Different Methods of Open Innovation: How Should Companies Choose?

Why do companies need a portfolio of open innovation methods?

Open innovation is not a one-size-fits-all discipline. Sectors, geographies, organisational cultures, and innovation maturities differ, so blindly copying another firm’s model rarely works. Before selecting specific tools, companies should conduct a structured portfolio and strategy exercise: defining strategic focus areas, clarifying what types of problems they want to solve externally, and identifying which internal resources can support collaboration. Only then does it make sense to decide whether to invest in scouting, competitions, crowdsourcing, or venture building.

Each method has distinct advantages and trade-offs. Some are fast and low-cost but shallow; others are strategically rich but slow and resource-intensive. The key is to build a flexible, evolving system that uses several methods in parallel, then regularly reviews outcomes with internal and external stakeholders. Over time, learning from pilots, data, and feedback allows the company to rebalance its open innovation portfolio, adding or retiring methods as markets and technologies change.

How does startup scouting through discovery teams work?

One of the most common methods is to create internal discovery or scouting teams. These teams—often composed of motivated employees—scan startup ecosystems to identify potential partners and investment targets aligned with corporate strategy. They use databases, attend conferences and demo days, visit accelerators and universities, and engage local innovation hubs. When designed well, scouting leverages the people who understand the company’s needs best: its own staff. Over time, these employees become experts at recognising which startups fit the firm’s technical and commercial priorities.

However, scouting is rarely their only job. Competing responsibilities can limit the time they devote to ecosystem work, especially at international scale. Without clear focus areas, training, and a simple way to record and reuse findings, scouting easily becomes ad hoc and amateur. To be effective, discovery teams need: defined priority domains, clear criteria for which startups to contact, a concrete value proposition to offer them, and a shared database where all interactions are documented. In global leaders, local and travelling teams operate in key regions, build long-term relationships with universities and accelerators, and periodically share insights so the whole organisation benefits from their work.

Why do representative offices in startup hubs matter?

Another powerful method is opening small representative offices inside entrepreneurial hotspots—often within co-working spaces or technology centres. Instead of trying to meet thousands of startups one by one, corporations move closer to the ecosystems where founders already work. Even a single desk in a shared workspace can dramatically increase exposure to new technologies, teams, and ideas, especially when compared with occasional visits from headquarters. Over time, some companies expand these offices, host their own events, and even offer free desks to startups selected through programmes or competitions.

Location is critical. Centres that are centrally situated, easy to reach by public transport, and affordable for startups usually create the most vibrant communities. If the venue is remote or too expensive, the number and diversity of potential partners drops. For firms with international production sites or sales offices, it is often effective to combine multiple hubs across regions and coordinate them through a simple data and governance system. Ideally, all meetings in headquarters and satellite offices feed into a common database; staff from different locations periodically meet, exchange information, and align priorities. In this way, representative offices become more than symbolic outposts—they become active listening posts and collaboration engines.

When should companies use innovation intermediaries?

Not every company can build an effective scouting network on its own. Some lack time, internal expertise, or access to deep-tech ecosystems where solutions are still in laboratories rather than in startups. In such cases, specialised innovation intermediaries can act as ecosystem brokers. These organisations maintain large databases and global networks of startups, researchers, and technology providers. For a fee or commission, they organise calls for proposals, broadcast them across their communities, and shortlist candidates that match the corporate brief. Some platforms even help build multi-partner solution teams tailored to a specific technical challenge.

Intermediaries are especially valuable in deep technology fields, where conventional startup databases mainly list ventures that have already raised funding, while important research remains inside universities and R&D centres. Yet there are caveats. The true breadth and depth of an intermediary’s network may not match its marketing claims. In some models, intermediaries charge only startups, not corporates, which can bias the pool of solutions and limit reach. When delegating research tasks, companies should therefore assess business models, transparency, and track records carefully. Combining internal scouting with selected intermediaries often offers the best balance between control, reach, and speed.

How can competitions support open innovation without becoming pure PR?

Innovation competitions—hackathons, ideathons, startup contests—are among the most visible open innovation methods. They can engage customers, suppliers, students, and startups around specific themes, while also strengthening the company’s brand and talent pipeline. Well-designed competitions offer mentoring, access to infrastructure, and the possibility of post-event collaboration or investment. They can be particularly effective when focused on clear strategic priorities, such as sustainable mobility in congested cities or digital solutions for energy efficiency.

The most common failure mode is treating competitions as one-off publicity stunts. If there is no link to real innovation needs, no plan for what happens after the awards, and only a small symbolic prize, serious startups will stay away or quickly lose interest. Experienced founders know that not all competitions are equal in the eyes of investors. To create genuine value, companies should align themes with their strategy, commit in advance to exploring pilots or partnerships with winners, and repeat successful formats over time. Involving employees as mentors and jury members also builds internal skills and familiarity with entrepreneurial ways of working, spreading open innovation culture beyond the innovation team itself.

What does crowdsourcing add to the open innovation toolbox?

Crowdsourcing platforms extend open innovation to very large communities of customers, experts, startups, and researchers. The company sets up a dedicated online portal, defines one or more topics, and invites anyone interested to submit ideas or concepts. After evaluation, selected contributors may receive prizes, co-development opportunities, or funding. Continuous, always-open platforms tend to generate high visibility and a large volume of input, especially when promoted actively in relevant communities.

Volume, however, does not always mean quality. Open-ended platforms that accept every idea on every topic often create noise rather than insight. Experience shows that better outcomes come from clearly defined themes and transparent value propositions: what problem are you asking people to solve, and what will successful contributors gain in return? Intellectual property is another key issue; rules about ownership and usage rights must be carefully designed and communicated. Some global consumer-goods companies have shown that well-governed crowdsourcing can generate billions of dollars in incremental revenue, but only when embedded in robust evaluation processes and linked to real product development pipelines.

How does venture building complement external startup collaboration?

Venture building—creating new startups from within the company—is a more recent and demanding method. Instead of only partnering with external startups, corporations deliberately spin out their own ventures to explore new markets, technologies, or business models. Two main patterns exist. In “spin-off” scenarios, a business unit or technology line is carved out as a standalone startup. In “spin-out” scenarios, employees leave the firm to found a new company around an opportunity identified internally, often with seed capital and minority equity participation from the parent.

This approach is rarely about immediate financial return; it is a strategic investment in learning, talent development, and ecosystem presence. Newly created ventures can access startup-only accelerators, grants, and networks that are closed to large corporates, while the parent company gains a window into unfamiliar markets. For the model to work, the new company must enjoy real autonomy, including independent governance and the obligation to achieve financial viability without constant subsidies. Typical structures involve the corporate holding a minority stake, with founders and external entrepreneurs owning the rest. Even failed ventures generate valuable insights. Many leaders who have tried this method compare it favourably to sending employees to top business schools: the “tuition fee” is similar, but the intensity of real-world learning is often far greater.

Key takeaways

• There is no universally superior open innovation method; the right mix depends on strategy, sector, and innovation maturity.

• Startup scouting teams work well when focus areas, criteria, and shared databases are clearly defined and maintained over time.

• Representative offices in vibrant startup hubs bring corporations closer to entrepreneurial activity and accelerate collaboration.

• Innovation intermediaries expand reach—especially in deep tech—but must be chosen carefully, with attention to networks and business models.

• Competitions and crowdsourcing can be powerful, but only when linked to real strategic needs, clear value propositions, and robust follow-up.

• Venture building is a long-term, learning-driven method that complements external partnerships by creating new startups from within.

FAQ

Should a company start with one method or several at once?
Most organisations benefit from starting with a small set of methods aligned to their strategy—often scouting plus one or two others—then expanding as they learn what works.

How often should we review our open innovation method mix?
At least annually. Regular reviews with data and stakeholder feedback help decide which methods to scale, adapt, or discontinue.

Is venture building only for very large corporations?
It is easier for large firms, but mid-sized companies can also run small, focused venture-building experiments, provided they accept higher risk and longer time horizons.

References

• Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Press.

• OECD, reports on business innovation and collaboration with external partners.

• European Commission, publications on corporate–startup collaboration, innovation contests, and crowdsourcing practices.