Ideation and problem solving have one thing in common - both are not easy to accomplish. When companies are in the process of innovating, they inevitably face challenges. Issues may appear in a product development line, or the future product may lack creative approaches, but regardless of the problem, if the issue is not resolved, the project has every chance to fail. Thus, to avoid risks, many companies review and practise external methods that are capable of accelerating product development beyond what their R&D lab can't achieve.
Due to high levels of market saturation in many industries, there is no excuse for products to be of poor quality or replicating one another. Thus, whilst still supporting R&D initiatives, businesses consider an external collaboration through crowdsourcing and other companies - a phenomenon known as open innovation (OI). Initially described by Henry Chesbrough in 2003, open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation, respectively.
Open innovation as a practice appeared when there was increasing demand for additional creative and problem-solving tools, in particular, as Chesbrough mentioned in his study, when a larger percentage of projects ended sitting in R&D labs unused, but still sucking on companies' budgets. Open innovation offers an objective insight into problems and product potential that companies may lack because they are unable to see the world through other people's eyes. The practice exists in different shapes and frameworks, but regardless of a chosen form - collaboration is always at the core, because 'most of the smart people don't work for you'- Chesbrough pointed out.
Crowdsourcing is one of the most popular approaches and it's essentially seeking feedback and solutions from the public. It is usually done within OI platforms, where businesses and professionals from all over the world are connected through one common digital space. Companies describe and submit problems they are struggling with, and interested experts then suggest ideas and possible solutions using their expertise. InnoCentive was one of the pioneers in providing open innovation platforms, and for over 15 years, the company has accepted problems in engineering, computer science, chemistry, life science, physical science, and business. The ways of submitting a problem and rewarding a solution depend on each platform, but InnoCentive, for example, uses a challenge-driven innovation methodology, where problems are presented as challenges. In the end, the process drives competition and eventually, there is a mutual benefit - a groundbreaking solution for the submitter and a generous reward for a contributor.
Many people question the approach, as there are risks of disclosing too much information with third parties, making IP vulnerable. It's recommended that companies have a strong IP management skillset and an IP protection strategy in place. According to Tyron Starding, CTO of Innography, 'IP creates a framework where both parties are able to make money – one with the know-how, and the other with the commercial path to market'- without IP, there is little-to-no legal protection, so open innovation can truly become a nightmare.