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Open and Closed Innovation: what are the differences?

When we think of Open Innovation, it is tempting to associate it with the opposite of Closed Innovation, the traditional one, generated by our own efforts in organizations, without the aid of external entities and agents. Do not follow this path. In fact, the best thing to do is to think of these two concepts […]

When we think of Open Innovation, it is tempting to associate it with the opposite of Closed Innovation, the traditional one, generated by our own efforts in organizations, without the aid of external entities and agents. Do not follow this path.

In fact, the best thing to do is to think of these two concepts as complementary. The opening of the business to external innovations comes to broaden the horizons, provide more means to continue developing and competing in a market that demands more and more inventiveness and disruption.

About this we will reflect throughout this article. Keep reading to understand what sets open and closed innovation strategies and where their complementing points lie!

What is Open Innovation?

Let us begin by recalling that the term Open Innovation was coined by Henry Chesbrough, a researcher at the University of California. In analyzing the activities of industries at the turn of the century, Chesbrough realized that the most disruptive, those that generated products really off the curve, were those that sought inspiration and help from outside agents.

“Open innovation presupposes that companies can and should use external ideas as well as internal paths as they seek to move forward in their innovation process. It is the use of intentional inflows and outflows of knowledge to accelerate internal innovation and expand markets for external use, “the researcher wrote.

What is Closed Innovation?

If we take a very careful look at the subject, we will see that Closed Innovation, as a concept, is practically impossible. It will always be necessary to look outside, seek external references and knowledge.

Therefore, it is better to talk about Closed Innovation strategy. So we have a good paradigm, because what is strategic has to do with choices.

A company that chooses to keep its innovation efforts closed has its projects developed only within clearly defined boundaries. Know-how, technology, processes and intellectual property remain under one’s control; without collaboration with other market players or universities, for example.

In short, according to Professor Henry Chesbrough himself, Closed Innovation is based on the view that innovations are developed internally. From the generation of ideas to development and marketing, the process occurs exclusively within the company.

The scientist points out that this concept refers to the “traditional model of vertical integration, in which internal activities lead to products and services generated at home and then distributed.”

Where are the differences between Open Innovation and Closed Innovation?

Recalling the concepts, we can now point out at which points Open Innovation is different from Closed Innovation. Check out below.

Open Innovation seeks the best, wherever it is – knowledge-aware import and export to improve and accelerate its own innovations. It promotes the exchange of idea and experience beyond the limits of the company. 

Organizations leverage their best talent and seek reinforcements in the marketplace (in universities, consultancies, business partners, etc.). They generate maximum use of internal and external ideas. The leadership of the competition is not about offering the best ideas, but about making the most of the ideas that come up. The north is developing a better business model, not being the first in the market to innovate.

Closed Innovation is based on the conviction that solutions can emerge from the available internal resources. The ideas usually come from project managers and their leaders. Because of these characteristics, it is necessary to ensure the hiring and retention of the best talent (researchers, technicians, specialists, etc.), which is often very expensive. There is a strong belief that to lead the competition, it is necessary to offer the best ideas. The winner is the one who brings innovation to the market first.

Which of the two strategies is best for your company?

As you have seen, the place of Closed Innovation is within the company itself. It is a strategy that places very high demands on employees, so it is necessary to hire highly qualified employees and protect intellectual property accordingly.

Open Innovation is more linked to collaboration, often coming from outside the company.

It is up to each organization, within its prerogatives, to decide which of the models is most adherent to it. What the experts on the subject – including Professor Henry Chesbrough himself – recommend is the combination of the two strategies.

Innovation activities of external actors, such as clients, suppliers, universities or business partners, should be seen as a complement to the organization’s own efforts. The basic prerequisite for this is the structuring of stable innovation processes in order to integrate facilitate the collaboration and absorb the results obtained.

MJV Innovation Lab

This initiative of open innovation has as main objective to connect the university to the market, from the administration of the human capital. With it, you can search for solutions that provide opportunities for more than 52,000 community members, including teachers, students, researchers and other employees, generating revenue for investors.

The Innovation Lab, a partnership between MJV and UFRJ, was created within the University’s Technology Park to develop projects in the areas of Design Thinking, Gamification, Big Data / Analytics, Agile Methodology, Digital Strategy and Internet of Things.

We are at your disposal to help your company implement an open innovation strategy. Through the MJV Innovation Lab, we can assist you in this effort.

Contact us and see how we can help!

Now that you already know the differences between Open Innovation and Closed Innovation, how about learning how to measure the results of the innovation process? Does it work for you? If so, download our e-book Innovation Metrics: your company’s compass towards innovation now!