Open Innovation in industrial SMEs

This article has been translated for your convenience using machine translation. Reasonable efforts have been made to provide an accurate translation. The official text is the German version of this content.

Imagine the following scenario: It’s Monday morning. Instead of sitting in the first of what feels like 20 meetings that day, you log into your company’s innovation platform. There, you’re not only collaborating with colleagues, but also with start-ups, universities, customers, and even some of your competitors. The topic: a new product update. An engineer from Germany sketches out an idea for a new technology, which is immediately refined by a designer from Sweden and a specialist from India. Within a few hours, the first virtual model takes shape, enriched with feedback from the community.

For companies that embrace Open Innovation, this can be reality. They develop products faster, save costs through shared resources, and attract highly skilled talent that thrives on genuine collaboration. Competition no longer hinges on secrecy. Instead, the companies that succeed are the ones that collaborate most effectively. Innovation becomes a dynamic, global effort. Boundaries between companies, industries, and nations fade away. At the end of the day, what matters is the shared solution.

What is Open Innovation?

In general, Open Innovation means that companies open their internal innovation processes to external knowledge, technologies, and ideas. Innovation no longer comes exclusively from the company’s own R&D department—if it even has one—but is developed together with, for example, customers, partners, universities, or start-ups.

By strategically leveraging knowledge that exists outside their own organization, companies increase their innovation potential—and with it, their competitiveness. This is becoming increasingly important for small and medium-sized enterprises in our globalized world. Globalization, combined with ever-shorter product life cycles, creates more pressure on individual players and raises risks. Many companies simply cannot afford to keep their innovation processes behind closed doors.

Of course, Open Innovation is no one-way street: it only works in both directions. Companies must be willing not only to draw on external knowledge, but also to share their own.

What Open Innovation means to us

At Possehl Digital, Open Innovation means systematically opening up to external knowledge, fresh ideas, and technological impulses. We see innovation as a team sport. That’s why we rely on exchange, ecosystems, and collaboration. It’s about thinking beyond company boundaries and working together with start-ups, technology partners, customers, and other companies to shape the future.

How we implement Open Innovation in our group

The Possehl Group consists of more than 200 small and medium-sized companies, with locations in over 30 countries and around 13,500 employees in total. And yet, the Group does not operate through centralized corporate governance. Instead, it deliberately relies on a decentralized, entrepreneurial model.

For us, Open Innovation is not just a theoretical concept—it is both a central tool for securing the future of the Group and part of our lived reality. So, what does this look like in practice? We pursue several approaches to promote knowledge transfer as broadly as possible.

Approach No. 1: The Possehl Group Cluster Ecosystem

With our cluster ecosystem, we deliberately create connections between Group companies, technologies, and partners. This ecosystem forms the backbone of our innovation strategy. It is a network designed primarily to promote knowledge transfer. The ecosystem is divided into clusters organized by functions such as Sales & Marketing, IT, or Sustainability, as well as by technologies including AI, New Work, and Data Analytics. In regular (virtual) meetings, employees from across the Group exchange experiences and best practices, supporting one another in developing innovative solutions. 

Approach No. 2: The Possehl Group Innovation Conference

For the past seven years, the Possehl Group has hosted its annual Innovation Conference (formerly the Digital Conference) at the site of one of its companies. Each year, around 250 colleagues from across the Group come together to explore topics around digital transformation and safeguarding the future viability of the industrial Mittelstand.

At the conference, we engage with new technologies, innovative digital projects, and practical examples. This September, we will once again gather—this time at HF Group in Belišće, Croatia. We’ll keep you updated.

Approach No. 3: Partnerships

Alongside our internal networking initiatives, Possehl Digital is also an active member of several associations and networks. For example, we are involved in the VDMA and Gateway49, and since this year, also in Maschinenraum. Our newest network partner is Next Level Mittelstand.

Each of these initiatives offers different opportunities for exchange and collaboration. Here, industrial SMEs from a wide range of industries can come together to learn, share knowledge, and benefit from best practices.

The challenge: Balancing efficiency and innovation

Many companies today face the question: How can we keep processes lean and organizations efficient while maintaining our innovative edge? The solution is not to choose one over the other, but to consciously embrace both at the same time. Open Innovation can serve as the bridge. By recognizing new opportunities early and implementing ideas, companies not only enhance their innovative power but also strengthen their operational excellence.

Example: encoway—success through Open Innovation

Our partner encoway is a prime example of how Open Innovation can enable sustainable success. From the very beginning, the Bremen-based software company has worked closely with industry partners to develop innovative solutions in the fields of product configuration and CPQ (Configure Price Quote). Applications are created in practice, directly with customers from the machinery and plant engineering sectors—making them highly relevant, scalable, and efficient.

Whether it’s digital product configuration, quote automation, or data-driven sales processes, encoway demonstrates how open innovation processes make technological complexity manageable and create real added value for industrial companies.

For encoway, Open Innovation has been the key to success from the very start. 

Conclusion

Open Innovation shows us that we can be more future-ready and more innovative if we don’t try to shape the future alone, but rather through collaboration. It is collaboration that makes us strong and resilient. We cannot afford to keep our knowledge to ourselves—neither as individual companies nor as an industry as a whole. Those who are willing to share ideas, experiences, and technologies today uncover new opportunities and strengthen their competitiveness.

In the end, it’s not those who guard their knowledge most closely who win, but those who collaborate most effectively.