Open Innovation versus Closed Innovation: Turn to the Left or Turn to the Right?

For a company, Innovation is the driving force behind the company’s sustainable growth. Essentially, it is the process of developing new ideas to create value and enhance the product or service to meet various market demands.

As an old saying goes, “All roads lead to Rome”. Likewise, not all innovation processes follow the same way but they also impact a company’s success significantly. Today, we will talk about two of them, open innovation and closed innovation.

Open is “Left” and Closed is “Right”

In Ancient China, people used “left” and “right” to express “aggressive” and “conservative” to a certain extent. I think that is matched for open innovation and closed innovation because the front one is much more radical than the behind one.

Closed innovation, “the Right”, is considered a traditional approach to research and development. Closed innovation companies operate in a self-contained innovative environment. They rely on their staff and R&D department only. They own some confidential knowledge and a absolutely independent lab. Besides, they prefer that all products or services be created by staff innovations within a company. Secret, Self-contained, and Exclusive are the features of closed innovation, all are similar to “the Right”.

On the contrary, open innovation, “the Left”, is a modern approach to innovation management, which emphasizes the external driving forces. Open innovation companies encourage breaking boundaries between different companies and exchanging their sources of knowledge, ideas, suppliers, and so on. Open innovation companies prefer to communicate with each other and leverage external creativity to develop. Collaboration, sharing, and in public are the features of open innovation.

So, “the Left” or “the Right”, how do you choose it?

Turn to “the left”: Open Innovation is Constantly Growing

With the penetration of education and the change in employment value, the availability and mobility of highly qualified specialists are increasing. It makes the specialized supplier increase as well. They can provide creative ideas, strategies, and technology for the same type of companies to complete the research together in an open environment so that they can meet the new demands of consumers. Therefore, Open Innovation is acceptable by companies and it is constantly growing.

As we know, China’s intelligence-driving technology and electrification vehicle technology are leading the world. The reason for this result is that amounts of Chinese companies are using the Open Innovation strategy. For example, as a Chinese vehicle company, GAC group is showing its intelligence-driving technology in order to strengthen its technical brand image. However, this technology is completed by collaboration with many advanced technical companies. Some of them are start-up companies invested in by the GAC group, and some are external excellent partners. They are in charge part of system research respectively. One of the companies is SenseTime, which is responsible for the visual identified by image. SenseTime's self-invention system can analyze pedestrians’ and car actions under the view transferred by sensors. This function of the intelligence-driving technology is like the eye on a person. Benefiting from open innovation, the GAC group can gain this system access permit from SenseTime and add it to its own intelligence-driving technology, improving the identified accuracy rate from 98.52% to 99.95% eventually.

Another prime case is hyper SSR, which is the first Chinese electrical supercar made by the GAC group. According to official data, the brake distance of SSR is 10 meters shorter than other traditional supercars and the reason is also to obtain the latest carbon ceramic brake disc technology through an open innovation strategy.

Turn to “the right”: Closed innovation maintains your ingenuity

However, closed innovation is still important in spite of the open innovation development. The company finds that open innovation can involve high costs. Whatever license, technology, knowledge, network, system, or other intellectual properties, open innovation does not mean that companies can be free to gain them. In essence, open innovation is a process of the same value exchange.

Most importantly, technology share means a unique loss because it is probable for your competitors to produce the same if you and your competitors own equal technology. Closed innovation can avoid these risks perfectly.

Based on the view that innovations are developed by companies themselves. All technology, know-how, and intellectual property, should be stayed under the company’s control. Closed innovation needs to invest large sums and talents in internal R&D but as a huge return, it can give us an exclusive and own intellectual property for the company's long-term development. It is a protection for your ingenuity accordingly.

Thus, Companies need an in-house R&D team to implement closed innovation, not except by the GAC group. GAC group has its own R&D department all over the world, achieving 24-hour consistent research. Relying on this model, the GAC group creates many in-house innovative technologies. One is all-solid battery technology. According to the introduction in the 2024 GAC Tec. Day event, the energy density of all-solid batteries is over 400Wh/kg and it can support vehicle recharge mileage over 1000km, which data is extremely better than competitors such as Tesla, XP, Nio, Zeeker, and so on. Besides, due to its existing state, this battery is more stable and safer than traditional liquid or half-solid batteries. Even if it is hit by damage, flooded, shot, or crashed, the battery can be guaranteed that it will not spontaneously ignite.

“All roads lead to Rome”.

Although Open Innovation has been mentioned incrementally in recent years, Closed innovation is still necessary. As we have seen, the distinction between open and closed innovation is that open innovation encourages Synergies. Companies can leverage external resources, and foster a more adaptable, fluid system. In contrast, closed innovation focuses on the internal innovation force, prioritizing proprietary knowledge, control, and independent problem-solving skills.

Whatever “the left” or “the right”, it can help a company to achieve its research needs. Even, Open innovation is not only a "substitute" for closed innovation but should be seen as complementary. the combination may be a “third road” that leads some companies to success.

In view of marketing, we can leverage corresponding angles to maximize the communication impact when a company uses different innovation strategies. If using open innovation, we can emphasize the openness of the research environment, awareness of the co-operators, and the process of co-creativity, to trust the audience that our product or services are reliable and effective. When a company uses closed innovation, marketing professionals can make a narrative about unique creativity, high competitive, epochal significance, and infinity possible, to convince the audience trying your product or services.