Open innovation is one of the key approaches that allows companies to use ideas and talents beyond their organizational boundaries — driving significant progress in their products and services.
Open Innovation and Its Powerful Impact on Global Business
Also known as Open Innovation for business methodology, this concept is sometimes referred to as crowdsourcing or co-creation. It is a strategy that enables companies to utilize ideas and expertise from outside their organization to enhance their performance, develop better products, and deliver improved services.
Large corporations across the globe have successfully implemented this method and achieved remarkable results — but under certain conditions!
One of the most notable examples is Procter & Gamble (P&G), a global brand that gained significant profit and innovation advantage through open innovation practices. In this article, we’ll take a closer look at how P&G integrated open innovation into its business strategy and uncover the secret behind its long-term success.
What Is Open Innovation?
Many companies constantly search for new and creative ideas — yet it’s unrealistic to expect all innovations to emerge solely from internal teams or in-house experts.
When internal resources are not enough, businesses turn to an alternative strategy: inviting ideas and solutions from external contributors.
This means engaging with everyday people or professionals outside the company to address major challenges or improve existing operations. Sometimes, these external insights even inspire in-house teams to generate better ideas and innovations.
This approach, which connects external and internal creativity and leads to significant business growth, is what we call Open Innovation.
Let’s explore why it matters and how it creates measurable impact.
The Importance of Open Innovation
Open innovation is essential for any organization aiming for growth.
Its greatest strength lies in breaking down the traditional boundaries of innovation — allowing companies to share and access resources beyond their own walls.
By embracing external ideas and combining them with internal knowledge, companies increase their chances of discovering the right solutions faster and more effectively.
This open exchange enables businesses to innovate across multiple dimensions, accelerate progress, and collaborate for greater outcomes.
Key Benefits of Open Innovation You Shouldn’t Overlook
1. Reduced Time to Market and Improved Product Development
When launching a new product or service, continuous refinement is essential.
By adopting open innovation, companies shorten the entire cycle — from ideation and prototyping to improvement, marketing, and sales.
They gain insights faster, reduce costs, and make more accurate adjustments to their products.
2. Stronger Collaborations and Partnerships
P&G, for instance, partnered with a Japanese company to create an innovative toothbrush that cost nearly half the price of similar projects.
Such collaborations demonstrate how open innovation enhances cooperation, minimizes initial investment, and maximizes long-term profitability.
3. Greater Customer Engagement
Products developed through open innovation often attract more attention from customers.
When people see their ideas reflected in a brand’s offerings, they feel more connected — leading to higher interest and stronger brand loyalty.
4. Increased Market Share and Lower Risk
By linking ideas with knowledge, open innovation empowers brands to gain market leadership while reducing the risks associated with innovation.
How Global Giants Like P&G Prove Open Innovation Works
Open innovation has become a powerful movement in modern business — not only for startups but also for global corporations like Procter & Gamble (P&G).
The company has used this strategy to enhance product quality, reduce costs, and build stronger relationships with consumers.
P&G focuses on recreating customer experiences — gathering insights from real users to improve brand perception, product quality, and customer satisfaction. Experts believe P&G’s success stems from its ability to bridge emotional trust between brands and consumers.
In 2019, P&G showcased its innovations at the CES trade show, demonstrating how technology and collaboration can redefine product development.
Through its Connect + Develop (C&D) initiative, P&G connects suppliers, competitors, scientists, and entrepreneurs to co-create breakthrough products using cutting-edge technologies.
This model not only addresses key consumer challenges but also drives faster product launches and stronger market positioning.
Former CEO Robert McDonald once stated that P&G’s renewed focus on open and continuous innovation has led to an entirely new generation of product categories and brand growth.
Some of P&G’s most successful products developed through open innovation include Mr. Clean multi-purpose cleaners, Bounce dryer sheets, Olay facial hair removers, and Tide all-purpose detergent.
P&G’s ability to quickly identify opportunities, link experts, and implement customer-driven insights demonstrates how effective open innovation can be in achieving sustainable growth — even in highly competitive, technology-driven markets.
Types and Approaches to Open Innovation
1. Outside-In Open Innovation
This approach focuses on bringing external ideas, knowledge, and technologies into the organization.
Companies collaborate with universities, research centers, or startups to integrate external innovation into their internal development processes.
The result: faster product development and reduced costs.
2. Inside-Out Open Innovation
In this model, companies share their internal knowledge, research, and technologies with external entities.
By licensing intellectual property, hosting innovation contests, or partnering with other firms, they create value from their internal assets while contributing to broader innovation ecosystems.
3. Coupled or Hybrid Open Innovation
This model combines both inside-out and outside-in approaches — enabling organizations to benefit from two-way collaboration depending on their strategic goals.
Common Open Innovation Models
- Open Source Model – Projects are publicly available for developers and experts worldwide to enhance collaboratively.
- Licensing Model – Companies license their technologies or products to others, enabling mutual growth and technology exchange.
- Innovation Challenge Model – Organizations host competitions that encourage individuals or teams to submit innovative ideas. At Jahesh, we regularly organize such open innovation challenges — inviting public and expert participation through transparent voting and professional evaluation.
- Ecosystem Model – Involves creating a collaborative network of companies, universities, governments, and individuals to share knowledge and resources.
- Technology Transfer Model – Universities and research institutes transfer their inventions to industries for commercialization.
Each model strengthens collaboration, accelerates knowledge sharing, and builds sustainable innovation environments.
Choosing the right model depends on an organization’s goals, structure, and culture.
How to Implement Open Innovation Successfully
For open innovation to work effectively within your organization, a structured approach is necessary:
- Ideation Phase – Be open to new ideas and conduct in-depth, data-driven research to assess their potential impact.
- Refinement Phase – Align employee contributions and refine ideas for optimal results.
- Execution Phase – Develop a prototype to visualize and test your innovation in practice.
- Production and Commercialization – Manufacture, market, and sell the final product or service to achieve full-scale success.
Open innovation models are reshaping how companies grow and collaborate. Instead of relying solely on internal ideas, organizations now use different types of open innovation models to connect with startups, universities, and experts worldwide. These open innovation frameworks, ranging from inside-out to outside-in, encourage knowledge sharing, reduce risks, and accelerate product development. Successful examples like P&G’s “Connect + Develop” show how open innovation business models can transform industries. By embracing cooperation over competition, companies that understand open innovation vs closed innovation models gain faster growth, smarter solutions, and a lasting edge in today’s evolving business landscape.
Which Open Innovation Method Works Best?
As discussed, each open innovation model serves different needs — but the hybrid approach is often the most effective.
At Jahesh and Jump Lab LTD in the UK, we recommend participating in open innovation challenges as a practical way to begin.
If you’re interested or have questions about how to apply open innovation in your organization, feel free to contact us, and we’ll help with our innovation model for solution business — we’re here to help you turn ideas into action.