EN
Demo

Blog & Articles

What Is Open Innovation? Forms, Examples and How to Start (2026)

Open innovation explained: where the term comes from, the three forms (outside-in, inside-out, coupled), real examples from P&G, NASA, LEGO and Tesla, and how a company starts.

Updated Alexander Wennerberg9 min read

Quick summary

Open innovation means a company uses ideas from outside its own walls as well as from inside, and lets its own unused ideas go out to others. The term was made popular by Henry Chesbrough in his 2003 book Open Innovation: The New Imperative for Creating and Profiting from Technology. His starting point was that companies “can and should use external ideas as well as internal ideas”.

In practice it covers three things: bringing knowledge in (from startups, suppliers, universities, customers or a crowd), taking knowledge out (licensing, spin-offs, sharing patents), and doing both together with partners. Most companies start with the first, and most start smaller than they think: one specific question, put to the people outside who are most likely to know the answer.

Where does the term come from?

Before Chesbrough, the standard model was what he called closed innovation: a company hires the best people, runs its own research lab, and brings its own inventions to market. It worked while knowledge was concentrated in a few large corporate labs.

By the 1990s it wasn’t. Skilled people moved between employers, venture capital funded startups that competed with the labs they came from, and universities produced research companies could license. Chesbrough argued that no company could rely on its own lab alone any more, and that ideas sitting unused inside a company could be worth more outside it.

He and Marcel Bogers later gave a tighter definition (2014): open innovation is “a distributed innovation process based on purposively managed knowledge flows across organizational boundaries”. The key word is managed. Open innovation is not a suggestion box on the website. It is a deliberate choice about which knowledge to bring in, which to send out, and how.

What are the three forms of open innovation?

Oliver Gassmann and Ellen Enkel, at the University of St. Gallen, described three core processes in 2004, based on a study of 124 companies. They are still the most common way to sort open innovation.

Form Direction What it looks like
Outside-in (inbound) Knowledge comes into the company Calls to startups, supplier challenges, university research, customer ideas, crowdsourcing contests, licensing technology in
Inside-out (outbound) Knowledge goes out of the company Licensing patents out, spin-offs, selling unused technology, opening patents to others
Coupled Both, with partners Joint development, alliances, consortia, co-creation with a few chosen partners

Outside-in is where most companies start, because it answers a problem they already have. Inside-out needs a portfolio of technology worth licensing. Coupled needs partners you trust enough to share with.

What does open innovation look like in practice?

These are the forms you meet most often, roughly from the most targeted to the most open:

  • A challenge to known partners. A specific question, sent to the suppliers, universities or startups you already work with or have picked out. Answers arrive in one place and a jury scores them.
  • An open call to startups. A brief published for any startup to answer, often with a pilot as the prize.
  • Supplier innovation. Asking suppliers how to make what you buy from them cheaper, lighter or greener. They often know more about the material than you do.
  • University partnerships. Funded research, student projects or a shared lab on a problem too early for a startup.
  • Crowdsourcing contests. A public challenge with a prize, open to anyone in the world.
  • Customer co-creation. Customers suggest and vote on products, and the company builds the best ones.
  • Licensing and patent sharing. Taking in technology someone else developed, or letting others use yours.
  • Corporate venturing and accelerators. Investing in or hosting startups to stay close to new technology.

Examples of open innovation

Procter & Gamble: Connect + Develop

P&G is the example most people quote. Its Connect + Develop programme set a goal of getting half of the company’s innovations from outside. In a 2006 Harvard Business Review article, Larry Huston and Nabil Sakkab reported that more than 35% of P&G’s new products in market had elements from outside the company, up from about 15% in 2000. Their argument: for every P&G researcher there were about 200 people outside who were just as good.

NASA: a solar flare forecast from a retired engineer

In 2009 NASA posted a challenge on InnoCentive’s open innovation platform: predict solar particle events that put astronauts at risk. Over 500 solvers from 53 countries took part, and the $30,000 award went to Bruce Cragin, a retired radio frequency engineer from New Hampshire. NASA reported that his method forecast event onset within a 24-hour window with 75% accuracy.

LEGO Ideas: fans propose, LEGO decides

On LEGO Ideas, fans submit designs for new sets. A design that gets 10,000 supporters is reviewed by LEGO, and if it goes into production, the creator earns 1% of net sales. LEGO keeps the decision; the community does the first filtering.

Tesla: patents opened up

In 2014 Elon Musk announced that Tesla would not start patent lawsuits against anyone who used its technology in good faith. It is the best-known recent example of inside-out open innovation: a company letting its technology go out to grow the market it sells into.

Open innovation vs closed innovation

Closed innovation Open innovation
Where ideas come from Your own people and lab Inside and outside
What happens to unused ideas They stay on the shelf They can be licensed or spun out
Where the expertise is The people you employ Also the people you can work with outside
The main risk Missing what others know Losing focus, or giving too much away

Most companies do both. The question is not whether to be open, but which problems are worth taking outside.

Open innovation vs employee innovation

Open innovation looks outward. Its close cousin, participative innovation, looks inward: ideas from your own employees, including the ones who never sit at a desk. The two work best together. Your people often know which problems are worth an open call, and outside partners often solve problems your people have already described. Our guide to the types of innovation shows where each fits.

How does a company start with open innovation?

Start with a problem, not a programme. Five steps that work for a first open call:

  1. Pick one problem you can describe in a sentence. “How could we cut the weight of our packaging by 20% without losing strength?” beats “We welcome innovative ideas”.
  2. Write the must-haves down. Budget range, timeline, technical limits. Put them in the form as questions, so every answer covers them.
  3. Choose who to ask. The partners most likely to know: specific startups, two or three suppliers, a university group. A targeted call to 30 well-chosen partners usually beats a public page that nobody sees.
  4. Set a closing date and a jury. Name an owner, a date and the people who will score the answers, on the same criteria.
  5. Answer everyone. Every partner who answered should hear back, including the ones who didn’t make it. The next call depends on it.

Our guide to writing an idea challenge covers the brief in more detail.

When the question is broad, and when it is specific

Two kinds of ask need two different approaches. A broad theme (“ideas for more sustainable logistics”) is best left open all the time and reviewed once a month. The problem there is filtering. A specific question with hard must-haves is better as a challenge with an owner and a closing date. The problem there is finding the right people, and if nobody answers, you need to go and look for them.

Where Hives.co fits

Hives.co runs open calls as an open innovation challenge: one brief out, answers in one simple form, and a jury that scores every answer on the same criteria. Partners see their challenge and nothing else in your hive. The same platform runs your employee ideas, so outside answers and inside ideas sit side by side.

When a specific challenge brings nothing in, Hives.co connects to Findest, our sister company, which searches about 250 million scientific papers and patents for the people and technologies that could answer it. The connection is on the Pro and Enterprise plans and needs a separate Findest subscription.

Hives.co is not a solver network or a startup database. If you need answers from people you have never met, a crowd platform such as Wazoku fits better. If you need dealflow and a partner database, look at a tool like Yoomap. Hives.co fits when you know whom to ask, or Findest can find them.

Frequently asked questions

What is open innovation in simple terms?

Open innovation means a company uses ideas from outside, such as startups, suppliers, universities and customers, as well as its own, and lets its unused ideas go out to others. Henry Chesbrough made the term popular in 2003.

What are the three types of open innovation?

Outside-in, where knowledge comes into the company; inside-out, where the company’s knowledge goes out through licensing or spin-offs; and coupled, where the company develops with partners in both directions. Gassmann and Enkel described the three in 2004.

What is an example of open innovation?

Procter & Gamble’s Connect + Develop programme, which by 2006 had elements from outside the company in more than 35% of its new products. Other well-known examples are NASA’s solar flare challenge on InnoCentive, LEGO Ideas and Tesla opening its patents in 2014.

What is the difference between open and closed innovation?

In closed innovation, a company relies on its own people and lab and keeps unused ideas on the shelf. In open innovation, it also takes in ideas from outside and lets unused ideas out through licensing or spin-offs. Most companies combine the two.

How do you start open innovation in a company?

Pick one specific problem, write down the must-haves, choose the partners most likely to know the answer, set a closing date and a jury, and answer everyone who replies. A targeted first call is easier to run and learn from than a public portal.

Is open innovation the same as crowdsourcing?

No. Crowdsourcing, a public challenge open to anyone, is one form of open innovation. Others include calls to chosen partners, supplier challenges, university research, licensing and joint development.

Sources

All checked on 10 November 2026.

More guides like this