Open Innovation is a popular buzzword these days in the business and product development world. The concept is changing the way firms approach product design and is opening the door to independent innovators and inventors to get involved with the process. And with that comes a whole new range of opportunities for designers to get paid for their inventions.
What is Open Innovation?
The term ‘open innovation’ was coined by academic and author Henry Chesbrough in 2003, but the concept is one which has been around for a while. Chesbrough gives the following definition for open innovation:
“Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology”
So what does that mean? The basic idea is that companies should be open to ideas, research, and knowledge not just from their own in-house people, but from the broader community. In the ideal open innovation context, this flow of information and inspiration is supposed to go both ways: on the one hand, firms are open to input from consumers or independent innovators or other external forces, while, on the other hand, they license out or otherwise release their own internally generated innovations back out into the market.
Open innovation is quite closely related to other emerging trends, like crowdsourcing, crowdfunding, and the open source movement. According to proponents of open innovation, it is in the self-interest of firms to take advantage of the widely distributed system of knowledge that extends far beyond the boundaries of any single company or institution. With the networking capacities of digital technology, it is now completely feasible for companies to do this.
Open innovation takes many forms. From crowdsourcing design contests to collaborative product design to taking submissions from the public, there are a variety of avenues for firms to open themselves up to outside ideas. For inventors, one of the most exciting ways is through product licensing.
Why Companies Want to Work With Independent Product Developers
Product licensing is nothing new. It has always been a viable strategy for inventors and product innovators to monetize their ideas. This is a classic example of open innovation at work: a mutually beneficial relationship whereby fresh, outside ideas come into a company and bring in fresh revenues with them.
The occasional dose of outside ideas can be of great value to even well-established firms, and companies are beginning to take note. In part, this is because of the institutional nature of firms and the complexity inherent to any large organization. Bigger companies simply tend to move a bit slower. Companies also tend to develop their own systems and ways of approaching problems. There’s nothing wrong with this — after all, firms have a lot of tasks that they need to handle, and a coherent set of practices is essential. They have to worry about distribution, marketing, and manufacturing, not to mention managing the relationships within their organization.
These are all tasks that you, the independent innovator, do not have on your plate. That leaves you free to focus on coming up with new ideas — great ideas, sometimes, that other companies may not have thought of as they were busy handling all the other details. A fresh perspective is needed from time to time to revitalize any operation.
There are a number of benefits associated with open innovation that are turning companies on to the paradigm. These include:
- Cheaper R&D costs
- Increased productivity
- Conceptual diversity
- Incorporation of customers into product development process
How Innovators Can Take Advantage of Open Innovation
The increasing popularity of open innovation has, in some respects, improved the prospects of product licensing agreements for independent product designers. While product licensing is nothing new, digital technology and the adapting marketplace have created a more welcoming and efficient environment for inventors looking to license their products.
As companies embrace open innovation, it is becoming easier to approach them regarding potential product licensing. Companies are increasingly inviting inventors to submit their ideas online. This is a great benefit for innovators, as it evens the playing field and helps to eliminate the kinds of personal biases on behalf of the licensing company that might come into play when you had to meet companies in person or even over the phone. You don’t have to be a slick marketeer anymore, and it doesn’t matter what you look like or how you speak.
You’re still going to want to establish a personal connection with someone on the other end of the online submission form, though. Just like with job applications, it’s likely that this company is receiving a lot of submissions through their online system, and so it’s worthwhile to make yourself stand out. In the best case scenario, you can get an ally on the inside who will advocate for your idea within the company. Else you might hope to get some feedback on your idea, or at the very least a confirmation that your submission has been received.
When you submit your idea to a company online, make sure to include a note introducing yourself and the name of your company. Include contact information, and ask if they could get in touch to let you know that your submission was seen and read. You’ve then opened the door to establishing a relationship with an actual human being.
Using Crowdfunding to Prove Demand Exists
The biggest challenge when it comes to licensing your invention is proving that market demand exists for your product. Firms are risk averse and are only interested in investing in ideas which they believe will make them money. Proving that demand exists, though, can be a bit of a tricky thing — especially if you have a limited budget to be spending on things like market research.
This is where you can take advantage of another innovation paradigm that has emerged from the advent of digital technology. A successful crowdfunding campaign will not only bring in some valuable capital to help you develop your idea and pitch it to licensees, it will also help you prove to those licensees that there is an enthusiastic audience for your product. This is exactly what they want to hear. While running a crowdfunding campaign can be labor intensive itself, the combined benefits of securing some funding and demonstrating market demand make it a strategy that is well worth considering.
Companies Are Embracing Open Innovation
As companies continue to embrace open innovation, the opportunities for independent inventors to get their ideas picked up and put on store shelves will continue to grow. The key to success is identifying which firms are adopting the open innovation paradigm and are excited to work with external innovators. That means networking and building relationships with people and companies working in the field you’re interested in innovating within.
Just like the invention process itself, product licensing is a numbers game. Don’t expect that ever submission you make will be picked up, and don’t be discouraged by rejection. You just have to get yourself out there. Start submitting ideas, building relationships, and developing connections in the industry. If your ideas are good, eventually you’ll connect with a firm excited about working with outside ideas people. And once you’ve gotten an idea accepted the first time, the second times becomes that much easier.
Whether you are planning on taking advantage of open innovation and licensing your invention to larger companies or are interested in bringing your product to market yourself, Cad Crowd has a full range of design services available to help you meet your goals. From 3D modeling to packaging design and even contract manufacturing, Cad Crowd is your one-stop-shop for product design and development services.
We also help companies looking to take advantage of open innovation through crowdsourced design competitions. Find out more about how Cad Crowd can help you!