Industry 4.0 enabled by the Internet of Things (IoT) allows for the integration of people, assets and applications within a company. It also contributes to the integration of a company with its wider ecosystem, which probably consists of customers, subcontractors, suppliers and R&D partners.
Major trends that encourage Industry 4.0 are shorter product and service lifecycles and therefore the need to speed up time to market. Thus, the need for innovation will be increased. It might bring organisations to their limit in terms of innovation capacity and capabilities internally. Open Innovation can be an approach to master the innovation game and to stay competitive in fast-changing markets.
The term Open Innovation was coined by Henry Chesbrough, a professor at UC Berkeley`s Haas Business School. In his definition it is “the use of purposive inflows and outflows of knowledge to accelerate internal innovation and to expand the markets for external use of innovation”. This is based on the acknowledgement that knowledge and experience within an organisation is limited and that internal regulations/processes might even cause further limitations to evoke innovation.
The most prominent challenge that comes along with Open Innovation is how to handle the intellectual property (IP). The collaboration with third parties in innovation could create conflicts about IP ownership and raise the question of which part of the innovation will be owned by whom.
Thus, it is a good idea to have a contractual regulation between the organisations for the processes of open and connected innovation fostered by Industry 4.0. There could be also a framework agreement between the organisations, that will set the rules under which joint innovation will take place.