgets are better equipped to pursue closed innovation, managing the entire process internally. Meanwhile, small and medium-sized enterprises can leverage open innovation to bridge resource gaps. By collaborating with external partners, they can accelerate development without the heavy financial burden.
For those seeking to harness internal creativity while safeguarding strategic projects, intrapreneurship provides an excellent middle ground. This approach empowers employees to innovate within the organization, keeping key initiatives confidential while driving fresh ideas from within.
Innovation objectives
The company’s innovation objectives also influence the choice of model.
To begin with, if the speed of innovation is a priority, open innovation allows you to benefit from the diversity of ideas and reduce development times.
Safeguarding intellectual property is another critical consideration. When preserving unique innovations is essential to a company’s competitive strategy, closed innovation naturally emerges as the go-to approach.
On the other hand, a company’s collaborative ambitions also come into play. If the goal is to foster strategic partnerships and drive collective innovation, open innovation becomes the obvious choice, unlocking the potential of shared expertise and resources.
Examples of adaptability to different situations
The choice between the two models can vary depending on the situation and the sector. Here are some examples:
When should open innovation be favoured?
- In dynamic and competitive sectors such as technology, fashion or renewable energy, where speed and adaptability are crucial;
- Companies like Google and Tesla collaborate with start-ups to accelerate their development and stay at the forefront of innovation.
Collaborative innovation platforms are particularly useful in these sectors, as they enable companies to quickly connect with internal or external talent, speeding up the innovation process!
When should closed innovation be favoured?
- In sectors where the protection of innovations is a major issue, such as aerospace, pharmaceuticals or certain branches of fintech;
- Companies like Lockheed Martin and Pfizer choose to keep their innovation process in-house to protect their competitive advantage.
Hybrid approaches: combining open and closed innovation
The hybrid model offers the best of both worlds, combining the strengths of open and closed innovation into a versatile strategy. With this approach, companies tap into open innovation for specific stages—like gathering external ideas—while retaining full control over more strategic and sensitive elements. This allows businesses to enjoy the benefits of both models while keeping potential risks in check.
Flexibility is the hallmark of the hybrid approach. Companies can adapt their strategy to suit different projects and objectives, drawing from external collective intelligence while leveraging internal expertise. By striking this balance, the hybrid model not only diversifies innovation sources but also mitigates risks: critical projects remain securely in-house, while external partnerships enhance less sensitive initiatives.
Find out more about open and closed innovation…
- “Open Versus Closed Innovation: A Model of Discovery and Divergence.” Academy of Management Review, 2010.
- “Open, Semi-Open and Closed Innovators: Towards an Explanation of Degree of Openness.” Industry and Innovation, 2010.
- “From closed to open: A comparative stakeholder approach for developing open innovation activities in SMEs.” Journal of Business Research, 2020
CEO & Co-Founder Yumana
