Help Your Business Transform in Times of Crisis with Open Innovation
June 23, 2021
In times of crisis, every business must do something to survive. During the recent pandemic, the industry has been shocked by the effects of the pandemic leaving many businesses struggling while others failed.
The recent pandemic has magnified the disruption that the industry has already been experiencing and has made a lot of people realize that there is an immediate need for digital transformation. All businesses can do to address these drastic changes is either to fight and survive or avoid the change and fail all at once.
With businesses taking that leap of faith, a lot of them are taking digital transformation to the next level. That said, successful digital transformation involves various strategies like open innovation.
So, what is open innovation?
Open innovation is described as a business management concept for innovation that promotes collaboration with people as well as organizations outside the company. This challenges the traditional concept with a silo mentality and secrecy that many businesses still possess. With this concept, a business acknowledges that there are greater knowledge and more ideas from outside the company.
Open Innovation versus Closed Innovation
Closed innovation relies on the idea that internal ideas or expertise together with an iterative process for the processing of these ideas can sustainably produce new opportunities, products, and businesses. With this type of innovation, the information is kept within the confines of the company and is not shared with external parties.
In contrast, open innovation is based on the belief that individuals outside the company can also contribute to the achievement of strategic goals. In addition, this type of innovation believes that sharing intellectual property both ways is useful for both parties in different ways.
That said, the more information gained, the more educated the decisions created.
Types of Open Innovation
Knowing the different types of open innovation will help us determine how this works and how this can be used.
Open innovation can be classified into its level of inclusion.
- Intracompany. This classification entails information being exchanged within the company or organization. In large organizations, there are many business sectors and each of these sectors will have different roles and responsibilities. Open innovation within the company involves collaboration within the different business functions or units.
- Intercompany. This classification involves two or more different companies collaborating for open innovation goals.
- For Experts. This classification involves the collaboration between different people outside the company who have the knowledge to provide relevant input.
- Publicly Open. This classification involves all people regardless of stature or knowledge.
On the other hand, open innovation can also be classified according to the purpose of use. This classification basically defines the different use cases in companies.
- Marketing. This type of classification for open innovation involves the purpose of getting information across.
- Gathering Insight. This classification involves gathering information on the market and consumers.
- Finding Talent. This classification involves finding appropriate people with the talent.
- R&D. This classification involves developing products or services.
Benefits of Open Innovation
Open innovation offers numerous benefits. Here are some of them:
1.Engaging a Larger Set of Audience
Compared to close innovation, open innovation involves a larger audience size potential. If you want the input to become as large as possible, it is possible to expand the audience through open innovation without limits. With this move, you will be able to gain knowledge and insight on consumer preference and buying habits which can be very useful as you develop your products and services.
2. Engaging Relevant Audiences
In a close innovation setup, audience relevance can be limited because ideas and concepts are limited by the expertise of the employees within a company, thus subsequently limiting the kind of topic or ideas that can be focused on.
With open innovation, it will be a matter of finding the right audience to solve your current problem, whatever that may be. This means, however, finding a relevant audience is more difficult and rather costlier since you will need to narrow it down from the much larger audience that you gain using open innovation.
3. Improving Cost Efficiency
Another benefit of open innovation is cost-efficiency. The overall costs when you engage in open innovation are significantly lesser in relation to the number of ideas and input gained, which is rather a profitable turn for companies.
Closed innovation consumes more work hours from your employees as they need to participate in the management of the innovation process in addition to the convening of ideas. With open innovation, unnecessary work is avoided and the time can be spent wisely in the management of the process.
4. Involving Consumers in the R&D Process
Across various industries, designing products and services according to customer’s needs and preferences is always important, regardless of the type of innovation process.
Open innovation offers the opportunity to involve consumers in the R&D process from the start. With this technique, the viability of the products also increases because you will be able to have instant feedback on whether features of the product are useful or not from the perspective of the end-users.
5. Improving PR and Brand Value
When it comes to marketing, open innovation is also beneficial, as it can be used to improve PR and help gain better brand recognition through the wider outreach that it provides. With better brand recognition, brand value can be significantly increased. This strategy is rather important when your business is in a competitive market with high consumption products and services.
Open innovation does have a great impact on digital transformation in times of crisis. This concept offers numerous benefits. But before you can become successful with open innovation, it is important to understand how it is used and how it is done. It is important to note, however, that open innovation can fail when you use it in areas where it does not belong. That said, you have to learn and understand what open innovation is all about.