Innovation can be difficult and expensive
Most companies struggle for the right balance between scaling operations and investment into future products or services. Even with a strong desire to look to the future, most companies do not possess the necessary resources to continuously innovate. Some of the biggest companies in the world like Exxon Mobil, Target, Intel, and Cisco choose to invest in venture and startup programs knowing that inventive ideas may come from outside their organizations.
What is Open Innovation?
A model whereby companies utilize outside ideas and concepts to advance their capabilities.
Want the formal definition? According to Wikipedia