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.
Different from the traditional R&D business model that keeps all the information internal, companies who embrace Open Innovation let the door open and ask for external ideas to solve their current business challenges more efficiently.
According to the article Could Open Innovation save the world? (Fitzgerald, 2020), there are few aspects that Open Innovation can bring benefits to the company:
However, not merely more companies are participating in the Open Innovation programme because the payoff is not always clear and also it is difficult for companies to identify which business solutions can create value for all the stakeholders. The author in the article suggested that companies should focus on the overall ROI created by open innovation rather than the individual return of each solution.
Responding to the title of the article, can Open Innovation really save the world” our answer might be yes, but the problem lies in how to make it happen.
In the Upskilling Lab 4.0 project, we will develop a robust model of collaboration between startups and corporates, the skill development network to make more Open Innovation and collaboration happen.
European Startup Network