OPEN INNOVATION AND

TECHNOLOGY TRANSFER
 INTRODUCTION TO OPEN INNOVATION

Open innovation has been defined as ‘. . . the use of purposive inflows and outflows of
knowledge to accelerate internal innovation, and expand the markets for external use of
innovation, respectively’ (Chesbrough et al., 2006).

Open innovation can be defined as «systematically encouraging and exploring a wide range of
internal and external sources for innovation opportunities, consciously integrating that
exploration with firm capabilities and resources, and broadly exploiting those opportunities
through multiple channels.» (West & Gallagher, 2005).

Chesbrough connected the processes of acquiring external knowledge and exploiting internal
knowledge externally by placing them both under the open innovation umbrella with the labels
inbound and outbound open innovation.
 INTRODUCTION TO OPEN INNOVATION
Inbound open innovation refers to internal use of external knowledge, while outbound open
innovation refers to external exploitation of internal knowledge.

Inbound open innovation: The company looks beyond its boundaries to bring in insights,
technologies, or inventions from universities, startups, suppliers, customers, or even competitors.

Outbound open innovation: The company shares or sells its internally developed technologies
with other firms or industries, even if it doesn’t use them internally.

Many successful firms use both inbound and outbound approaches simultaneously which have
been known as coupled open innovation.
 INTRODUCTION TO OPEN INNOVATION
Companies use different modes for open innovation. Partnerships with external parties
(alliances, joint ventures, joint development etc.); acquiring/selling knowledge (contract R&D,
purchasing, licensing) are used to source external knowledge.

While these modes are more common, open innovation has been increasingly realized through
corporate venturing (equity investments in university spin-offs or in venture capital investment
funds). Companies also increasingly use venturing to look for external partners in order to
commercialize innovations that are not used internally (divestments, spinning out, spinning off).
Chesbrough’s open innovation approach
Chesbrough’s open innovation approach
 THE PARADOX OF OPENNESS

To innovate, firms often need to draw from, and collaborate with, a large number of actors
from outside their organization.

At the same time, firms need also to be focused on capturing the returns from their innovative
ideas.

This gives rise to a paradox of openness – the creation of innovations often requires openness,
but the commercialization of innovations requires protection.
Open innovation process is related to the ‘how to do it’ question. Open innovation requires
managers to make new decisions in developing and exploiting innovation activities. When,
how, with whom, with what purpose, and in what way should they cooperate with outside
parties? The outside players range from suppliers, customers, and competitors, to research
institutions and organizations in very different industries that either have solutions that can
improve the company’s innovations or that can exploit solutions the company has developed.

These collaborations may last for a significant period (e.g., when jointly developing a new
technology), are likely to be repeated, involve different groups of organizations, can have
different initiators (e.g., the supplier invites the customer to explore applications of a new
technology or the customer invites the supplier to participate in a project to reduce waste),
require different roles of the organization (e.g., project leader versus project participant), and
include different departments (going beyond R&D and marketing by including production,
logistics, and even finance as well).
 PERSPECTIVES TO OPEN INNOVATION
The spatial perspective leads to research on the globalization of innovation. Since research,
technology and product development have become more global in a flat world, open innovation
has become easier.

Access to resources is one of the main drivers of R&D’s internationalization. Prominent examples
of such R&D are Norvatis’s research in New Jersey, BMW’s design center in Palo
Alto and Hitachi’s research lab in Dublin.

The structural perspective shows that work division has increased in innovation. There is
a strong trend toward more R&D outsourcing and alliances.
Drivers of this trend are cost reduction and greater specialization due to more complex
technologies and product systems.

Open innovation approaches compensate for central R&D units by not just focusing on short-
term, customer-oriented business unit research activities.
 PERSPECTIVES TO OPEN INNOVATION
The user perspective. Users are integrated into the innovation process to utilize the freedom
available in its early phases in order to understand potential customers’ latent requirements and
to integrate users’ hidden application knowledge.

The supplier perspective. The downstream side of innovation has been less intensively
researched but has a strong impact on innovation. Suppliers’ early integration into the
innovation process can significantly increase innovation performance in most industries.

The leveraging perspective. Most research and practice are oriented toward the existing market
and business. Existing research competencies and intellectual property’s multiplication into new
market fields have often been neglected, despite their potential to create new revenue streams.
The involvement of business model thinking seems to be crucial.
 PERSPECTIVES TO OPEN INNOVATION
The process perspective. There are three core processes in opening up the innovation process:
outside-in, inside-out and coupled. Sometimes, these processes complement one another,
although the dominance of the outside-in process is usually observed.

The tool perspective. Opening up the innovation process requires a set of instruments. Those
tools, for example, enable customers to create or configure their own product with tools kits or
enable companies to integrate external problem solvers or idea creators via websites. Examples
are ‘The Sims’ with which an online community of gamers develops addon packages, or
Swarosvski, whose customers can create their own figures.
 PERSPECTIVES TO OPEN INNOVATION
The institutional perspective. Open innovation can be considered a private-collective innovation
model. The free revealing of inventions, findings, discoveries and knowledge is a defining
characteristic of the open innovation model. Spillovers of proprietary knowledge occur regularly
by means of compensation (e.g., licensing) or without compensation (e.g., most open source
initiatives).

The cultural perspective. Opening up the innovation process starts with a mindset. Creating a
culture that values outside competence and know-how is crucial for open innovation practice.

This culture is influenced by many factors: besides being influenced by the values of the
company,
it is also influenced by concrete artefacts such as incentive systems, management information
systems, communication platforms, project decision criteria, supplier evaluation lists and
its handling and so on.
 FUTURE OF OPEN INNOVATION

The opening up of the innovation process has become increasingly popular in leading industries.
The principle of open innovation has, for example, penetrated pioneering industries such as
software, electronics, telecom, pharma and biotech, while the software and electronics industries
are progressively building on the open innovation trend.

In software, the open source trend has been so strong that even previous, organizations such as
SAP and Microsoft have started to build decentralized research labs on university campuses to
increase their absorptive capacity for outside-in innovation processes.

Prominent examples in the electronic industry are Philips’ open innovation park, Xerox’s Palo
Alto Research Center, Siemens’ open innovation program and IBM’s open source initiatives.
Today, many electronic suppliers drive open innovation on a strategic level.
 FUTURE OF OPEN INNOVATION
It is clear that open innovation mainly started in the high-tech sector, but there is a new trend for
the low-tech sector to exploit the potentials of opening up their innovation process. Open
innovation’s management innovation has spread to different sectors, such as machinery,
turbines, medical tools, fast moving consumer goods, food, architecture and logistics.

Modern technology is becoming so complex that even large firms cannot afford to develop a new
product alone. Consequently, there is a strong trend toward R&D partnerships and alliances.
Vertical alliances are complemented by horizontal alliances and cross-industry partnerships.
However, earlier research on R&D partnerships and alliances focused primarily on cost-saving
and transaction cost economizing. Recent research, however, focuses on how these inter-
organizational relationships can enhance value creation.
 FUTURE OF OPEN INNOVATION
Currently, universities are still largely financed by public money, but in many regions of the
world, this financing will decrease despite soothing public statements. Large companies like ABB,
Daimler, Siemens and GE have already reduced their corporate research activities or have
increased thirdparty financing. This will force all players in the innovation game to cooperate
even further. ,

As AI continues to evolve at speed, its influence is reshaping the future of open innovation. The
areas of future collaboration are the same in years to come as they are now – namely AI,
cybersecurity and sustainability.
OPEN INNOVATION REPORT 2025
(SOPRA STERIA NEXT)
OPEN INNOVATION REPORT 2025
(SOPRA STERIA NEXT)
 OPEN INNOVATION REPORT 2025
(SOPRA STERIA NEXT)
Defence & Homeland Security (DHS) and Telecommunications have the most
cybersecurity collaborations. Financial Services and Media & Entertainment industries
have the most AI collaborations. Meanwhile Financial Services and DHS have
collaborated the most in sustainability.

By country, Switzerland, Denmark and Norway have the highest amount of AI