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Open innovation

Concept · Innovation

Open innovation

Using knowledge, technologies, and routes to market beyond a firm’s internal R&D boundary

Useful ideas can cross the firm’s boundary in both directions.

Open innovation deliberately uses knowledge across organizational boundaries and considers external as well as internal routes to market. Inbound ideas, collaboration and outbound licensing or partnering perform different work. Openness does not require giving every asset away.

In one sentence

Open innovation is the deliberate use of external knowledge and internal and external commercialization paths to advance a firm’s technologies and business.

The decision is which capability gap an external contribution can address and how the knowledge will become a usable offer. Specify rights, evaluation, integration, responsibilities and the contributor’s incentive. A popular submission is an input rather than a completed product.

Internal expertise remains important. The organization needs to understand what the input can do, adapt it and deliver responsibly. Accepting outside ideas without those capabilities can create an unmanageable queue or poorly supported products.

Knowledge flows

Identify where knowledge originates and how it will be turned into a useful offer.

Inbound search

Bring external ideas, research, components, or user contributions into internal development.

01
Bring external ideas, research, components, or user contributions into internal development.
Collaborative creation

Develop solutions with customers, universities, suppliers, developers, or a community.

02
Outbound pathways

License, spin out, standardize, or partner to reach markets the firm cannot serve alone.

03

A continuum, not a switch

Open innovation broadens where knowledge can originate and how it reaches market while retaining deliberate governance and internal capability.

LowClosed internal pipelineHighManaged knowledge flow across boundaries
“Openness creates options for knowledge flows; it does not mean giving everything away.”

Why it matters

The Garwood Center credits Chesbrough’s inflow and outflow paradigm and stresses the work of integration and delivery. The source defines the approach, rather than proving outside knowledge is always better or cheaper.

The mechanism expands the available search and commercialization paths while adding evaluation and coordination work. A partner can offer a capability the firm lacks and need a credible return. An unused internal idea may serve another market through a suitable arrangement.

Popularity, novelty and contributor enthusiasm can diverge from safety, rights, capacity or viable demand. A successful collaboration can also reflect the internal work around it. Compare the completed outcome and responsibilities rather than count submissions as innovation output.

Real-world examples

The same concept shows up in different ways across industries.

LEGOQualification leads to a separate review
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LEGO’s help answer says a supporter milestone sends an idea into review and requires further information and legal documents. Qualification does not guarantee production. The account distinguishes external input from the organization’s product decision without supplying a conversion-rate estimate.

LEGO IdeasA popular proposal can be declined
→

LEGO Ideas’ official Trojan Horse comments document a proposal that qualified for review and was subsequently rejected. The actor’s decision is the organization’s production choice after receiving outside input. The review description identifies considerations such as fit, licensing, capacity, quality and feasibility, while not assigning a weight to each. Popularity and review eligibility were therefore insufficient to guarantee production. The operating conflict is between inviting contributions and maintaining responsibility for an offer the organization can deliver. A proposal can reveal a customer interest while requiring rights, manufacturing or support work that its supporters have not supplied. The source does not show which consideration determined this rejection, so no missing capability is invented as its definitive cause. For a manager, define the intake promise separately from the product decision: what information will be considered, who can authorize production and what contributors should expect if the idea cannot proceed? An open route can improve the set of possibilities while leaving evaluation and execution with the firm. This actual rejection prevents a success-only account of external innovation.

When it breaks

For a hypothetical community proposal, strong demand exists while required rights are unavailable and delivery would exceed capacity. Open input identifies an interest; it does not remove the constraints. Resolve the viable path before committing to release.

A knowledge-transfer arrangement can fail because neither party owns integration or support. Clarify who completes those functions and how value is shared. More inbound activity cannot repair an undefined handoff.

Key takeaways

  1. 01

    Design inbound and outbound knowledge paths around a real capability gap.

  2. 02

    Set ownership, evaluation, integration, and value-sharing rules in advance.

  3. 03

    Use external input selectively and retain enough internal expertise to act on it.

Sources

  1. What is Open Innovation · UC Berkeley Haas Garwood Center. Opening definition; The Era of Open Innovation abstract and integration requirement
  2. What happens to my product idea after I reach 10,000 supporters? · LEGO service. Primary indexed full help answer; qualification, information/legal documents and review
  3. Trojan Horse: official review comments · LEGO Ideas. May 2, 2024 official rejection and review factors; June 7, 2023 qualification