Hey there, in our last classes, we went over the basic building blocks of innovation management from the incremental stage gate and further models, to the uncertainty management tools, capabilities, and functions. However, we never touched on an important subject for innovation management; partnerships. If you follow the subject of innovation, you know the large companies don't do it all themselves. There's a lot of cooperation going on. A lot of investments in startups, and even direct collaboration with customers should design your solutions. The next two weeks will be dedicated to understand how partnerships can help companies innovate. Let's get to it. You have probably already heard about open innovation. If you didn't hear the specific concept, I'm sure that you have seen related ones such as ecosystems platforms or corporate entrepreneurship. These are all very appealing names. Rather they actually mean. In this video, I'll guide you through it. In the earlier 2000s, a professor called Henry Chesbrough from Berkeley University started to receive a lot of attention for his work. He was studying ways that companies use to gain access to ideas, technologies, and knowledge outside of their own boundaries. His concept, open innovation was an instant hit. Academia managers and the media couldn't get enough of it. But some scholars and managers were puzzled. Was there ever such a thing as close innovation? R&D departments, usually collaborative universities and research institutions, engineers worked closely with suppliers to make sure that a new feature will integrate well with other parts of the final product. Customers participated in innovation projects all the time from generating ideas to giving their feedbacks on prototypes. This has always happened in one way or another. However it was a very unstructured and often ignored part of innovation management. What Chesbrough proposed is that open innovation's a game changer, as long as we treat it as a central aspect for developing novel solutions. Formerly open innovations defined as the use of purposeful inflows and outflows of knowledge to accelerate internal innovation. This is a fancy way of saying that organizations can use resources and ideas that are not inside the company to develop new products, services, and processes. The main idea behind open innovation is to admit that no matter how competent a company is, no matter how brilliant the people working in the R&D department are, there are always useful ideas and knowledge that are not inside the organization. Traditionally, companies have a verticalized eye in this structure. They come up with their own new product ideas, they do the research themselves and they develop and sell these products alone. The issue is, what about the great ideas that are not inside the company? Isn't there perhaps a brilliant scientist working in a university lab that has great ideas for new products, or maybe a new startup in your field who's developing a revolutionary solution? This is the main premise behind open innovation. Companies can become badder innovators if they open up their boundaries, if they invite other people and other organizations to help them during the ideation, development and launch of a new solution. However, there's also a main challenge that comes with open innovation. If you share the ideation process, the development, and launch of a product, you will probably have to share the financial returns as well. This is why open innovation is not only about creating value, making products and services that will be a hit in the market, but also about making sure that you capture that value. That is, money won't be lost somewhere along the way. In this video, we introduced the concept of open innovation. In the next one, I will discuss some cases and show how companies can leverage its powerful idea to innovate. See you there.