Decoding Design

How 'open innovation' is evolving

How 'open innovation' is evolving

Posting in Design

Large companies are increasingly collaborating with outside engineers, designers, and inventors to develop new products--and are coming up with new strategies to manage this process.

Writing in the Financial Times, Louise Lucas discusses how "open innovation"--the concept of corporations partnering with outside engineers and designers to develop new products-- has evolved since the phrase was first coined by University of California, Berkeley professor Henry Chesbrough in 2002.

Partnering with outsiders can help corporations save money by sharing research and development costs and capitalizing on inventions that are already being prototyped. In the article, "Innovation Matchmakers" (published online on December 28), Lucas reports that consumer goods giant Procter & Gamble hopes to triple its sales from such research collaborations to $3 billion by 2015.

She goes on to focus on open-innovation brokers, such as NineSigma and Yet2.com, that help to introduce companies to inventors. Lucas reports that there are some 50-60 such firms in the world today. "Typically brokers get paid a transaction fee, for carrying out a search, and a royalty-type fee," Lucas explains.

The biggest danger is that some of the smaller innovation and design firms hired to work with larger corporations might share aspects their ideas with others, possibly leaking concepts to competitors. Unilever, another consumer-goods behemoth, combats this threat by searching anonymously for open-innovation partners, then manages the relationships via third parties.

In other words, open innovation might make it tough to keep design secrets under wraps, naturally. But the practice might just prompt large companies to develop products and services faster to compete nimbly as corporations and smaller innovation firms increasingly team up. And large companies will also likely to continue to devise imaginative ways of managing the open innovation process itself.

Image: thinkpublic/Flickr

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Reena Jana

Contributing Editor

Contributing Editor Reena Jana has written for the New York Times, Wired, Harvard Business Review online, Fast Company, Architectural Record, Artforum, Time Out New York, Harper's Bazaar, and GQ. Previously, she was the innovation department editor at BusinessWeek. She holds degrees from Columbia University and Barnard College. Follow her on Twitter. Disclosure