Open Innovation: From Its Beginning to Today

Abstract

Guest editorial In our constantly changing world, corporations find themselves continually adapting to new trends and technologies, and often reinventing themselves to remain relevant. In fact, with our changing global business environment, staying the course is not an option if today’s businesses want to remain viable and competitive. One of the most dramatic corporate shifts we have seen over the last decade is on the innovation front. As recently as the early 2000s, innovation was largely derived from within an individual corporation’s walls through its internal research and development (R&D) departments. However, as the pace and intensity of competition around the globe increased, it was widely becoming recognized that to maintain and increase a competitive edge, R&D strategies were going to have to change. In 2003, Henry Chesbrough wrote about a new collaborative innovation theory and coined it “open innovation,” which he defines as “the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation.” He further explains that the open innovation paradigm can be understood as the antithesis of the traditional vertical integration model in which internal innovation activities lead to internally developed products and services that are then distributed by the firm (Chesbrough 2012). The roots of this concept date back almost a decade prior to Chesbrough’s research, to discussions and meetings at the Industrial Research Institute with members like Procter & Gamble (P&G) and General Electric (GE) sharing best practices on how to succeed in R&D’s ever-changing environment. It is not a coincidence that at the same time our innovation model was beginning to change, the Internet and emergence of social media were enabling society as a whole to be more connected and helping to facilitate collaboration across geographies. In the same year as Chesbrough, the widely regarded founding father of open innovation, presented his theory, LinkedIn was introduced; Facebook debuted a year later and at the end of June 2012 was reporting an astounding 955 million monthly active users; Twitter was launched in July 2006 and today has more than 500 million active users. Not surprisingly, leaders at major corporations in various industries were recognizing that the world was becoming increasingly connected and perhaps the most effective and efficient path to innovation was no longer through internal channels and limited company resources. The concept of open innovation progressively began to infiltrate corporate R&D practices and today has claimed a prominent position in our corporate culture as a compelling and effective force behind creating new concepts and products. Procter & Gamble was one of the first companies to explore using external sources for innovation. Its approach, Connect + Develop, was first presented in 2000 at a fall meeting of the Industrial Research Institute, and would become P&G’s open innovation program.