^{The pace of new product introduction has increased in recent years within certain industries and companies are increasingly looking outside their own boundaries to obtain external expertise and ideas to help them comThe pace of new product introduction has increased in recent years within certain industries and companies are increasingly looking outside their own boundaries to obtain external expertise and ideas to help them compete. Compare and contrast the open innovation approach with the early supplier involvement approach to new product introduction. pete. Compare and contrast the open innovation approach with the early supplier involvement approach to new product introduction.}

Answer:

The demands on innovation management have changed dramatically in recent years. In the traditional understanding, the in-house R&D department is the most important source of innovation. An opening to the outside world to better meet the increased demands changes this classical understanding. In this blog post we shed light on the two approaches Open Innovation vs. Closed Innovation, which at first glance point in different directions.

The difference between Closed Innovation and Open Innovation

The distinction between open innovation and closed innovation is determined by the way in which innovation is created. While a closed innovation is made in a self-included company settings , efficiencies andaenvironment, Open Innovation incorporates external knowledge into innovation management.

Open and new Innovation in New Product Development

Open innovation means no longer relying solely on the company’s internal resources for innovation, but looking to external sources such as customers and suppliers to complement internal knowhow and capabilities. By doing so, firms have the opportunity to improve innovation performance.

For years, firms have sought to externally acquire technologies they lack, on an as-needed basis. This is called outsourcing, which is for instance common in the pharmaceutical industry. Top firms such as GlaxoSmithKline outsource a substantial amount of their new product research due to the huge costs involved in the new drug product discovery, development, regulatory approval, and launch.

However, open innovation goes much further: under an open innovation model, firms start with the understanding that much (if not most) of the knowledge they could use for new product ideas can be found outside the firm. This makes open innovation in new product development so important: the best ideas are in most cases not inside of the company, but in its environment, out there. And that makes sense: Not all the smart people work for us. Therefore, companies can rely on open innovation in new product development: they systematically and intentionally set out to acquire knowledge from external resources to complement their own internal resources and accelerate innovation.