Open innovation is a management concept in which companies collaborate with external sources, such as startups, universities, research centers, or even customers, to develop new solutions.
Unlike traditional closed innovation (where all development happens in-house), open innovation draws on both internal and external ideas to accelerate progress and create better products and services. The term was coined in 2003 by Professor Henry Chesbrough of the University of California, Berkeley, a leading authority on the subject.
In this complete article, you will learn what open innovation is, how it differs from closed innovation, its main benefits for companies, practical examples, and how to implement this strategy in your organization. At the end, we answer the most common questions in an FAQ and show how open innovation can drive your business's success. Let's get started!
What is open innovation?
Open innovation is a collaborative innovation model in which a company opens up its innovation process to external partners, seeking to exchange knowledge and technology in order to develop solutions jointly. In practice, this means the organization no longer relies solely on its internal Research & Development (R&D) department and begins to incorporate outside ideas, whether from startups, suppliers, universities, independent researchers, or even its own customers. Instead of keeping all of its knowledge “under lock and key,” the company shares some of its challenges and allows others to contribute ideas and resources.
Henry Chesbrough, the “father” of open innovation, defines the concept as “the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation.” In other words, companies can and should use ideas from both inside and outside, as well as internal and external paths to bring innovations to market. This involves both seeking external solutions (inbound open innovation) to internal problems and sharing unused internal inventions (outbound) with the market, through patent licensing, spin-offs, or partnerships.
A simple way to understand it is to compare it with the traditional closed innovation model. In the closed model, the entire process, from idea generation to the final product, happens in-house, with the company's own resources and team. In open innovation, part of that process is carried out with outside help: the company collaborates with partners or absorbs solutions that already exist in the market. For example, instead of developing a new technology from scratch internally, a large company can partner with a startup that has already created that technology and integrate it into its products. This brings speed and efficiency, taking advantage of the best of both external and internal ideas.
Open innovation vs. closed innovation
The differences between open innovation and closed innovation become clear when we compare their characteristics:
- Closed Innovation: All development is internal, with heavy investment in the company's own R&D. The company relies solely on in-house talent and maintains full control over the knowledge and intellectual property it generates. On one hand, this reduces the risk of information leaks, but it also limits the sources of new ideas. The process tends to be slower and more expensive, since it requires significant resources and highly specialized teams working exclusively inside the organization.
- Open Innovation: The company actively seeks out and incorporates external ideas. It collaborates and partners with other companies, universities, startups, or even customers to co-develop innovations. While strategic secrets are still protected, the assumption is that it is possible to share knowledge safely, for example through confidentiality and licensing agreements, without losing competitive advantage. The result is a more agile, diverse, and “horizontal” innovation process, with multiple players contributing. Instead of relying only on internal R&D, the organization combines its in-house know-how with external ideas, which broadens the range of possible solutions.
In short, open innovation breaks down the company's boundaries in the innovation process. Ideas can flow from the outside in (such as a startup supplying a new technology) and also from the inside out (such as when a company licenses an invention it will not use to another company).
This collaborative model has become strategic in a world where knowledge is abundant and distributed. Today, no company holds a monopoly on the best ideas; talent is spread across the market, in startups and institutions. Embracing open innovation is therefore a way to access the best available, regardless of where it comes from, while closed innovation remains confined within internal limits.
What are the benefits of open innovation for companies?
Adopting open innovation brings numerous benefits to companies, especially in competitive environments with rapid technological change. Below we list the main gains of the open innovation model:
1. It speeds up innovation and time-to-market
Collaborating with external partners can drastically reduce the development time for new products or services. After all, there is no need to “reinvent the wheel” internally if an external solution already exists. This division of labor makes the process far more agile. In a market where being first makes a difference, open innovation helps shorten the cycle between idea and launch, boosting competitiveness.
2. It cuts costs and shares risks
Developing everything in-house is usually expensive. With open innovation, R&D spending can be reduced by leveraging technologies and research already carried out by others. In addition, the risk of an innovation failing is spread among the partners: if a project does not work out, the loss (in money and time) is smaller for each participant than it would be in an isolated effort. In short, innovating openly costs less and makes the process safer, since ideas that have already been tested externally are less likely to fail.
3. Access to new ideas, knowledge, and technologies
Open innovation connects the company to a much larger knowledge network. Partnerships with startups and universities bring in skills the organization may not have internally. This diversity of perspectives stimulates creativity and can generate solutions the internal team would never come up with on its own. In other words, it is a way to “freshen up” internal innovation with outside insights. Companies often discover entirely new opportunities by interacting with outside inventors, researchers, and entrepreneurs.
4. Creation of new markets and opportunities
External collaborations can lead to new business models and untapped markets. For example, a large company can co-create a product with a startup and together enter a new niche. Open innovation broadens the organization's view of the market, exposing it to emerging trends and customer needs it might not otherwise address on its own. This increases the chances of launching pioneering solutions and capturing entirely new market share. Major innovations often arise from combining knowledge from different sources, which is exactly what open innovation makes possible.
5. Expanded network and improved internal culture
Working on open innovation projects pushes the company to engage with the ecosystem: startups, researchers, other businesses. This expands its network of contacts and can yield valuable long-term partnerships (high-quality networking).
Internally, the company's team benefits as well: contact with new ideas raises the level of learning and can shift the organizational culture toward a more innovative and collaborative mindset. Employees involved in open projects tend to be more motivated and receptive to change, because they see the benefits of sharing ideas in practice. In other words, open innovation not only delivers tangible results (new products, savings, etc.) but also evolves the company's DNA, making it more adaptable and more attractive to talent that values an innovative environment.
These are just some of the main benefits. Other positives include lower market rejection of the product (since external partners and customers can validate the idea during development, increasing product-market fit before launch) and the democratization of knowledge (useful ideas that would go unused by one company end up finding application in others, benefiting the market as a whole). It is no coincidence that the open innovation model has gained so much traction: it makes innovation more efficient, faster, and richer in learning for everyone involved.
It is worth noting that recent studies show growing adoption of this approach. According to a survey by Brazil's National Confederation of Commerce (CNC), 45.8% of innovative companies in Brazil already report adopting open innovation practices, whether through partnerships with other companies, universities, or research institutes.
This 2024 figure indicates that nearly half of innovating organizations are seeking external collaboration, which represents a significant cultural shift (and there is still plenty of room for that number to grow). At the market level, open innovation initiatives between corporations and startups are on the rise: the 100 Open Startups ranking recorded more than 54,000 open innovation relationships between companies and startups in Brazil alone in 2024. In other words, those who invest in open innovation today position themselves at the forefront, tapping into a broad network of ideas so as not to fall behind.
How to implement open innovation in your company
Now that you know the concepts and benefits, you may be wondering: “how do I apply open innovation in my company in practice?” Below, we present a step-by-step guide with best practices for implementing open innovation effectively:
Foster an internal culture that supports open innovation
The first step is to prepare your team and leadership for collaboration. Many companies face the well-known “not-invented-here” syndrome, a resistance to ideas “from outside.” So work on your innovation culture internally, encouraging openness to new perspectives and continuous learning. Hold training sessions, workshops, and communications reinforcing that good ideas can come from anywhere. Encourage intrapreneurship (internal entrepreneurship) among employees; that way they will better understand the experimentation mindset and be more receptive to external partnerships.
Having senior management engaged is crucial: leaders must lead by example, showing themselves open to outside suggestions and willing to break with the traditional hierarchical structure in favor of collaboration. In short, create a safe environment for innovation, where employees see external partners not as a threat but as allies in accelerating results.
Define objectives and priority areas for innovation
Before going out in search of partnerships, map out a strategy. Identify which of your company's challenges, problems, or opportunities could be accelerated with outside help. Pinpoint areas where some expertise or technology is lacking internally; for example, perhaps you need to improve a production process, create a new digital product, or solve a specific technical problem. Set clear objectives for what you expect to achieve with open innovation (reduce R&D costs? Increase revenue with an innovative product? Improve efficiency?).
Also assess your company's current level of innovation maturity: if the organization is still taking its first steps in innovation, it may be better to start with smaller pilot projects; if it already has an innovative culture, it can take on larger initiatives. This initial planning helps focus efforts and choose the partnership models best suited to your reality. Remember: this is not about doing open innovation “because it is trendy,” but with a purpose aligned with the business's strategic planning.
Connect with the innovation ecosystem
With objectives in mind, it is time to look for external partners. This means diving into the ecosystem: attend startup events, technology fairs, hackathons, innovation challenges, and meetups. Get to know innovation hubs and technology parks (for example, RAJA Valley itself, or spaces such as Cubo Itaú, Google Campus, etc.) where startups and companies meet.
Another action is to map startups or researchers working on solutions relevant to your industry. You can use startup scouting platforms, competitions (pitch days), or even specialized consultancies to find these opportunities. Talk to nearby universities and research centers; they often have innovation centers or projects looking for practical applications.
The idea here is to “tune the company's antennas” to what is happening outside. Build a list of potential partners and follow trends in the startup market related to your sector. It is also worth creating channels for startups and inventors to reach you, for example a page on your website inviting proposals, or a formal connection program (many companies launch open innovation calls to receive ideas). In short: step out of the corporate bubble and become part of the innovation community.
Establish partnerships and collaboration initiatives
After identifying potential partners, move on to collaborative action. There are many ways to implement open innovation; choose the ones that make sense for your objectives. For example:
Corporate acceleration programs or startup challenges
You can create your own acceleration program, offering mentoring, infrastructure, and investment for startups to develop solutions of interest to your company. Large corporations such as Unilever, Samsung, and Porto Seguro have already done this, opening their doors to startups and developers and, through these partnerships, driving projects in the Internet of Things (IoT) and other technological advances.
Another option is innovation challenges: launching a public call (a request for proposals or competition) for startups to present solutions to a specific problem at your company. The best projects earn the chance to run a pilot with you. This format attracts a wide range of ideas and filters out the most promising ones.
Hackathons and idea competitions
Hackathons are innovation marathons, often focused on programming, where teams work intensively for days to build prototypes that solve a proposed challenge. Companies like Google and Facebook use hackathons continuously to innovate with both their internal developers and outside talent. You can host an open hackathon involving university students, independent developers, and employees, focused on a company problem.
This initiative generates quick insights and identifies talent. Another idea is to implement ongoing idea programs, including customers and suppliers: for example, create a portal where customers can suggest improvements or new products, offering rewards for the ideas that get used (a kind of idea crowdsourcing). All of this reinforces that the company is open to outside suggestions and willing to co-create.
Co-development partnerships and CVC
For more complex challenges, you can enter into bilateral partnerships with another company or research institute to develop a technology jointly (sharing costs and results). Many traditional corporations sign agreements with startups in which both parties co-create a solution and share the gains.
Corporate Venture Capital (CVC) is also gaining prominence: this is when a company creates an investment arm for innovative startups, becoming a shareholder in them. Beyond the potential financial return, CVC provides privileged access to new technologies and strategic synergies (it is open innovation through investment).
One example is when an automaker invests in mobility startups so that, together, they can develop connected-car solutions. If your company has the financial capacity, considering the creation of a CVC program can be an excellent way to structure open innovation over the long term. (Learn more in our article on Corporate Venture Capital: Growth and Impact.)
Crowdsourcing and co-creation with the community
In some cases, open innovation can involve a broad audience. Crowdsourcing is when you launch a challenge to the general community (for example, via the internet) and obtain solutions from many people, rewarding the best ones. Co-creation, on the other hand, means bringing outsiders, whether experts, brand fans, or even customers, into the process of creating a product or service.
A famous case is LEGO Ideas: LEGO created a platform where fans themselves submit designs for new toys; the most-voted projects are manufactured by the company, and the creators receive a commission on sales. This co-creation initiative allowed LEGO to launch successful products built on customer ideas, revitalizing its portfolio. Consider whether it makes sense to directly involve your customers or community at some stage; this can generate products with strong market fit and also increase engagement with your brand.
Paths to practicing open innovation
In short, there are many paths to practicing open innovation. What matters is choosing the format that aligns with your objectives and resources. You can start small, for example by joining an existing startup connection program, or by supporting a university hackathon sponsored by your company. As you gain experience and confidence, you can deepen the strategy by creating your own structured program.
Many companies combine several approaches, for example first running a startup scouting challenge, then selecting a few for an internal acceleration program and, at the end, investing in the ones that stood out most (a mix of competition + acceleration + CVC). Flexibility and experimentation are welcome: open innovation is also a continuous learning process.
Establish clear agreements and take care of intellectual property
Once engaged in collaborative projects, formalize the rules of the game properly. It is essential to sign confidentiality agreements, contracts, and legal arrangements with partners to protect sensitive information and define who will hold the rights to any innovations generated.
A common fear among companies is “I will share my knowledge and lose control.” To mitigate this, work with robust legal mechanisms: partnership agreements, terms on shared or licensed intellectual property, exclusivity definitions, and so on.
That way, everyone enters the collaboration knowing what they can (and cannot) do with the knowledge exchanged. It is also important to align expectations: from the outset, define the metrics and goals of the joint project, the roles of each party, and plans for what happens if the initiative evolves into a commercial product. Building trust is essential in open innovation, and trust comes from both close relationships and well-drafted contracts. Remember to involve your legal department or innovation specialists in this process.
Also make sure to integrate the partner into your company in an organized way. Define points of contact (internal sponsors, project managers) to follow the collaboration. It is often useful to adopt agile methodologies and mixed squads (a team made up of your employees plus people from the startup or partner) to run the project, which makes communication easier. Make sure your internal team understands that this partner is not just another supplier but a strategic collaborator, breaking down internal barriers that could isolate the partner.
Run pilot projects, evaluate results, and scale what works
With everything planned and agreed, get to work! Implement pilot projects with the selected partners, aiming for short- and medium-term results. It is important to have some tangible gain to show (a working prototype, a new process implemented, etc.); this builds internal confidence and validates the open innovation approach. During execution, monitor performance indicators: time saved, cost reduction, solution quality, end-user feedback, etc.
Compare these results against the goals defined at the start. You will most likely gather valuable lessons: perhaps you will discover that communication between teams needs improving, or that a certain partnership model did not work as well as another. That is fine; open innovation also involves experimentation and adjustment. Gather feedback from everyone involved, internal and external, on the collaborative process.
Identify the success stories to plan for scale
At the end of the pilots, identify the success stories and plan for scale. For example, if a new co-developed product worked out, consider launching it at a larger commercial scale; if a technology worked, implement it permanently on the production line; if a hackathon revealed talent, hire or sign contracts with those professionals. Spread the wins internally to overcome any residual skepticism; show that thanks to the external partnership you achieved X result that you could not have achieved alone in the same time frame.
This helps institutionalize open innovation as part of the company's strategy, rather than a one-off effort. In parallel, initiatives that did not deliver the expected return should be analyzed: what went wrong? Was it the idea, the execution, or was the partner not the right fit? Learn from the mistakes and refine the process for the next iterations.
Relationship with the innovation ecosystem
Finally, maintain your relationship with the innovation ecosystem over the long term. Open innovation is not a project with a defined end; it is an ongoing stance. Even after completing a cycle of projects, keep participating in the community, following new startups, and perhaps creating a permanent program (such as an innovation lab).
Over time, your company builds a reputation in the innovation community and starts to get “first access” to opportunities; startups and researchers will seek you out for partnerships because they know your door is open. That is the ideal point: when open innovation becomes part of the company's DNA, driving a constant flow of new ideas and solutions.
Examples of successful open innovation
To make it all more concrete, let's look at some real examples of open innovation adopted by companies, in Brazil and around the world:
LEGO
Customer co-creation platform: The traditional toy maker LEGO faced falling sales in the late 1990s and decided to innovate by listening to its fan base. It created the LEGO Ideas platform, where enthusiasts can submit ideas for new LEGO kits. The proposals are evaluated and voted on by the community; the best ones are produced by LEGO, and their creators receive a percentage of the profits.
This open innovation model, involving customers in product development, brought LEGO several commercial successes and increased the brand's engagement with consumers. It is an emblematic case of how opening up the creative process to the public can generate mutual gains: the company launches products aligned with what the market wants, and customers have the satisfaction of seeing their ideas come to life.
Samsung: startup acceleration program (Samsung Accelerator)
Seeking to compete on equal footing with its rival Apple in innovation, Samsung chose to open its doors to outside talent. It launched the Samsung Accelerator program, initially in the US, offering infrastructure, investment, and support for startups, designers, and developers to work on new solutions aligned with Samsung products. Participants had access to coworking spaces, company resources, and mentoring from Samsung teams.
This initiative produced significant results; for example, it helped Samsung develop Internet of Things (IoT) products and enhance connected services by integrating ideas from the accelerated startups. The program later expanded, and Samsung went on to collaborate with numerous partner startups, many of which ended up contributing to innovations in smartphones, wearables, and other segments. The Samsung case shows a large corporation opening up to the startup ecosystem and, in doing so, gaining agility and technological diversification that would be hard to achieve internally alone.
Mozilla Firefox: open development and a global community
The Mozilla Firefox browser is often cited as an example of successful open innovation in the software industry. Mozilla, the organization behind Firefox, adopted an open source development model from the start: the browser's code is open for developers around the world to contribute improvements, plugins, and new features. Thousands of volunteer contributors (and some paid ones) take part in Firefox's evolution, reviewing code, suggesting features, and hunting bugs. In return, Mozilla offers recognition, some incentives, and the opportunity for developers to influence a product used globally.
This model allowed Firefox to compete head-to-head with browsers from large corporations, even though it is run by a community. The secret was to engage a collective intelligence spread across the globe, something no single company could hire. Firefox illustrates that open innovation is not limited to relationships between companies; it can involve entire communities, especially for digital products.
Ambev: partnerships with startups (100 Open Startups)
In Brazil, many traditional groups have bet on open innovation through partnerships with startups. A notable case is Ambev, a giant in the beverage industry. Ambev consistently appears in the 100 Open Startups ranking among the leading companies in startup connections. It created programs such as the 100+ Accelerator, focused on sustainable and technological solutions to the company's challenges (for example, logistics, new beverages, environmental sustainability). The company launches challenges and startups from across the country submit their proposals; those selected work alongside Ambev on pilot projects and may become long-term suppliers or partners. There have already been cases of startups developing energy-efficiency and waste-reduction solutions that were deployed in Ambev's plants, with mutual gains: Ambev innovates in its processes and the startups gain a major client and hands-on learning. This example shows the strength of open innovation in the Brazilian context: large traditional companies pursuing innovation in collaboration with the agility and creativity of local startups.
The examples above are just a sample. Virtually every industry now has open innovation cases: automakers co-developing electric-vehicle technologies with cleantechs, banks creating programs with fintechs, food companies running competitions for healthier formulations, pharmaceutical companies partnering with healthtechs, and so on. The common lesson is that collaboration delivers results that would be hard to achieve in isolation. Companies that embrace open innovation reap rewards like those mentioned, whether by reinventing products (LEGO), learning new technologies (Samsung), building loyal communities (Mozilla), or solving challenges quickly (Ambev).
Frequently asked questions about open innovation
What is open innovation?
Open innovation is an innovation model in which companies collaborate with external sources to develop new solutions, rather than relying solely on internal ideas and resources. The concept assumes that organizations can and should use both internal and external ideas in their innovation process. In practical terms, open innovation means opening the company's doors to partnerships with startups, universities, suppliers, customers, and even competitors, exchanging knowledge to jointly create better products and services.
What is the difference between open innovation and closed innovation?
The main difference lies in the flow of ideas and the degree of collaboration. In closed innovation, all development takes place internally: the company relies only on its own team and keeps its research confidential. In open innovation, the company seeks external contributions and also shares part of its knowledge in order to innovate jointly.
While closed innovation focuses on resources and intellectual property kept 100% under internal control, open innovation involves partnerships and shared results. For example, instead of spending years building a technology from scratch (closed), the company can license or co-develop it with someone who already has the solution (open). This makes the process faster and broader, but it requires building trust and clear agreements to protect sensitive information. In short: closed = going it alone; open = collaborating.
What are the benefits of open innovation?
The advantages of open innovation include developing innovations faster and at lower cost, by leveraging solutions that already exist in the market (reducing duplicated effort). It also lowers the risk of failure, since external ideas usually come pre-validated or are tested jointly, avoiding betting everything on internal hypotheses. In addition, open innovation brings a diversity of ideas; different perspectives lead to more creative and complete solutions. The company gains access to new technologies and knowledge it might not otherwise have, becoming more competitive and up to date. Another benefit is entering new markets or opportunities identified through external partnerships. And there are cultural impacts: contact with partners increases the organization's adaptability, improves internal learning, and expands its network of contacts (networking). In short, companies that practice open innovation tend to innovate more and better, with agility, savings, and greater market reach.
What are the challenges or risks of open innovation?
Despite the benefits, there are some challenges. One is the risk to security and confidentiality: when sharing information with external partners, there is the possibility of data leaks or loss of control over intellectual property. That is why it is crucial to have legal agreements and protective measures in place. Another challenge is internal coordination: teams may struggle to align with outside partners, leading to conflicts or a lack of internal cooperation if the right culture is not in place. There is also the risk of excessive dependence on partners: the company may cut its investment in internal innovation and become too tied to external solutions. Furthermore, implementing open innovation can involve high initial costs and complexity, including the time needed to manage partnerships and select the best ideas. There is also the challenge of selecting external projects: many proposals may come in and not all will be suitable, requiring good judgment about where to invest energy. In short, open innovation requires careful management of partnerships and organizational culture to mitigate these risks; with good practices, the challenges can be overcome, but they should not be ignored.
How to implement open innovation in a company?
To implement open innovation, start by preparing your internal culture: educate and engage your team and leadership so they are open to collaborating with outside ideas. Next, define clear objectives: know in which areas or challenges it makes sense to pursue open innovation. Then connect with the ecosystem: attend events, get to know startups, build contacts with universities and innovation hubs. Next, choose a suitable collaboration format, such as startup challenges, hackathons, research partnerships, or acceleration programs. Formalize partnerships with contracts, defining intellectual property and each party's responsibilities. Start with well-focused pilot projects to learn by doing. Track results with metrics (time, cost, quality) and make adjustments as needed. If the pilot succeeds, scale the initiative (for example, by integrating the solution into operations or investing in the partner startup). It is also important to maintain transparent communication and involve internal teams in the process to avoid resistance. In summary: cultivate the right mindset, plan, seek out ideal partners, collaborate on practical projects, and learn from the experience. By following these steps, your company will be able to incorporate open innovation efficiently and reap excellent rewards.
What are some examples of open innovation?
There are many examples. A famous one is LEGO, which launched the LEGO Ideas platform to co-create products with its customers: fans submit suggestions for new kits and the best ones are produced, involving the public in development. Another example is Mozilla Firefox, whose code is open for developers around the world to contribute to, illustrating community-driven open innovation.
Tech companies like Google and Facebook use hackathons and open source projects to innovate with outside help (for example, Google's Android system is open for developers around the world to create apps and improvements). In Brazil, cases include Ambev, which collaborates with startups on innovative solutions for its business through programs such as the 100+ Accelerator, and banks that have joined forces with fintechs to develop digital services. In short, from traditional industries to software companies, there are many success stories in which external collaboration has leveraged innovation.
Open innovation
Open innovation has ceased to be merely a theoretical concept and has become an indispensable strategy for companies that want to stay competitive in today's economy. By opening their doors to external ideas, organizations can accelerate their pace of innovation, cut costs, diversify their solutions, and create new businesses in partnership, all while evolving their internal culture to a more collaborative and agile level.
Of course, implementing open innovation brings management challenges, but the results prove that it is worth breaking down the barriers of closed innovation. We live in a hyperconnected world full of distributed talent; those who know how to make the most of every source will be ahead.
If you want to bring the benefits of open innovation to your company but do not know where to start or need specialized support, count on RAJA Bizz. Our team has extensive experience in open innovation programs, connecting corporations to startups and structuring successful collaborative projects.
Turn your company into an innovation hub with RAJA's help; from building an innovative culture to executing strategic partnerships, we are ready to drive your business forward. Contact RAJA Bizz and find out how to implement open innovation effectively, minimizing risks and maximizing results.
Shall we innovate together? RAJA Bizz, Innovation Consulting
