Open Innovators Outperform the Market by 16.9%
December 7, 2009 10 Comments
At the Open Innovation Summit last week in Orlando, there were a number of companies there discussing their various initiatives for open innovation. What is open innovation? UC Berkeley professor Henry Chesbrough, perhaps the father of the movement, formulated this definition several years ago:
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.
At the Summit, several companies expressed their growth related to and/or impact of open innovation:
Given the way these companies described their open innovation efforts, I decided to check out their stock performance. Hat tip to Jackie Hutter for suggesting this idea.
The table below compares the 5-year performance of the companies presenting at the Open Innovation Summit against the S&P 500:
It’s not a clean sweep, but most of the companies have outperformed the S&P 500 handily the past five years. While it’s not all due to initiating open innovation, it appears that you can’t rule out its influence on company performance.
Here’s how industry consultant Stefan Lindegaard describes the open innovation landscape:
I also argued that only about 10% of all companies are adept enough at open innovation to get significant benefits today. Another 30% have seen the light and are scrambling to make open innovation work and provide results that are worth the bother. I call them contenders.
The other 60% are pretenders—companies that don’t really know what open innovation is and why or how it could be relevant for them.
Looking for growth ideas? See what the firms in this open innovators stock index are doing right.