What Open Innovation Means and Why We Care

Henry Chesbrough, an author and professor who is widely credited with coining the term “Open Innovation”, believes that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions from other companies.  In addition, internal inventions not being used in a firm’s business should be taken outside the company (e.g. through licensing, joint ventures or spin-offs).  We would expand Dr. Chesbrough’s view to include not only inventions and processes, but also ideas and concepts.
Open Innovation has become an established process for introducing new products and technology to the marketplace.  Companies are reaching out – to everyone from the “average Joe” inventor to universities and labs to third party open innovations specialists – for the latest and greatest ideas, and they are seeing results.  In the past, major retailers and manufacturers have relied on their own in-house staff and close network of partners to bring new products to market.  The current trend, however, is to mine new products directly from the source: anyone with a great invention or product idea.
Most people can think of someone they know who is always coming up with some invention to solve a problem they face on a regular basis, whether it be as simple as a new kitchen or household gadget or something more complex.  The world is full of inventors, but often these innovators lack the resources or willingness to fully realize their visions.  Companies like Edison Nation, NineSigma, Innocentive, and others provide inventors with the opportunity to see their innovations commercialized by partnering with manufacturers, retailers and other entities that are seeking solutions or new product concepts.
Why do we care about this?  We truly believe that open innovation and the wisdom of the crowd allow for new opportunities and efficiencies.  We believe this because we have seen it first hand.  Not so long ago, most of the world’s most recognizable and successful companies refused to consider working with outside inventors.  Today the opposite is true.  These companies perceive value in asking the targeted resources and/or the public at large what they have to offer.  Obviously open innovation companies take a share of each deal that they close, however the upside for the inventor in these arrangements is significant.  We care because this is a relatively new and exciting way of doing business and driving revenue for these great companies.
We also believe that open innovation and the law of ideas present myriad fascinating legal and business and practical challenges.  It is those challenges that we intend to analyze and explore in this blog.  We welcome and invite your comments and questions, and are grateful for your readership.
Chris Clark and Katie Foss

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