The term can be broadly defined as the process by which an organization seeks ideas and expertise outside company walls. Under this concept, it is argued that a company cannot and should not rely solely on its own research, but will benefit by engaging individuals outside the company to further innovation and business goals. Additionally, under this concept, businesses also look for opportunities outside of the company for internal inventions not used within the firm’s business. Open innovation is the opposite of “closed innovation,” the term broadly used to define companies that make limited use of external knowledge and limit the use of internal knowledge outside the company.
Additionally, research has found that companies that do best in a tough economy are those that innovate and are open to outside ideas. The only way to do this affordably is through open innovation. Now more than ever, companies need to innovate and do it more efficiently by focusing on the most efficient use of corporate resources. It enables companies to have their employees focus on the most important tasks while outsourcing for additional ideas and input. Open Innovation also enables a company to do more with its current budget or cut budgets without compromising innovation. It can also lead to more innovative products that can be brought to market more quickly than in using traditional methods.