In his book "Open Innovation: The New Imperative for Creating and Profiting from Technology”, Henry Chesbrough coined the term ‘‘open innovation,’’ where companies have shifted from closed innovation processes towards a more transparent way of innovating.

Companies that have gone for open innovation paradigm shift have done so on the realization that it’s possible to tap into the knowledge and expertise of excellent individuals outside your company, it is not necessary that you have to originate the research in order to profit from it, make best use of external ideas to add more customer value.

Businesses have benefited from open innovation, through quadruple helix relationships and complimentary interdependence among industry, academia, government and citizens have been four key strands that have sewn together the DNA for life changing innovative spinoffs.

For open innovation to succeed companies need to collaborate through partnerships and alliances, built on the company having a powerful open innovation champion and promoter who can engage other bright minds outside the organisation.

On the other hand, companies can use tools to interact with other professionals; tools can be embedded on company websites, or also outsource the service to firms who specialise in bridging the external ideas to the company.

Traditionally, companies have depended on closed innovation, but with each passing day mobility of highly educated is on the rise and that means that large amounts of knowledge will continue existing outside the organisation.

Top this up with the democratization of venture capital where good ideas can now be easily funded, developed and deployed outside the firm.

Open innovations should be looked as the endless frontier of developing new ideas whereas closed innovation is the hinterland of ideas in internal silos. Open innovation tells you that the potential is in the crowd that is big and brighter.

It sometimes may result to ideas and technologies that are not aligned with the strategy of the company, but the same can be out-licensed to collaborating organisations.

As companies engage in open innovation they should play the right strategic game in protecting their core intangible assets.

In open innovation the need for intellectual Property (IP) protection is paramount, the right IP schemes need to be developed, IP barriers need to be addressed based on a set of basic legal rules which will build a level of trust and contiguity between partners.

Open innovation is meant to be more distributed, more participatory and more decentralised.

Business models should determine what companies should strive to bring inside and at same time what they will allow for outflow.

For companies, open innovation provides a platform for value creation and value capture. It’s a lucrative way to innovate, because companies will reduce costs, accelerate time to market, increase differentiation in the market and create new revenue streams.

The writer is an IT professional.

The views expressed in this article are of the author.