Twenty Years of Open Innovation

Two decades of open innovation have shown that the biggest barriers are inside, not outside, the organization.

Reading Time: 6 min 


Permissions and PDF

Carolyn Geason-Beissel/MIT SMR

Twenty years ago, I introduced the concept of open innovation in an MIT Sloan Management Review article. Where do we stand two decades later? We’ve seen some companies enjoy great success with this approach and witnessed the difficulties of others. One surprising insight 20 years on is that the biggest barriers to successful open innovation are inside, not outside, the organization.

Open innovation emphasizes drawing on external resources — such as customers, startups, crowdsourcing platforms, and universities — to develop ideas for new products and services. More formally, it can be defined as a distributed innovation process involving knowledge flows across organizational boundaries, for both pecuniary and non-pecuniary reasons. To innovate, we need to move knowledge from where it resides to where it is needed. Often, this means moving people so that knowledgeable workers can collaborate together to create something new. At other times, it might require new workflows and structures to create incentives and procedures to move that knowledge. To achieve success with open innovation, organizations need the ability to mobilize and access their knowledge across all of their silos — whether functional, departmental, or geographic — to design, develop, and deliver the innovations that their customers want.

There’s much to celebrate about two decades of open innovation. Many studies have found evidence that it improves financial performance.1 National studies employing the Community Innovation Survey have found that organizations with more external sources of knowledge achieve better innovation performance than those with fewer sources, controlling for other factors.2 One survey of 125 large companies also found that organizations that employed open innovation were getting better innovation results.3

Despite this success, much remains to be done. For open innovation to succeed, it is not enough to identify possible useful sources of knowledge, access those sources, negotiate possible collaborations with them, and then incorporate that new knowledge into new innovative products and services. More in-depth studies find, in fact, that the biggest problems that organizations face in using open innovation often come from inside, rather than outside, their own walls. Collaborating and coordinating with external actors in open innovation often requires changes to organizational workflows and can trigger defensive responses from internal innovators.

A recent paper clearly documented the internal resistance to open innovation.



1. J. Du, B. Leten, and W. Vanhaverbeke, “Managing Open Innovation Projects With Science-Based and Market-Based Partners,” Research Policy 43, no. 5 (June 2014): 828-840; K. Laursen and A. Salter, “Open for Innovation: The Role of Openness in Explaining Innovation Performance Among U.K. Manufacturing Firms,” Strategic Management Journal 27, no. 2 (February 2006): 131-150; H. Chesbrough and S. Brunswicker, “A Fad or a Phenomenon?: The Adoption of Open Innovation Practices in Large Firms,” Research-Technology Management 57, no. 2 (March-April 2014): 16-25; and Q. Lu and H. Chesbrough, “Measuring Open Innovation Practices Through Topic Modelling: Revisiting Their Impact on Firm Financial Performance,” Technovation 114 (2022): 1-17.

2. See, for example, Laursen and Salter, “Open for Innovation,” 131-150.

3. Chesbrough and Brunswicker, “A Fad or a Phenomenon?” 16-25.

4. H. Lifshitz-Assaf, “Dismantling Knowledge Boundaries at NASA: The Critical Role of Professional Identity in Open Innovation,” Administrative Science Quarterly 63, no. 4 (December 2018): 746-782.

5. For an extended discussion of Intel’s NBI process, see H. Chesbrough, “Open Innovation Results: Going Beyond the Hype and Getting Down to Business” (Oxford, U.K.: Oxford University Press, 2019).

6. For a detailed description of Rendanheyi, see G. Hamel and M. Zanini, “Haier: Everyone an Entrepreneur,” ch. 5 in “Humanocracy: Creating Organizations as Amazing as the People Inside Them” (Boston: Harvard Business Review Press, 2020).

Reprint #:


More Like This

Add a comment

You must to post a comment.

First time here? Sign up for a free account: Comment on articles and get access to many more articles.

Comment (1)
Michael Smith
Interesting that in much of the past and current discussions within the DOD on modernization and the need to gain user inputs early, there has been little, if any, discussion of Open Innovation.