Innovation is changing its paradigm. It will no longer take place exclusively within the organizations, but rather be the result of the collaborative efforts between the organizations’ human resources and expert innovators external to these organizations. This paradigm shift has already taken place in many business sectors, but in others it is still yet to come, or is just beginning, as is the case regarding tourism destinations.

What is Open Innovation? It refers to the practice of integrating contributors from outside the organization in the innovation processes, not only in the stage of generating ideas but potentially in all the innovation stages. To be considered Open Innovation, the contribution of the outside innovators must be significant. Open Innovation can be used for all sorts of outputs, such as products, processes, marketing contents, business model innovation, etc.

With Open Innovation, up to 80% of the innovation-related activities may end up being carried out externally. The internal staff are left with the roles of project dissection, orchestration and reassembly, as well as monitoring and evaluating the outsourced innovation activities. The judgement-based roles of hypothesis generation and design should preferably be carried out externally, as this is likely to result in a much broader range of research options. It is then up to the internal staff to select and evaluate all these options.

Since innovation is a key factor to competitiveness, having an innovation strategy is key to improving and sustaining competitiveness. Open Innovation is the best innovation strategy to leverage the collective intelligence and creativity from the stakeholder system, which in the case of Destinations 3.0, especially contributes to bringing in expertise, knowledge and new ideas at no cost in many cases. As has been explained in previous White Papers, non-profit organizations have a unique power to foster free contribution, as do mission-driven organizations, such as Destinations 3.0.

Open Innovation reflects a new open mindset to carry out innovation, as long as it takes advantage of all the potential collaborators available in the stakeholder system and their will to contribute. This contribution may be driven through crowdsourcing, co-creation, collaborative innovation, etc. but what really matters is that the innovation processes integrate the insights, know-how and creativity from different agents, so as to enrich the innovative concept and make it more suitable for all types of stakeholders to use directly or indirectly once implemented.

Apart from bringing in a much wider variety of expertise and innovative approaches, Open Innovation outperforms traditional “closed” innovation by better managing diversity, as well as reducing risks and costs.

Firstly, opening the innovation process to a greater diversity of innovators increases the likelihood of bringing in a greater variety of innovation approaches to tackle the challenges. It will most probably yield better solutions in terms of effectiveness, efficiency, and profitability, as well as shortening the innovation process. Leveraging diverse perspectives and approaches is the core of the Open Innovation practice.

Secondly, with regards to risk-sharing, the financial risk has to be considered, i.e. paying for something without assured return, technical risks, and execution risks concerning feasible ideas but which have not been developed successfully. In Open Innovation, these risks are shared with the contributors, some of which are willing to take high risks, while other innovators’ skills and expertise allow them to tackle the innovation challenge at a lower risk. In some Open Innovation models, the innovation assignments are chosen by the innovators themselves, who have greater expertise than anyone regarding their innovative capabilities. They are therefore able to take the risk of working with a fee pattern based on results.

Finally, the innovation marketplaces are lowering the costs of the searching for experts and contracting, by developing standardized agreements including intellectual property issues. All in all, they make the process much more efficient and cost-effective. The faster and more effective the matching of assignments and innovators, the greater the reduction of the innovation cycle which thus increases the expected profitability and paves the way to an “eBay of Innovation”. It is necessary to note that the Open Innovation system is most likely to be applicable only in the case of large destination management organization and government bodies, though simplified structures could also be designed for smaller organizations.

This article is from the White Paper “Envisioning Open Innovation in Destinations”, available for download in www.envisioningtourism.com/whitepapers

Posted by Jordi Pera

Jordi Pera is an economist passionate about tourism, strategy, marketing, sustainability, business modelling and open innovation. He has international experience in marketing, intelligence research, strategy planning, business model innovation and lecturing, having developed most of his career in the tourism industry. Jordi is keen on tackling innovation and strategy challenges that require imagination, entail thoughtful analysis and are to be solved with creative solutions.

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