Open Innovation

Definition of Open Innovation

Open innovation defines the innovation process for customers or other organizations. This is how they source ideas and suggestions from external sources. The goal is for the company to stay ahead of its opposition and help in marketing. In addition, it supplements the processes managed by companies, as a good alternative that enables consumer participation.

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The History of Open Innovation

Henry Chesbrough coined the term open innovation in the 20th century. Chesbrough wrote several books about the topic, including “The New Imperative for Creating and Profiting from Technology”. Today he works at Berkeley University in California. The system is viewed as a change or the rebirth of innovation. It strikes new production development paths. This process is prospering in particular as a result of the increasing popularity of the internet in the last few years. The benefits of open innovation in business have been discussed as far back as the 1960s. Additionally, the main focus has usually been research and development.

Growing Popularity

Interestingly, since Chesborugh’s book was published in 2003, the idea of open innovation has created a lot of interest in both the world of business and research. Open innovation was created by looking at ways businesses deviated from the norm when creating new ideas. Moreover, researchers found that R and D departments were increasingly using external knowledge with increasing frequency. Obviously, businesses then wanted to adapt to this new way of garnering new ideas and suggestions. Over time, the definition of open innovation changed somewhat.

Changes in Open Innovation

Since the term open innovation was created so has its meaning. Therefore, the creators of the term leaned more towards a definition that fit more modern business methods. Firstly, they looked more at the way innovation flows in and out of a company. Secondly, they considered the effect on marketing much more. And finally, Chesbrough pushed more towards open innovation being defined as a distribution process based on managed knowledge flow.

Evolution of Open Innovation

In recent years, the evolution of open innovation has accelerated. In the past, companies may have been open to the idea of open innovation, however, they may not have fully utilised the concept. The reasons for this are many but mainly include an overarching concern for information to get into the wrong hands. Openness in business is something that used to have very strict boundaries. Workers and contractors alike would be bound by very strict non-disclosure agreements (NDAs). Unfortunately, being unable to share anything outside of the business meant that ideas would be limited. By relaxing these boundaries, companies can reach out in various ways to garner new ideas. Companies are now more open, asking clients and customers alike for their input.

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Crowdsourcing and Open Innovation

Whilst crowdsourcing and open innovation aren’t the same thing, they do have some similarities. As explained, open innovation is a distributed approach to innovation. In practice, it involves companies and organisations getting ideas from both internal and external sources. On the other hand, crowdsourcing involves companies and businesses seeking knowledge, tasks or services from large groups of people (known as the crowd).

The Similarities

Both methods bring new ideas from external sources to the table including thinking outside the box due to the expansive knowledge of the crowd. Additionally, both open innovation and crowdsourcing can reduce stress on internal R and D departments. Conversely, they can both also keep costs down and minimise the need for formal employee contracts. Finally, time is reduced as both concepts lead to faster problem solving.

The Differences

Unfortunately, it isn’t always realistic to use the crowd for some projects, especially those in very early development. Ideas that need to be expanded may be in their infancy and secrecy may be required, the chances of keeping ideas confidential is reduced when a huge crowd is involved. Some projects may only wish to involve very specific people such as investors or researchers with certain knowledge skillsets. Open innovation can also help companies to change the way they develop moving from traditional methods to more modern ones.

Examples of Open Innovation

Local Motors

This company relies on the participation of customers to share and discuss concepts and ideas with others on their dedicated platform. Therefore, outstanding proposals that can be put into practice, help this sector’s developers create new and exclusive features and systems. In this example, the participation of the community is decisive and breaks new ground. Through this type of crowdsourced open innovation, the company created a self-driving bus!


Quirky is an invention site. It is community led and anyone can put up an idea for others to comment and suggest on. Unsurprisingly, members of the crowd on this platform have a wide range of skills. Conversely, this leads to a wide range of ideas and suggestions to get an invention from an idea to a fully formed product or service for sale.


Whilst not often mentioned in the world of open innovation, open source projects are strongly linked to it as well. Obviously, the concept of crowdsourcing comes in too. Open source software development usually offers products for free that anyone can contribute towards. Many say it’s a great learning experience and helps to expand their skills.


This popular cosmetics company learned just how valuable open innovation was when its team used social media to get ideas. They openly admitted that their deodorants had the possibility to stain or mark clothes. This brave step of being open and honest caught people’s attention, even more so when they asked “How do we fix it?”. They explained a problem, and what they wanted, then asked others how to achieve it. However, some saw this as a sign of weakness, admitting fault and asking for help. However, it paid off and they created a new product that doesn’t stain or mark clothes. Nivea and their customers both got what they wanted.


Finally, the company most known for having very strict and secretive research and development. So how are they using open innovation? Despite being one of the more covert companies out there Apple will open up in certain ways. Their apps are a classic example of this, letting others create apps to put onto their platform is an excellent idea. Of course, they have to pass Apple’s standards but overall it’s been a very smart move for them.