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Forbes: How Open Innovation Can Reduce The Costs Of Innovation
- Mark Gold
- Sep 13, 2022
- 2 min read
Updated: Sep 28, 2022
Open innovation - collaborating with external companies toward innovation goals - offers tremendous potential for supporting just this type of innovation whilst also helping to tame the costs associated.
There are few organizations that don’t wish to innovate, but whilst most aspire to develop creative new products, services and processes, the evidence is mixed as to their ability to do so successfully. A big contributor to this gap is the cost of innovation.
A recent study from the Stanford Institute for Economic Policy Research highlighted the growing costs involved in innovation. The research shows that companies are investing far more than their historic peers to achieve the same results. Organizations today are devoting approximately 20 times as many people to R&D as their peers did in 1930, but the output from all of this endeavor is not rising in unison.
“It’s getting harder and harder to make new ideas, and the economy is more or less compensating for that,” the authors explain. “The only way we’ve been able to roughly maintain growth is to throw more and more scientists at it.”
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Open Innovation
Open innovation - collaborating with external companies toward innovation goals - offers tremendous potential for supporting just this type of innovation whilst also helping to tame the costs associated. Rather than inventing the wheel from scratch and in house each time a company wants to improve a product, service or process, organizations are partnering with a wide range of external parties such as startups and independent software vendors to tap into their ideas, insights and solutions.
As well as providing a broad range of ideas, perspectives and insights to tap into, there are also clear commercial advantages. By turning to open innovation approaches like running proof-of-concepts with startups and technology vendors, you’re reaching a large crowd of potential partners relatively easily. What’s more, you are usually only paying participants if a solution is found, thus giving you not only a practically risk-free source of innovation, but also one that has heavily reduced costs by not requiring you to fund the failures that are an inherent part of innovation.
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