Framework library · Innovation and product

Open innovation framework

Open innovation treats the boundary of the firm as porous. Useful ideas and technology can come in from universities, suppliers, start-ups and customers, and ideas the business will not use itself can go out through licences, spin-offs and partners. The discipline is in the terms: every flow needs a clear account of what is given, what is gained and who owns the result, or openness gives value away.

LevelIntermediate
TimeTwo hours to build the register; a quarterly review to keep it current
Who to involveWhoever runs research or innovation, with legal for the ownership terms and the business owners who will use what comes in.
Also calledopen innovation, outside-in innovation, inside-out innovation, coupled innovation, inbound and outbound innovation

Use it when

  • The business depends on technology it cannot develop alone fast enough, such as automation, sensing or AI models.
  • You hold patents, data or know-how that you do not use and could earn from or share.
  • Several teams are running partnerships, challenges and licences separately and nobody can see them together.
  • You are setting up a joint development and need to agree, before work starts, who owns what it produces.

Avoid it when

  • The capability is core to how you compete and you can build it. Keep it inside; use build, buy or partner to test that judgement.
  • You are choosing one partner for one deal. Use a partnership go or no-go assessment for that decision.
  • Nobody can absorb what comes in. Outside ideas need an internal owner with time and budget, or they stay in the laboratory.

How to run it

  1. List every flow across the boundary

    Research partnerships, licences in and out, challenges, venture investments, spin-offs, supplier co-development and open platforms. Include the informal ones.

  2. Name the direction of each

    Outside-in brings knowledge in. Inside-out takes it out to earn from it. Coupled develops it jointly with a partner, with flows both ways.

  3. Write what each side gives and gets

    Data, staff time, test sites, money, licences, access to customers. If you cannot say what you get, ask why the relationship exists.

  4. Record who owns the result

    Ownership of what is produced together, and any licence back. Agree it before joint work starts; afterwards it is much harder.

  5. Estimate the value and name an owner

    A rough figure for what each flow is worth to the business over three years, and one person who answers for it.

  6. Review the portfolio as a whole

    Check the balance between directions, the share of value in deals not yet agreed, and any relationship without terms.

Work through it

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Mistakes to avoid

  • Starting joint work before ownership is agreed, then arguing over the results once they have value.
  • Running challenges and hackathons that produce ideas nobody inside is funded to take forward.
  • Licensing out technology that turns out to be a competitor's missing piece. Check who would buy it and why.
  • Counting every supplier meeting as open innovation. The register should hold flows of knowledge with terms, not contacts.

Where it comes from

Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business School Press, 2003), which set out the model and contrasted it with closed, in-house research. Oliver Gassmann and Ellen Enkel distinguished outside-in, inside-out and coupled processes in "Towards a Theory of Open Innovation: Three Core Process Archetypes" (R&D Management Conference, Lisbon, 2004). Source.

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