Procurement Glossary
Open innovation: definition, methods and strategic importance in Procurement
November 19, 2025
Open innovation is a strategic approach in which companies consciously use external sources of knowledge and partnerships to accelerate innovation processes and develop new solutions. In Procurement , this approach enables the systematic involvement of suppliers, customers and other stakeholders in product development and process optimization. Find out below what Open Innovation is all about, which methods are used and how you can successfully implement this approach in your procurement strategy.
Key Facts
- Open innovation uses external sources of knowledge to accelerate innovation processes
- Suppliers are integrated into product development as strategic partners
- Reduces development times and costs through shared resources and expertise
- Enables access to new technologies and markets outside your own organization
- Requires structured processes for idea evaluation and intellectual property management
Contents
Definition: Open Innovation
Open innovation describes a collaborative approach to innovation that transcends the traditional boundaries of the company and systematically involves external stakeholders in development processes.
Core elements of open innovation
The approach is based on three key principles: the conscious exchange of knowledge across company boundaries, the strategic use of external research and development capacities and joint value creation through partnerships. Both internal and external ideas are treated equally and systematically evaluated.
- External knowledge integration into internal processes
- Joint development of products and services
- Shared risks and investments
- Structured exchange of intellectual property
Open innovation vs. closed innovation
In contrast to traditional closed innovation, which relies exclusively on internal resources, open innovation opens up innovation processes to external partners. This enables faster market launches and reduces development risks through shared expertise.
Importance of open innovation in Procurement
For procurement, open innovation opens up new opportunities for co-creation with suppliers and innovation management in Procurement. Suppliers are transformed from mere suppliers into strategic innovation partners who actively contribute to product development and process improvement.
Methods and procedures for open innovation
The successful implementation of open innovation requires structured methods and clear processes that effectively involve both internal and external stakeholders.
Supplier Innovation Challenges
Targeted supplier innovation challenges make it possible to communicate specific problems to the supplier network and collect innovative solutions. This method promotes competition between suppliers and generates a wide range of solution options.
- Definition of clear innovation goals and evaluation criteria
- Structured tendering to qualified suppliers
- Systematic evaluation and selection of the best concepts
Co-development projects
Co-development creates long-term partnerships in which companies and suppliers develop new products or technologies together. This method enables the exchange of expertise and the sharing of development risks.
Innovation Funnel Management
A structured innovation funnel ensures the systematic evaluation and further development of external ideas. From the initial collection of ideas to the market launch, all innovation projects are managed and prioritized according to uniform criteria.
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Important KPIs for open innovation
Measuring the success of open innovation requires specific metrics that capture both quantitative and qualitative aspects of collaboration.
Innovation speed and time-to-market
The reduction in development time is a key advantage of open innovation. The time from initial idea development to market launch is measured in comparison with traditional internal development processes. The number of innovation projects running in parallel is also recorded.
- Average development time per project
- Number of ideas in the innovation pipeline
- Success rate of pilot projects
Partner network quality
Innovation partners are evaluated using metrics such as the number of active partners, their contribution to innovation and the quality of the proposals submitted. Supplier awards can be used as an incentive system to increase partner quality.
ROI and cost savings
The return on investment is calculated by comparing innovation costs with the savings or sales increases achieved. Both direct cost savings and indirect benefits such as improved market position are taken into account.
Risks, dependencies and countermeasures
Open innovation entails specific risks that can be minimized through suitable measures and structured processes.
Intellectual property risks
The disclosure of trade secrets and the joint development of technologies can lead to conflicts over property rights. IP co-creation agreements and clear licensing models are essential for the protection of intellectual property.
- Detailed non-disclosure agreements before the start of the project
- Clear definition of property rights to joint developments
- Regular legal review of the agreements
Quality and coordination risks
The involvement of external partners can lead to quality problems and coordination difficulties. Structured pilot projects with suppliers help to identify and minimize risks at an early stage.
Dependency risks
Excessive dependence on individual innovation partners can limit strategic flexibility. A diversified partner strategy and regular evaluation of strategic partnerships significantly reduce these risks.
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Practical example
A car manufacturer implements open innovation to develop sustainable battery technologies. The company launches a Supplier Innovation Challenge with the aim of increasing the range of electric vehicles by 30%. Over 50 suppliers submit innovative concepts, five of which are selected for further development. The most promising approaches are tested and refined in pilot projects with suppliers.
- Reduction of development time by 40% through parallel development
- Access to specialized technologies outside our own expertise
- Building long-term strategic partnerships with innovation leaders
Trends & developments around Open Innovation
Digitalization and new technologies are changing the way open innovation is practiced and opening up new opportunities for collaboration.
AI-supported idea evaluation
Artificial intelligence is revolutionizing the evaluation of ideas in open innovation processes. Machine learning algorithms can analyse, evaluate and prioritize large volumes of innovation proposals, significantly increasing the efficiency of the selection process.
Digital collaboration platforms
Cloud-based platforms enable seamless collaboration between internal teams and external partners. These technologies support design sprints and other agile innovation methods through real-time communication and joint document processing.
Ecosystem-based innovation
Companies are increasingly developing complex innovation ecosystems that go beyond traditional supplier relationships. These networks include start-ups, research institutions and even competitors to work together on industry-wide challenges.
Conclusion
Open innovation transforms traditional procurement from a transactional to a strategic function that actively contributes to value creation. By systematically integrating external partners, companies can significantly increase their innovative capacity and reduce development risks at the same time. However, success depends on structured processes, clear legal agreements and continuous maintenance of the partner network. Companies that implement open innovation strategically create sustainable competitive advantages in an increasingly dynamic market environment.
FAQ
What distinguishes open innovation from traditional product development?
Open innovation opens up development processes to external partners and utilizes their expertise, while traditional development relies exclusively on internal resources. This enables faster innovation cycles, access to specialized technologies and the sharing of development risks with partners.
How do you choose the right partners for open innovation?
Partners are selected based on technical expertise, innovative ability and strategic fit. Important criteria are the complementarity of skills, the willingness to work together and the quality of previous innovation projects. A structured evaluation by Supplier Innovation Days supports the selection process.
What are the legal aspects of open innovation?
Key legal challenges include the protection of intellectual property, the definition of property rights to joint developments and the regulation of license agreements. Detailed contracts and IP co-creation agreements are essential for successful partnerships.
How do you measure the success of open innovation initiatives?
Success is measured by various KPIs: Reduction of time-to-market, number of successful product launches, ROI of innovation projects and quality of the partner network. Qualitative factors such as learning effects and strategic positioning are also evaluated.
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