As Jehan Chu, co-founder and managing partner of Kenetic, aptly observed, "In the post-industrial age, innovation becomes the most important competitive weapon." Today, companies that hope to survive and thrive in fast-paced, competitive markets are embracing Open Innovation as a critical part of their strategic management toolkit.
Open innovation, a term coined by University of California professor Henry Chesbrough, is a paradigm that suggests valuable ideas can come from inside or outside an organization and can go to market from inside or outside the organization as well. This radically differs from traditional models of innovation, where companies relied solely on internal resources.
According to a study by Accenture, 78% of innovators consider Open Innovation critical for their strategy. McKinsey research also supports this view and suggests that embracing Open Innovation can lead to a 20% increase in revenue.
Key Principles of Open Innovation
Open Innovation differs significantly from traditional approaches to innovation. Here are some key principles:
Knowledge and ideas do not only reside within an organization. They can be sourced from a variety of external stakeholders including customers, suppliers, academia, start-ups, and even competitors. Deloitte reports that companies implementing Open Innovation have seen a 20% increase in ideas sourced externally.
Not all the smart people work for your company. PwC found that companies using Open Innovation leverage external R&D to reduce time to market.
Profit from research can be realized by others. As Gartner's survey shows, 60% of businesses have licensed out their intellectual property, further supporting the Open Innovation model.
Implementing Open Innovation in Strategy Development
How does a company implement Open Innovation in practice? Here are some best practices, from Harvard Business Review and Bain & Company:
Develop an Innovation Strategy - This is a top-level vision that aligns innovation activities with corporate strategy. Successful Open Innovation is predicated on an overarching strategy, not just random idea generation.
Create a Culture of Innovation - Open Innovation is a 'people process' that requires the right mindset. Companies must foster an environment that encourages risk-taking and supports creative thinking.
Establish an Open Innovation Ecosystem - Successful Open Innovation programs actively cultivate their innovation networks and partnerships. This involves building connections with other organizations, academia, and individual innovators.
Protect Intellectual Property - Whilst Open Innovation is about the free flow of ideas, it’s important to have a framework in place to ensure a company’s intellectual property is protected.
Real-World Examples of Open Innovation
Several Fortune 500 companies have successfully incorporated Open Innovation into their Strategic Management. For instance, Procter & Gamble's 'Connect + Develop' program relies heavily on Open Innovation, accounting for roughly 50% of their product development. Similarly, Lego uses a crowdsourcing platform to solicit new product ideas from their user community.
Open Innovation isn't just a trend; it has become the hallmark of modern Strategic Management. The embrace of Open Innovation is about recognizing that the smartest people do not always work for your company and that there's value in collaboration beyond the company walls.
The Future of Open Innovation
The future of Open Innovation looks promising. According to Forrester, 68% of businesses plan to increase their investment in Open Innovation over the next five years. Furthermore, with the rapid advance of digital technologies such as AI, Blockchain, and IoT, the opportunities for Open Innovation are vast.
As businesses continue to navigate the complexities of the 21st-century business landscape, Open Innovation will likely remain a cornerstone for companies committed to maintaining a competitive edge in their respective markets. Embrace it as a powerful weapon in the arsenal of Strategic Management.
CUSTOMER TESTIMONIALS
"If you are looking for great resources to save time with your business presentations, Flevy is truly a value-added resource. Flevy has done all the work for you and we will continue to utilize Flevy as a source to extract up-to-date information and data for our virtual and onsite presentations!"
– Debbi Saffo, President at The NiKhar Group
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service. "
– Jim Schoen, Principal at FRC Group
"The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."
– Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"One of the great discoveries that I have made for my business is the Flevy library of training materials.
As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy usually has just what I need to make my point.
It is well worth the money to purchase these presentations. Sure, I have the knowledge and information to make my point. It is another thing to create a presentation that captures what I want to say. Flevy has saved me countless hours of preparation time that is much better spent with implementation that will actually save money for my clients."
– Ed Kemmerling, Senior Lean Transformation Expert at PMG
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead."
– Roderick Cameron, Founding Partner at SGFE Ltd
"As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value."
– David Coloma, Consulting Area Manager at Cynertia Consulting
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success."
– Bill Branson, Founder at Strategic Business Architects
SELECT CUSTOMERS
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes across the world—in over 130 countries.
Below is just a very small sample of our customer base.
Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.
Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.
Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.