Defining Open Innovation

Abstract

In the last installment of this column, I initiated a new series of topics aimed at defining the vocabulary of innovation management. The object is to look critically at the profession's terms of art, exploring their origins and mapping their limitations, to provide new clarity, and in the process restore some of their power. By looking at the terminology at the heart of innovation management and exploring how it has emerged and evolved, perhaps we can also get a glimpse of where innovation is heading. In the first entry in the series, we looked at the concept of disruptive innovation. This time, we're examining another concept whose usage has become confused and, at times, diluted: open innovation. Henry Chesbrough introduced the concept of open innovation in his 2003 book, Innovation: The New Imperative for Creating and Profiting from Technology. Despite popular conceptions, Chesbrough didn't actually invent open innovation--his book is rich with examples of companies already doing it. Rather, he gave a name to the pattern and defined the paradigm: Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology. Innovation combines internal and external ideas into architectures and systems whose requirements are defined by a business model. He refined that definition in a 2006 book he co-edited, Innovation: Researching a New Paradigm: Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. The key in both definitions is the focus on an approach driven by the business model. As Gene Slowinski and Matt Sagal point out, in their 2003 book and in a 2010 RTM article, that approach must be supported by a set of tools and processes designed to facilitate the relationships--with universities, with researchers, with individual inventors, even with competitors--that are at the core of open innovation. Slowinski and Sagal's Want-Find-Get-Manage model, described in detail by Slowinski in Reinventing Corporate Growth, offers one framework for sustaining collaborative innovation. Chesbrough's assertion--in the books and in a series of journal articles between the two books (including two in the pages of this journal)--that open innovation would become absolutely essential was not wildly speculative; the precursors were clearly in place in the early 2000s. But he could not have predicted the changes to come in the few years after that first work, or the ways in which they would make openness both easier and more vital. Indeed, Innovation arrived on the cusp of revolutionary change. As markets became ever more dynamic and unpredictable, new technology platforms allowed knowledge to circulate ever more freely and far more widely. Facebook, Twitter, LinkedIn, and Kickstarter all were born after open innovation. Wikipedia, Linux, Google's Raspberry Pi, and other open-source projects revealed the power of mass collaboration to create knowledge through unfettered sharing. And Red Hat and others showed that there was money to be made from open-source platforms. The crowd and the cloud became viable, even essential, tools. Wired magazine introduced the term crowdsourcing to the world in a 2006 article by Jeff Howe, and suddenly innovation had an entire new toolset. All companies had to do was figure out what to do with it. As Kevin Boudreaux and Karim Lakhani warned in a 2013 HBR article on the subject, Crowds are moving into the mainstream; even if you don't take advantage of them, your competitors surely will. All of these developments offered new tools for pursuing open innovation. But what many practitioners and researchers alike have done is conflate these new tools with open innovation itself, either treating crowdsourcing and open innovation as synonyms or suggesting some other kind of equivalence between the two concepts. …