Open Innovation: what it is, what benefits it offers to companies and how it is growing in Italy

The innovation model theorized in 2003 by the US economist Henry Chesbrough predicts that companies can and should use external resources such as startups and research centers to advance their technological skills. In this perspective, the Italian Open Innovation Lookout 2024 report "maps" the open innovation market in our country and the roles of the main players, including Intesa Sanpaolo Innovation Center

Open Innovation (OI) is a model of innovation first theorized in 2003 by the American economist and writer Henry Chesbrough, who coined the term in his essay "The New Imperative for Creating and Profiting from Technology" and provided an initial definition. Following what Chesbrough wrote, "Open innovation is a paradigm that states that companies can and must resort to ideas exogenous to their organization, as well as those endogenous, and access internal and external routes to markets if they want to progress in their technological skills".

What is the difference between open and closed innovation 

A model that goes beyond the traditional one - also known as closed innovation -, whereby organizations invest internally in R&D and intellectual property to get ideas that lead to the realization of innovative products and services, and thus maintain (or create) a competitive advantage based on the marketing of assets generated by its in house research activities.

The OI paradigm, on the other hand, proposes a model that to stimulate innovation, based on collaboration and exchange of expertise between different organizations such as, for example, startups, research centers and universities. Obviously, since 2003 the model of Open Innovation has evolved, adapting from time to time to the rapid changes in the global socio-economic context.

The evolution of the meaning of the term Open Innovation according to Henry Chesbrough

"Open Innovation is a model of distributed innovation that involves knowledge inflows and outflows managed in a targeted way between the boundaries of the organization to generate spillover, the phenomenon that occurs when an economic activity produces positive effects even beyond the areas for which it acts", writes Chesbrough "updating" the definition of OI.

In addition, the Californian economist points out that the adoption of open innovation is not achieved through sometimes impromptu actions such as crowdsourcing, collaborations with startups or universities, user innovation, highlighting instead that the new theory involves a revision of business processes and job profiles.

Open Innovation Inbound and Outbound: meaning, differences and examples

Currently exist two distinct approaches to Open Innovation - inbound and outbound -, and the difference between them consist in the direction of the flows of innovation and knowledge between an organization and the ecosystem outside it.

Inbound Open Innovation: how it works, what characterizes it

Inbound Open Innovation refers to the process by which an organisation acquires knowledge, ideas and innovative technologies from outside. Following this approach, the organization opens up to external inputs by collaborating with partners, customers, suppliers, universities or other realities to acquire new ideas and skills that, combined with internal resources, increase and improve its innovative capacity.

Among the various tools of the Inbound Open Innovation, for example, there are hackatons, so-called call4ideas and call4startups, collaborative programs with universities and research centers initiated by companies to develop specific projects related to their business, Corporate Venture Capital and the creation of company’s incubators and accelerators.

In the early stages, organizations usually work with strategic partners that have these activities as their core business, such as incubators, accelerators and innovation hubs, before acquiring the skills needed to move independently.

What is and what characterizes the Outbound Open Innovation approach

Outbound Open Innovation, on the other hand, involves an approach based on the outsourcing of ideas, innovations and technologies generated within an organization. This approach contrasts with the inbound one, with the flow of open innovation reversed by leaving the company perimeter to make it available to partners and other realities interested in "contaminating".

By adopting this approach, an organisation aims to market (or exploit) its innovations through partnerships, spin-offs, licensing agreements and other forms of collaboration with third party organisations, Aiming to seize and exploit the external opportunities offered by the market, thus maximizing the value of what has been developed internally.

In this case, the flow of OI follows a reverse path to inbound and leads, for example, to spin-offs and/or licensed distribution of innovations by third parties who have the resources and expertise to market them effectively.

The benefits for companies that adopt the Open Innovation paradigm

The Research system in Italy distinguish itself by multiple excellences, but its effectiveness results penalized by the limited ability to "network". For companies, it is often not possible to find innovative solutions in their own, while the market responds to various technological needs and the only difficulty consists in finding the one that suits the problem you want to solve by adopting the paradigm of Open Innovation.

What is and what benefits offers the Technology Transfer 

In this perspective, acquiring R&D on the market (for example patents, licenses, partnerships and acquisitions) results in a reduction of costs and time for innovations, with Technology Transfer (TT) It enables companies to find technical solutions through the acquisition or use of licensed specialist know-how, technologies and experiences available on the market.

A dynamic that transfers intangible assets (ideas and skills) and material assets (products) by determining the enrichment and exploitation of the Technology Portfolio for the organization benefiting from the technology transfer. An exchange mechanism in the "knowledge market" involving universities and research centres, as well as startups, scale-ups and innovative SMEs.

Technology Transfer: how it materializes

The TT usually takes place when research is transferred to industry where results are applied. However, the process can also take place within industry itself by matching technology supply and demand to meet the needs of companies that are unable or unwilling to develop the technology they need internally.

The main ways in which Technology Transfer is developed are:

• Transfer of patent implemented by assignment or license [Intellectual Property (IP) Advisory & Portfolio Management].
• Buying and selling a patent creating the basis for the production of additional income for both the seller and the buyer of the intellectual property (technology transfer).
• Sale/Acquisition of a business or transfer of a high-tech business (M&A)
• Acquisition of knowhow and/or of specialist resources from universities/ research centres and transfer to companies
• Provision of specialist training on innovative processes and technical standards.

Considering the most economically relevant case in which TT concretize itself, the so-called Hi-tech M&A which is considered as a substitute for internal R&D investments of an organization, whose effectiveness is determined by the time to market.

The Italian Open Innovation Lookout 2024 report: where stands Open Innovation in Italy

In a global scenario where OI is increasingly widespread and essential to foster innovation, fits in the Italian Open Innovation Lookout 2024 Report, presented on 21 February 2024 at the Politecnico di Milano. The study is the result of collaboration between the research group Innovation & Strategy of the School of Management of the Politecnico di Milano and the Lab11 team, with the active involvement of companies recognized as major players in innovation offering OI services (Provider) - including Intesa Sanpaolo Innovation Center - and companies considered leaders in the adoption, use and promotion of OI (Champion).

How has been produced the Italian Open Innovation Lookout 2024 Report

The survey, conducted on 905 Italian organizations and enriched by surveys and in-depth interviews, counts 150 answers representative of a statistically significant sample of 400 participants, provides a detailed overview with scientific value of the Open Innovation market in Italy as motor for economic evolution and competitiveness.

In addition, the research contributes to the development of the Italian innovation ecosystem to make companies aware of the available Open Innovation services, offering a map aimed at enterprises, managers and professionals to navigate and understand the dynamics of OI market.

A study that highlights how the over 900 OI operators in Italy range from consulting companies to brokerage platforms, through startups, venture builders, incubators and accelerators, competence centres, innovation hubs, up to technology transfer agencies.

What is the market for Open Innovation services in Italy

According to the report, the value of the Open Innovation services market in Italy is estimated to be close to 696 million euros, with five service provider categories - corporate innovation hubs, consulting companies, technology transfer offices, Competence centres and professional intellectual property companies - generating 85% of the value.

A conservative estimate, as obtained by quantifying the activity of the 15 categories of actors for which detailed data is available, compared to the 25 identified on the basis of the services offered: from assistance in the search for funding to coaching, mentoring and tutoring, from co-creation to consulting for digital transformation or innovation tout court, including technology scouting training and start-up scouting, as well as idea sourcing, Research and market analysis to find new ideas.

The growth of Open Innovation in Italy and the challenges that companies must face to obtain benefits adopting it

The report also highlights the growth of the OI approach in both the public and private sectors, involving large companies as well as SMEs, that after initial reticence tend to rely more and more on external partners to initiate and implement their innovation activities, thus creating a professional and structured advanced services market.

However, this evidence is contrasted with the difficulties of many companies in translating the OI paradigm into tangible benefits and implementing it accordingly, facing obstacles such as organizational culture, the availability of resources, intellectual property management and the impact of national and international innovation systems.

In order to face these challenges, it is necessary to support companies in adapting to a changing ecosystem, defining and sharing its dynamics, as well as promoting and encouraging collaborations of various kinds between the different OI actors, with the aim to find effective strategies that can facilitate the transition towards Open Innovation.

The contribution of Intesa Sanpaolo Innovation Center in the Report Italian Open Innovation Outlook 2024

The report also contains an opinion piece by the Intesa Sanpaolo Group, which explains how innovation is a crucial competitive factor in the global economy, with the traditional model that has evolved from closed to increasingly open, thus giving rise to an "innovation ecosystem". A network of relationships in which all the actors involved interact and collaborate to generate innovation: one of the essential elements for the growth of advanced economic systems, since it allows companies to maintain their competitiveness, also acting as a stimulus to attract new investment and develop new products and services.

How Intesa Sanpaolo Innovation Center promotes Open Innovation

Based on these premises, Intesa Sanpaolo Innovation Center is committed to developing innovation ecosystems with an international scope and coordinates the Group’s network of relations with companies, incubators, research centres, universities and other bodies to facilitate the matching of innovation supply and demand following OI paradigm.

In fact, the Company dedicated to the frontier of innovation promotes Open Innovation in ecosystems through acceleration programs for high-potential startups activated on the territory and focused on different verticals. In Turin with Techstars Transformative World focusing on smart cities and smart mobility; in Florence with Italian Lifestyle, which is interested in sectors seen as the flagship of Made in Italy, such as Fashion, Food & Beverage and Tourism; Naples with Terra Next focusing on the Bioeconomy, with focus on sustainability, new materials and functional nutrition; Ancona with Next Age for the so-called Silver Economy; In Venice with Argo on the conservation and enhancement of the cultural heritage of the Belpaese and on responsible and quality tourism; finally in Taranto with Faros which focuses on the Blue Economy.

Routes to which are added multiple stand-alone acceleration programs created and developed ad hoc for the clients, through which innovative technological solutions available on the national and international market are intercepted, selected and proposed, generating growth opportunities for customer companies also for external lines – following the perspective of Open Innovation - through industrial collaborations and partnerships, commercial agreements and investments.

Moreover, Intesa Sanpaolo Innovation Center directly manages a "portfolio of value-added" startups (currently around 70) already on the market with applications that are predominantly cross-industry (some even more vertical in different sectors), to extend the innovation reach to a wider and more diversified customer target. Thanks to a constant monitoring of technological, industrial and consumer trends, to activities of analysis of the state of the art and benchmarking, to the detection of innovation needs and markets of interest to customers, it facilitates the matching between demand and supply in a win-win logic.

Last – certainly not by importance - Neva SGR: the Venture Capital of Intesa Sanpaolo. Neva SGR, a 100% subsidiary of Innovation Center, has an investment portfolio in scale-up and high-tech technology with high growth potential representing the flagship of the Group’s recognized commitment to fostering the development of new innovative enterprises and attracting national and international investors, positioning itself as a major player at European level in the innovation risk capital market.

The results of the Open Innovation initiatives of Intesa Sanpaolo Innovation Center

The initiatives of Intesa Sanpaolo Innovation Center are united by the ability to attract and develop the potential of startups, create new jobs, new skills and new opportunities for companies following the paradigm of Open Innovation, with the realities already accelerated in these programmes, which have raised more than EUR 90 million of investment and generated 700 new jobs.

Finally - as explained in the opinion piece - the increase of competitiveness passes by the ability to "conquer" and support new talents, as well as by intercepting and conveying new trends to attract capital that can support the growth of startups and innovative SMEs. All this in a context characterized by constant and rapid evolution, where only innovation and frontier technologies can quickly solve major global challenges such as the fight against climate change.