What is Open Innovation? – Definition and distinction
Open Innovation—often referred to in German as “offene Innovation”—describes an innovation paradigm coined in 2003 by Henry Chesbrough. In contrast to closed innovation (Closed Innovation), where all development takes place internally, Open Innovation opens company boundaries for bidirectional knowledge and technology transfer.
The concept is based on a simple insight: Not all smart minds work in your company. No matter how large your R&D department is, there is always more relevant knowledge externally than can exist internally. Open Innovation makes this knowledge systematically accessible and integrates it into the innovation process.
In the context of innovation management, Open Innovation is not a replacement, but an extension of existing structures. It requires an open innovation culture and complements internal capabilities with external impulses.
The 3 types of Open Innovation
Open Innovation can be divided into three basic directions:
1. Outside-In (Inbound Open Innovation): The company integrates external knowledge into its own value creation. Examples: customer idea platforms, collaborations with universities, technology scouting, licensing external patents. This is the most common form and is particularly relevant for business model innovation.
2. Inside-Out (Outbound Open Innovation): The company makes its own knowledge available to external partners. Examples: licensing its own technologies, open-source contributions, spin-offs. Unused internal developments are monetised instead of gathering dust in a drawer.
3. Coupled Open Innovation: The combination of both directions through strategic alliances, joint ventures, or innovation ecosystems. Partners contribute resources together and share the results—typical for platform business models and the platform economy.
Benefits of Open Innovation
Companies that use Open Innovation systematically benefit on multiple levels:
- Faster time-to-market: By leveraging external groundwork, development cycles are significantly shortened
- Lower innovation risk: Ideas are validated with the market earlier—a core principle from Lean Startup and product–market fit
- Access to specialist knowledge: Niche expertise that would take years to build internally
- Higher innovation quality: Diversity of perspectives leads to more robust solutions
- Cost efficiency: Shared R&D costs and avoidance of duplicate development
- Cultural change: Opening up externally fosters a learning-oriented innovation culture internally
Open Innovation methods and formats
Depending on objectives and resources, various Open Innovation formats are available:
| Method | Description | Suitable for |
|---|---|---|
| Idea competitions | Crowdsourcing solutions for defined challenges | New perspectives, broad idea generation |
| Corporate accelerators | Supporting external startups with strategic fit | Disruptive innovation, technology transfer |
| Lead user innovation | Involving innovative customers in development | Customer journey optimisation |
| Research collaborations | Collaboration with universities and institutes | Basic research, technology development |
| Innovation ecosystems | Building a network of partners and suppliers | Complex value chains |
Implementing Open Innovation: step by step
Successfully introducing Open Innovation requires strategic planning and organisational preparation:
- Define innovation fields: In which areas does your company need external impulses? Derive this from your innovation strategy
- Map the partner landscape: Identify relevant partners—startups, research institutions, customers, suppliers, competitors
- Set up governance: Establish clear rules for IP rights, confidentiality, and the distribution of results
- Start pilot projects: Begin with a manageable Open Innovation format—e.g., an idea competition or a Design Thinking session with customers
- Integrate processes: Embed successful formats in your innovation process and idea management
- Measure results: Define KPIs such as the number of external collaborations, the share of external ideas in the pipeline, and time-to-market improvement
Challenges in Open Innovation
Despite the benefits, Open Innovation entails specific risks that must be managed:
- IP protection: Balancing openness and protecting intellectual property is often the biggest challenge. Clear contractual arrangements are essential
- Not-invented-here syndrome: Internal teams reject external ideas. Countermeasure: cultural work and incentive systems that value external contributions
- Coordination effort: Managing external partners requires dedicated management capabilities and resources
- Quality assurance: External contributions must be carefully evaluated and integrated into existing standards
- Cultural differences: Partners from different industries or countries bring different ways of working—effective change management is required
Open Innovation for Austrian SMEs
Open Innovation is not a privilege of large corporations. Austrian SMEs in particular can benefit from open innovation approaches:
- Clusters and networks: Austria’s innovation clusters (e.g., in mechatronics, green tech, life sciences) offer ideal platforms for cross-industry collaboration
- FFG funding: The Austrian Research Promotion Agency supports collaborative R&D projects with attractive funding
- UAS and university collaborations: Practice-oriented research projects with students provide fresh perspectives at manageable costs
- Startup collaborations: Partnerships with startups bring agility and access to technology—without having to build your own venture building capabilities
The key for SMEs lies in selective opening: Not all innovation fields need to be handled openly. Focus on areas where external knowledge offers the greatest leverage—such as digital transformation or the development of digital business models.
Using Open Innovation strategically
Would you like to open up your innovation processes and systematically leverage external knowledge? We support you from strategy through implementation—with the right Open Innovation format for your company.
Frequently asked questions about Open Innovation
What is the difference between Open Innovation and crowdsourcing?
Crowdsourcing is a method within Open Innovation. While Open Innovation describes the overall strategic approach of opening innovation processes, crowdsourcing specifically refers to gathering ideas, solutions, or feedback from a large group of external participants—typically via digital platforms.
How do I protect intellectual property in Open Innovation?
IP protection in Open Innovation requires a multi-step strategy: First, clear NDAs and collaboration agreements before any exchange. Second, define IP allocation (background IP vs. jointly developed IP) in advance. Third, selective openness—share only the knowledge necessary for collaboration. Fourth, regular IP audits to document your own state of knowledge.
Is Open Innovation suitable for every company?
In principle, yes—but the degree of openness should fit the company’s situation. Prerequisites include an open innovation culture, a willingness to share knowledge, and basic governance structures. Highly sensitive areas (e.g., defence-relevant technologies) require special caution. For most SMEs, a selective Open Innovation approach—such as in product development or digitalisation—is a good starting point.
What role does digitalisation play in Open Innovation?
Digitalisation is a key enabler of Open Innovation. Digital platforms enable global idea competitions, collaborative development tools foster virtual collaboration, and data analytics helps identify the most promising external contributions. At the same time, digitalisation opens up new Open Innovation fields—for example, AI strategies or data-driven business models.