Opening Innovation Starts Within the Organization

You’ve been in that meeting.

The leadership team gathers around a table. The CEO leans in and asks: “How are we going to innovate faster?” The room goes quiet. Someone suggests buying a start-up. Another proposes hiring consultants to find the “next big thing.” There’s talk about acquiring new technology, licensing, or partnering with universities.

And then all eyes turn to you. As the innovation lead—even if that’s not your formal title—you’re expected to have the answer. You might even feel the tug yourself: If we can just find the right external solution, our innovation problems will be solved. But deep down, you know the truth:

External innovation is seductive, but it can’t save you if you haven’t built the internal capability to absorb it.

The Mirage of External Innovation

On paper, it seems so simple: identify a promising external innovation, bring it in, and transform the business.

But reality is far messier.

Henry Chesbrough, who coined the term open innovation (Open Innovation) , studied this for decades. His research shows organizations often do succeed at sourcing external innovations, but routinely fail at integrating them.

They don’t lack ideas. They lack the capability to absorb and disseminate those ideas across their own systems.

The result? Wasted resources. Frustrated teams. Disappointed customers.

You’ve seen it yourself: the flashy acquisition that never delivers. The licensed technology no one knows how to implement. The partnership that collapses under internal resistance.

Why the Best Programs Start Inside

Here’s what the most successful innovation leaders understand:

Before you look outward, you must first open up internally.

Innovation isn’t just about finding good ideas. It’s about building the organizational muscle to execute them consistently and effectively.

That muscle doesn’t appear overnight. It doesn’t arrive when you buy a start-up. It grows through deliberate practice—starting with the knowledge you already have.

Your Hidden Innovation Asset: Internal Knowledge

Every organization is a treasure trove of knowledge.

• Explicit knowledge: documented processes, data, patents, playbooks.
• Tacit knowledge: the unspoken expertise in people’s heads, built over years of solving problems, serving customers, and adapting to change.

Too often, this knowledge stays locked in silos, buried under hierarchy, or hidden because people don’t feel safe or invited to share it.

If your company can’t harness its own knowledge to innovate, how can you hope to successfully integrate knowledge from outside?

Building the Foundation: Inside–Inside Innovation

This is where it starts.

Inside–inside innovation is about unlocking your own knowledge for your own use. It’s not glamorous—but it’s transformational.

Consider TD Bank’s iD8 program. Rather than outsourcing innovation, they invited employees to propose ideas through an internal challenge-based innovation platform.

Since its launch in 2019, more than 100,000 ideas have been submitted by TD Bankers. Over 10,000 have been implemented. Employees have even been named inventors on 1,600 patents filed since the program began.

At first glance, many ideas seem small: faster processes, better customer interactions, simpler forms.

But over time, iD8 did something much bigger. It built a culture where everyone saw themselves as innovators. It developed repeatable processes to gather, evaluate, and implement ideas. It proved that innovation wasn’t a department’s job—it was everyone’s job.

These incremental wins stacked up, creating a robust, organization-wide innovation capability.

Innovation as Organizational Practice

Think of inside–inside innovation as your organization’s training ground. It’s where you build the habits, systems, and cultural norms that make innovation repeatable:

• Creating safe spaces for idea sharing
• Developing clear processes for evaluation
• Building prototypes quickly and cheaply
• Scaling what works

It’s like strength training for your organization. Without this foundational practice, you’re not ready to lift heavier weights.

The Progressive Complexity of Innovation

Innovation leaders often talk about the Three Horizons Model, a framework first introduced by McKinsey consultants Mehrdad Baghai, Stephen Coley, and David White in their 1999 book, The Alchemy of Growth. This model helps organizations balance current business performance with future growth by categorizing initiatives into three horizons:

• Horizon 1: Focuses on improving and defending the core business.
• Horizon 2: Involves expanding into adjacent markets and nurturing emerging opportunities.
• Horizon 3: Centers on creating transformational new businesses and breakthrough innovations.

Most companies overinvest in H1 because it feels safe and underinvest in H2 and H3 because they’re risky.

But here’s the twist: Even H1 requires an open, collaborative culture. If you can’t share knowledge internally, you’ll struggle to improve even your core offerings.

That’s why inside–inside work matters so much. It’s not small thinking. It’s the foundation that makes bigger bets possible.

Growing into Inside–Out Innovation

Once you’ve built internal capabilities, you’re ready for more sophisticated approaches.

Inside–out innovation is about identifying underutilized internal assets and finding external markets or partners for them.

Procter & Gamble’s Connect & Develop program is a classic example.

They discovered they had a mountain of unused patents. Rather than leaving them on the shelf, they adopted a “use it or lose it” policy. Internal teams had nine months to commercialize new patents. If they didn’t, those technologies went on the licensing market. This created new incentives internally while opening up new revenue streams externally.

Their partnership with Clorox on the Glad brand came from this willingness to share manufacturing technology while Clorox brought branding expertise. Together, they built a billion-dollar business.

But none of it would have worked without first developing the internal rigor to evaluate, manage, and share technology effectively. Henry Chesbrough covers their example excellently in Open Innovation Results.

Preparing for Outside–In Innovation

Many organizations want to skip straight to outside–in: acquiring start-ups, licensing technology, partnering with universities.

It sounds strategic—but it’s risky without internal readiness.

Apple’s acquisition of Siri in 2010 succeeded not just because Siri was a good product, but because Apple had the processes and discipline to integrate external innovation seamlessly.

BMW’s Startup Garage thrives because BMW knows how to bring external solutions into its production pipeline. From 4,700 startups assessed, they now have 30 established as suppliers, service providers, and integral parts of the BMW Group network.

Organizations that excel at outside–in have spent years building the internal capability to evaluate, adapt, and implement external knowledge.

The Ultimate Innovation Challenge: Outside–Out

The most advanced approach is outside–out: defining big problems and incentivizing the world to solve them.

XPRIZE does this by offering millions to teams tackling seemingly unsolvable challenges: space travel, ocean cleanup, carbon capture, water desalination, and human longevity.

Or consider the DARPA Grand Challenge of 2004, which catalyzed the autonomous vehicle industry by challenging inventors to develop self-driving ground vehicles that could one day keep soldiers safe in hazardous operations.

This isn’t where you start. It’s where you arrive—after mastering internal innovation and building systems to manage complexity, evaluate wild ideas, and adapt to unexpected solutions.

Your Role: Building Innovation Capability

If you’re tasked with making your organization more innovative, your real job isn’t just to find the next big thing. It’s to build the capability to innovate over and over again.

That starts with:

• Activating internal innovation capability
• Creating systems to capture and share tacit knowledge and wisdom
• Encouraging safe idea sharing and disciplined evaluation
• Cultivating a culture of experimentation and learning
• Building the ability to scale what works

Only then can you truly benefit from external innovation—and move confidently across all four models.

The Mission We Share

At Open Solve Studio, we believe organizations shouldn’t get stuck behind customer needs or market shifts. Our mission is to help leaders like you activate innovation cultures that are open, collaborative, and endlessly adaptable. Because open innovation isn’t just about opening your doors to the outside. It’s about opening your own organization first.

If you’re ready to start, we’re ready to help.