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Benefits of Open Innovation in Business

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  • 0:00 Open Innovation
  • 0:39 Transparency
  • 1:38 Benefits
  • 3:42 Lesson Summary
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Lesson Transcript
Instructor: Artem Cheprasov

Artem has a doctor of veterinary medicine degree.

This lesson goes over a concept known as open innovation in business. First, you'll learn what it is. Then, you'll find out how it employs transparency in order to derive numerous benefits.

Open Innovation

Being open, whether being open about yourself to a potential mate or having an open-source software application, each has its many benefits. Companies have embraced this rather new wave of openness in society in many fields via open innovation as well. Open innovation (OI) refers to a company's process of opening up certain segments of itself and searching for solutions outside of its regular scope of business in order to develop a competitive edge. This lesson goes over the benefits of open innovation in business.

Transparency

One of the core elements of open innovation in business is the notion of transparency, or letting those in the outside world see into a particular part of a business. This doesn't mean that a company has to put all of its cards out on the table. In the context of open innovation, transparency often refers to sharing the right kind of information in order to gain a competitive edge.

For example, imagine that you own a research laboratory that is designing new gadgets people can use at home to improve their health. That's quite the tall order. You need engineers, medical personnel, researchers, marketers, and many other people to make this product work well. It could be that you eventually reach a roadblock of sorts and can no longer advance your product.

So you open up your research and development strategies to outside forces, including academia, government, and private sector industries of all sorts. Companies can then better assess what it is that you need to overcome your problem and thus help you develop a better product more efficiently.

Benefits

Now, you might be thinking something important. Why would you be transparent about your research and development processes in order to innovate out in the open? Wouldn't that give your competitors the edge instead? They'd get to see your super-secret processes, right?

Well, not necessarily. Your competitors are most likely researching some of the same things you are and encountering the same exact problems. By being open about your needs and processes, you actually derive a massive benefit that a company who doesn't have an open policy may never take advantage of.

For instance, with your research lab, you become transparent about the fact that you are trying to solve problem X but cannot do so. This allows you to forge relationships with outside providers who can help you; providers who not only can help you solve a problem, but also work to anticipate and negate future problems you may have never even thought about.

As for your competitors who keep an extremely tight lid on everything they do? Well they were stuck exactly like you. But they're now not only stuck, but also falling farther behind because they didn't engage in open innovation.

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