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Open Innovation: The Role of Developers and APIs

A study by CMO estimates that more than half of Fortune 500 companies are engaged in open innovation projects.

The original definition from its creator, UC Berkeley Professor Henry Chesbrough, is “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.”

More recently, it is defined as “A distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with the organization’s business model.” This more recent definition acknowledges that open innovation is not solely company-centric: it also includes creative consumers and communities of user innovators.

We use a simpler way to describe Open Innovation – It’s taking innovation ‘out of the building’. In other words, it’s allowing people or organizations not part of or controlled by you to have access to your technology, data or services and to build new product features or even whole new applications often in combination with other companies’ open innovation services. Scary, eh?

Developers as Innovation Partners

Traditionally, marketing was made up of the 4P’s: product, promotion, price and place. Over time, sales and strategy took over product, price and place, leaving just the promotion piece to marketing. However, as companies realize the importance of being customer-centric, they have brought marketing back into the fold by putting the “product” in their hands by enabling feedback and knowledge exchange. This is an example of open innovation.

The boundaries between a company and its environment have become more permeable. “Partners” in open innovation can include other businesses, customers, universities, scientists, public institutions or any other beneficial entities.  A key open innovation partner for many companies is developers. In these companies, product feedback and development often comes from the developers who use tools and services.

APIs Enable Open Innovation

More and more companies are moving from a closed innovation model to more open approaches to accelerate their internal innovation process. Simply put, open innovation is the platform that developer marketing and third-party developer ecosystems are built on.

Open innovation is realized with APIs. While they are not the only avenue, APIs are the main way third-party developers expect systems to interact with their experiences. They enable developers to integrate data to enhance different states of an application, perform transformations to the data given the context of an interaction, and store the results a given transaction within its corresponding system of record.

This speaks to the importance of APIs in enabling developers to distribute a powerful company asset: information. By leveraging information gathering via API interaction as well as direct developer feedback, tech companies are on their way to realizing the power of open innovation.

It’s time to take innovation out of the building. Let the vast array of external developers, designers, thinkers, and creators build new functionality and experiences for your users and customers. Ultimately they’ll do it faster, cheaper and better than any in-house team. You just need to give them the tools to do it. Open innovation is the future of product development.

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