The PDMA Handbook of Innovation and New Product Development, 4th Edition

CHAPTER FIFTEEN NAVIGATING OPEN INNOVATION

Rebecca J. Slotegraaf and Girish Mallapragada

15.1 Introduction

Innovation is an essential engine for corporate growth. By investing in new ideas, companies can explore new markets and create opportunities for increasing shareholder value. Historically, much of corporate innovation has occurred within the company’s boundaries, and a vast amount of literature has documented the various processes and practices that enable company-driven innovation (e.g., Cooper and Kleinschmidt 1995; Griffin and Hauser 1996; Moorman and Slotegraaf 1999). As a form of innovation that has garnered much attention, open innovation (Chesbrough 2003) refers to a hybrid innovation model wherein the company cedes ownership of some innovation processes to an outside stakeholder, such as a channel partner or a customer. While it generates coordination challenges compared to the traditional company-driven model, open innovation can resolve other challenges that a company-centric model cannot. Furthermore, by democratizing innovation through an open approach, companies can better navigate an uncertain future by farming out the innovation process to important stakeholders (Slotegraaf 2012).

In this chapter, we begin by briefly explaining the evolution of open innovation before providing a framework that delineates the value of engaging with customers and competitors ...