Foundation
What is open innovation?
Open innovation is a paradigm that assumes firms can and should use external ideas as well as internal ideas — and both internal and external paths to market — as they look to advance their technology and grow.
Coined by
Henry Chesbrough, UC Berkeley, 2003
The term was introduced in his book Open Innovation: The New Imperative for Creating and Profiting from Technology, challenging the closed R&D model dominant in the 20th century.
Core idea
Knowledge flows in — and out — intentionally
Organisations intentionally partner with startups, universities, competitors and customers to co-create, license, spin off and absorb new ideas rather than relying solely on internal R&D.
Australian context
A$1.3B raised by AU startups in Q1 2025 alone
Australia's innovation ecosystem is maturing rapidly. Government, university and corporate players are increasingly adopting open innovation models to stay competitive and access global talent.
Closed innovation (traditional)
- All R&D kept in-house
- IP locked internally
- External ideas seen as risky
- Long, expensive development cycles
- Linear: research → develop → sell
→
Open innovation (modern)
- External + internal knowledge welcomed
- IP licensed in and out strategically
- Startups, unis, partners co-develop
- Faster, cheaper, de-risked innovation
- Porous boundaries: ideas flow both ways
The modes of open innovation
Beyond the classic outside-in and inside-out framework, research has extended open innovation to include three additional modes — recognising the full spectrum of how organisations can orchestrate knowledge flows. See: Extending Open Innovation: How to Orchestrate Your Knowledge Flows, California Management Review (2023) ↗
01
Outside-in
Bringing external knowledge, ideas and technologies inside the organisation. Examples: startup scouting, open challenges, licensing-in, hackathons, university partnerships.
02
Inside-out
Allowing internal knowledge and unused IP to flow outward. Examples: spinouts, licensing-out, corporate venturing, selling R&D projects that don't fit core strategy.
03
Coupled
Strategic alliances, joint ventures and consortia where knowledge flows both ways. Examples: industry R&D consortia, co-innovation hubs, government–industry partnerships.
04
Outside-out
Facilitating the flow of external knowledge to other external actors — without the organisation absorbing it. Examples: innovation intermediaries, open platforms, knowledge brokers, ecosystem orchestration.
05
Inside-in
Recombining internal knowledge across divisions, subsidiaries or departments to generate new innovations. Examples: internal innovation markets, cross-unit innovation labs, internal venturing programs.
Who benefits from open innovation?
Corporates & enterprises
Access cutting-edge technology without building it internally. Partner with agile startups. Reduce R&D costs. Tap into new markets faster.
Startups & founders
Gain corporate clients, distribution and credibility. Access funding, mentorship and real-world pilots. Validate and scale faster than going it alone.
Researchers & universities
Commercialise IP and see research create real-world impact. Attract industry funding. Spin out ventures. Bridge the lab-to-market gap.
Government & public sector
Deliver public services more efficiently. Stimulate regional economic growth. Support national priorities in defence, health, climate and digital infrastructure.
Learning
Tools, games & reading
Curated resources — grounded in research and practice — to help founders, innovators and corporate teams learn, upskill and navigate the open innovation landscape.
🎮 Interactive learning game
Breaking the Boundaries: The Open Innovation Quest
An interactive simulation game that puts you in the role of an innovation leader. Learn OI principles through strategic play — and earn a certificate of completion. 🏆
🏆
Certificate
🎯
Strategy
Frameworks & toolkits
OI Strategy
Open Innovation Strategy Canvas
A structured one-page canvas — designed by Marisol Menendez in 2019 — for mapping your open innovation strategy across two key layers: Strategy (distance to core, time frame, depth of change, certainty of result, business model, geography, property) and Open Innovation (direction, internal/external, scope of action, level of impact, intended results, stakeholders). Includes built-in satisfaction and maturity self-assessment scales.
marisolmenendez.com ↗
Strategy
Business Model Canvas
Osterwalder's one-page framework for mapping, testing and pivoting business models. Essential for early-stage ventures and corporate innovation teams.
strategyzer.com ↗
Validation
Lean Startup Methodology
Eric Ries's build-measure-learn loop for rapid hypothesis testing. Reduces waste, accelerates learning and guides product-market fit.
theleanstartup.com ↗
Research
Jobs-To-Be-Done (JTBD)
Clayton Christensen's framework for understanding why customers buy. Helps innovators uncover unmet needs and design genuinely useful solutions.
jtbd.info ↗
Design
Design Thinking (Stanford d.school)
Human-centred approach covering empathise, define, ideate, prototype and test. Widely used in corporate innovation programs globally.
dschool.stanford.edu ↗
AU-specific
R&D Tax Incentive Guide
The Australian Government's R&D Tax Incentive provides a tax offset for eligible R&D activities. Understand what qualifies and how to claim.
business.gov.au ↗
Essential reading
OI
Open Innovation — Henry Chesbrough (2003)
The foundational text that defined the field. Essential reading for understanding the theory and business case for open innovation.
Book · Foundational
OH
The Oxford Handbook of Open Innovation (2024)
Edited by Henry Chesbrough, Agnieszka Radziwon, Wim Vanhaverbeke and Joel West. The definitive academic reference on the state of open innovation — theory, practice and future directions.
academic.oup.com ↗
Book · Oxford University Press · 2024
VC
Venture Clienting: How to Partner with Startups to Create Value
Tobias Gutmann, Sebastian Greiss & Christian Hüttenhein. The definitive guide to the venture clienting model — how large organisations can access startup innovation through procurement rather than equity, with practical frameworks for running pilots and building internal capability.
amazon.com.au ↗
Book · Practical guide · Venture clienting
BB
Beyond The Buzz: Unpacking the forms and practices of dedicated open innovation functions
Dąbrowska J, Keränen J, Mention A-L. (2024). California Management Review. Empirical study examining how organisations structure and operationalise dedicated open innovation functions beyond the hype.
Journal Article · California Management Review · 2024
SW
Waking the sleeping beauty: Swarovski's open innovation journey
Dąbrowska J., Lopez‐Vega H. and Ritala P. (2019). R&D Management, 49(5), pp.775–788. A landmark case study on how a heritage luxury brand opened up its innovation model — with lessons for any incumbent.
Journal Article · R&D Management · 2019
OI
Open Innovation 2025–2026 Outlook — Mind the Bridge
Annual global report on the state of open innovation between startups and corporations — covering deal flows, program structures, strategic trends and regional comparisons.
mindthebridge.com ↗
Report · Mind the Bridge · 2025 edition
SG
Startup Genome Global Startup Ecosystem Report — Annual
The world's most comprehensive benchmarking of startup ecosystems globally, including detailed data on Sydney and Melbourne.
Report · Annual · Free download
AU
StartupAUS Crossroads Report — Annual
Australia's flagship annual report on the state of the startup ecosystem — policy, funding, talent and ecosystem health.
Report · Annual · Australian focus
Podcasts, listening & watching
Open Innovation Playlist
Curated Spotify playlist covering open innovation theory, practice and ecosystem insights
Corporate Venturing Podcast
By Davide Ritorto — exploring corporate venture capital, open innovation and startup-corporate collaboration
Design Thinking Podcast
Conversations on design thinking, innovation and creative problem-solving approaches
🎬 Watch
Communities & events
Australia's peak startup body — policy advocacy, events and national ecosystem intelligence
National
Curated listing of hackathons, pitch nights, investor meetups and innovation events across Australia
All cities
Find local founders meetups, innovation groups and tech communities across every Australian city
All cities
Australia's largest innovation, music and culture festival — annual event bringing global innovation to Sydney
Sydney · Annual
Annual technology conference and exhibition covering digital transformation, AI and enterprise innovation
Sydney · Annual
Innovation in context
Open innovation does not happen in a vacuum. Understanding the sustainability imperative and the ability to navigate uncertainty are increasingly central to how organisations design and lead their innovation strategies.
🌱 Sustainability & open innovation
Sustainability is no longer a side agenda in corporate innovation — it is becoming the primary driver. Open innovation is uniquely suited to addressing complex sustainability challenges that no single organisation can solve alone, enabling the cross-sector collaboration, shared IP and co-investment models that systemic change requires.
Circular Economy + OI
The circular economy — keeping materials in use, eliminating waste — is fundamentally an open innovation challenge. No company can close its own loops alone: it requires ecosystem partnerships, shared infrastructure, cross-industry data and co-designed business models.
OI mechanisms used
- Industry symbiosis networks (waste = input)
- Open product design and repair ecosystems
- Cross-sector material flow partnerships
- Shared reverse logistics infrastructure
AU relevance: CSIRO Circular Economy programs; National Waste Policy Action Plan; Ellen MacArthur Foundation Australia network.
Clean Energy Transition
The clean energy transition is one of the largest open innovation opportunities in Australian history — spanning technology, finance, regulation, infrastructure and behaviour change. No single actor has all the pieces.
Key OI models in AU
- Corporate-startup co-development (EnergyLab)
- Government-industry co-investment (ARENA, CEFC)
- University-industry research translation (CSIRO)
- Blended finance for climate tech (The Planet Fund)
Key resource: CSIRO's Net Zero Futures report; Clean Energy Finance Corporation innovation strategy; EnergyLab AU portfolio insights.
ESG as OI Driver
ESG (Environmental, Social, Governance) reporting requirements are pushing corporations to innovate beyond their own boundaries — sourcing sustainable solutions, engaging communities and partnering with startups, NGOs and government to meet commitments they cannot fulfil internally.
How ESG drives OI
- Scope 3 emissions require supply chain OI
- Social impact mandates drive community co-design
- Governance expectations demand transparent partnerships
- Investor pressure creates urgency for innovation speed
Key reading: GRI Standards; TCFD Framework; KPMG Survey of Sustainability Reporting; B Corp certification ecosystem.
Ellen MacArthur Foundation — Circular Economy resources
The global authority on circular economy thinking — frameworks, case studies and tools for building circular business models through open collaboration
↗
CSIRO — Circular Economy & Sustainability research
Australia's national science agency research on sustainable materials, circular systems and clean energy innovation — directly relevant to Australian open innovation practitioners
↗
ARENA — Australian Renewable Energy Agency
Federal agency funding open innovation in renewable energy — grants, co-investment and knowledge sharing programs connecting industry, research and startups
↗
🔭 Navigating uncertainty: foresight tools & methods
Effective open innovation strategy requires the ability to act under uncertainty — to sense weak signals, anticipate disruption and design for multiple futures. Strategic foresight provides the methods to do this systematically, moving from reactive to anticipatory innovation management.
Weak Signals
Early detection
Weak signals are early, ambiguous indicators of potentially significant future developments — often dismissed as noise before they become obvious trends. Systematic weak signal scanning is a core competence of leading corporate OI functions.
How to use it
- Define signal sources (academic papers, startup activity, fringe communities, patents)
- Scan broadly across sectors, not just your industry
- Filter by novelty, early adoption rate and potential impact
- Cluster into emerging themes for strategic discussion
Used by: Nokia Bell Labs, Shell Scenarios, CSIRO Futures
Wild Cards
Low probability, high impact
Wild cards are sudden, unexpected high-impact events that conventional planning ignores. Scenario planning that includes wild cards builds organisational resilience and prevents strategic blindness — especially critical in open innovation ecosystems that span many sectors.
How to use it
- Brainstorm events your strategy assumes won't happen
- Map their potential impact across your innovation portfolio
- Design early warning indicators for each wild card
- Build contingency pathways into your OI partnerships
Examples: COVID-19, generative AI emergence, sudden regulatory shifts
Future Wheel
Consequence mapping
The Future Wheel (Jerome Glenn, 1972) maps the cascading second and third-order consequences of a trend or event. It visualises how a single change ripples outward — helping innovation teams understand systemic implications before committing to an OI partnership or investment.
How to use it
- Place a trend or event at the centre
- Map immediate first-order consequences around it
- For each consequence, map second-order effects
- Identify which consequences represent OI opportunities or threats
Try it: millennium-project.org ↗
2×2 Scenario Matrix
Strategic scenario planning
The 2×2 scenario matrix selects two critical, high-uncertainty driving forces and plots them on perpendicular axes to generate four distinct future scenarios. Each quadrant represents a plausible world — forcing organisations to innovate strategies that are robust across multiple futures.
How to use it
- Identify the 2 most uncertain and impactful driving forces for your sector
- Create a 2×2 matrix with each force as an axis (high/low)
- Name and narrate each of the 4 resulting scenarios
- Test your OI strategy against each scenario — does it hold?
Pioneered by: Shell Global Scenarios; used by OECD, World Economic Forum, CSIRO Futures
Horizon Scanning (PESTLE+)
Environmental scanning
Horizon scanning (extending PESTLE: Political, Economic, Social, Technological, Legal, Environmental) systematically monitors the broader environment for emerging issues. In OI contexts it helps identify which external trends are creating new partnership opportunities or threatening existing ones.
How to use it
- Assign scanning responsibilities across your team by domain
- Run monthly horizon scans across PESTLE+ dimensions
- Rate signals by certainty (high/low) and impact (high/low)
- Feed insights directly into OI strategy and partner scouting
Tools: UK Govt Horizon Scanning ↗ · CSIRO Futures
Futures Literacy
Mindset & capability
Futures literacy (Riel Miller, UNESCO) is the capability to use the future in fundamentally different ways — not to predict it, but to imagine alternatives and use those imaginings to act differently today. It is the foundational mindset for any organisation embedding foresight into its open innovation practice.
How to build it
- Run Futures Literacy Laboratories (FLLs) with mixed teams
- Distinguish between "anticipatory assumptions" and facts
- Practice reframing current challenges through multiple futures
- Embed futures thinking into OI partnership design processes
Key reference: UNESCO Futures Literacy ↗ · Riel Miller (2018)
OECD Strategic Foresight
OECD's strategic foresight programme — methodologies, reports and tools for policy and organisational foresight, including megatrends shaping innovation ecosystems globally
↗
CSIRO Futures — Australian foresight
CSIRO's dedicated futures and foresight team — horizon scanning, scenario planning and megatrends analysis specifically for the Australian context
↗
WEF Global Risks Report — Annual
The World Economic Forum's annual assessment of the most significant global risks — essential context for OI strategy, partnership design and investment priorities
↗
European Commission — Research & Innovation Foresight
EU foresight studies on the future of research and innovation ecosystems — directly relevant to understanding where corporate OI is heading globally
↗
Australian grants & funding guides
business.gov.au — Grants & Programs Finder
The Australian Government's official portal listing all federal grants, loans and support programs for businesses and researchers
↗
DISR — Industry Funding & Incentives
Federal Department of Industry, Science and Resources — funding for commercialisation, R&D and export growth
↗
ATO — R&D Tax Incentive
Up to 43.5% tax offset for eligible R&D activities. ATO guidance on what qualifies and how to register with AusIndustry
↗
AVCAL — VC Market Research Reports
Australia's private equity and VC industry body — quarterly market data, investment trends and fund performance reports
↗
