Innovation is a desire present in most — if not all — companies on the planet. In addition to the positive feeling of creating something different, this process is also commercially necessary for many organizations.

In this sense, we have open and closed innovation: two different models of designing an innovative product or service, but achieving similar results. With them, companies can dedicate resources to innovate and, with luck, stand out in the market.

But do you know exactly what the concept of open and closed innovation is? We address this topic in the content below, where we will explain the concept, differences and benefits of each model. Read on to learn!

Open and closed innovation: what’s the difference between them?

The concept of open and closed innovation is very simple, but with different stages between them. Therefore, it is essential to understand how the tools can be applied in the business routine.

In the first case, of closed innovation, we have a model traditionally applied in companies, where all the innovative steps are carried out exclusively in the company’s environment.

In other words, all research, generation of ideas, construction of the product or service and, eventually, marketing are carried out by the business’ employees. This allows for great control across the entire innovation chain.

In the second case, of open innovation, we have a less used model, but equally efficient in the mission to innovate. In this sense, open innovation makes use of its business ecosystem to turn an idea into reality.

Thus, open innovation makes use of researchers, universities, hackathons, partner startups and professionals specialized in a certain topic to optimize its innovation process and, with that, achieve good results.

It is important to emphasize that there is no one model better than another, as it is suitable for companies according to their characteristics and needs. That said, let’s understand the benefits of each modality.

Main benefits of closed innovation

The benefits of closed innovation are valuable and serve organizations that need more management of their work. With this, they are able to obtain the following advantages:

• Full control over the innovation process;

• Significant reduction of failures for the tasks performed;

• Absence of dependence on external knowledge, which can be a limiting factor during innovation;

• Possibility of exclusivity in the innovation process, where products/services can bring an immense competitive advantage;

• Reduction of project leakage to the market.

In summary, companies that set the pace of the market and, traditionally, set high quality standards, will bet on closed innovation, as it will help to keep the level of competitiveness high, as well as the profits from sales.

In this case, we can list companies like Amazon, Apple and Google — giants in the world market — that lead the rankings of innovative organizations acting in the closed model in their projects.

Main benefits of open innovation

The benefits of open innovation are also extremely valuable and effective in purpose. Although it is not restricted to the company, the potential of open innovation is extremely high as it bets on a wide ecosystem of capable partners.

With that, the modality obtains the following advantages:

• More speed in the innovation process, as it involves resources coming from various areas, internal and external;

• More variety of ideas, as there is a great diversity of people working on a particular topic;

• Greater learning ability, given the number of different minds involved in the work;

• Easier fundraising, as the project involves other stakeholders in the projects.

Thus, as we can see above, open innovation also enables the conception of products and services of the highest quality, even though it is a model intended for few organizations.

As an example, we can mention Itaú’s Cubo, which was conceived to be a technology center for all of Latin America. In it, the idea is to create a unique space that connects entrepreneurs, investors, universities, professionals and startups accelerators.

Another interesting example is Fast Dating, by Tecnisa, whose objective is to find startups and partner companies that can create and meet opportunities in the civil construction sector. And this happens through periodic meetings of companies interested in innovation.

In the end, what matters is to innovate

Whether with open or closed innovation, we have a scenario where companies can use their best resources to create differentiated products and services that make tasks easier and, as far as possible, transform the world.

For that, they can bet on the closed model (more commercial) and the open one (still commercial, but aimed at strengthening a heterogeneous group of businesses). Also, depending on the case, it is possible to mix the two systems to maximize results and extract the most from the innovation.

So, in the end, it is important that companies dedicate efforts to innovate regularly, creating more competitiveness in the market and enabling the evolution of society as a whole.

Did you like the content? Also take the opportunity to read:

• How deep learning works: concept, history and how this technology is applied in the real world

• Business feedback: what it is, how to do it and 4 types to apply and evolve the team

• Find out which front-end framework is best: Vue vs React vs Angular