Formula 1 has been at the awesome edge of innovation for decades, yet most of the time you would have been pushed to find the fruits of its research adopted elsewhere. Not any more. Technology developed by F1 engineers at McLaren – in order, among other things, to speed up its pit stops – is being used by air traffic control at Heathrow to predict aircraft movements two hours before they happen.

McLaren's pit stop technology has also been used at Great Ormond Street hospital in London to help streamline the handover between surgery and intensive care. These are but two examples of "open collaboration" between different industries which helped McLaren to win one of the five prizes – for open innovation – awarded in this year's Open Innovation competition organised by Nesta and supported by the Guardian.

Open innovation is coming of age as companies and public sector bodies realise that if they want to stay competitive in future against the increasing global challenges, it makes absolute sense to collaborate with outsiders. Innovation is happening at a breathless pace in nearly every industry as the digital revolution demolishes the old business models.

But how do you know whether something being developed in an unrelated industry couldn't transform your own in the way the principles of Last.fm have been applied to scientific research or how someone from the concrete industry solved the problem of getting rid of the oil from the Exxon Valdez oil disaster 20 years on?

Being one of the judges of the competition opened my eyes – not only to the huge potential of open collaboration as reflected in the winners, but also to some of the weaknesses of the model. First, the good news. We were required to choose winners from a shortlist of 100 divided into five sections. Winner of the crowdsourcing section was Cloudmade, the company whose co-founder was responsible for starting OpenStreetMap, which is using volunteers to map the entire planet street by street with great success. The maps are free, but CloudMade has now built a company on top to employ people to exploit it commercially, a great example of how open innovation can be combined with a business model to create jobs for the future.

The admirable wikihow.com, which uses crowdsourcing to generate "How to" videos that attract 25 million visitors a month, won the Co-creation award, while Open Office, the open source alternative to Microsoft's Office, won the Open Source Software section in recognition of the progress that has been made over the years to make it more user-friendly. The winner of the Open Business award was Zopa, which provides a peer-to-peer lending and borrowing service that has grown strongly during the banking crisis although it is still a small organisation. If, and it is a big if, it can continue to provide a safe alternative to banks even though it doesn't have a government guarantee (it relies on spreading the risk of loans among dozens of different recipients), then customers will be satisfied and taxpayers could avoid future bailouts.

The weakness of the model? It was crystallised during an animated discussion about whether Apple should be considered for an award. Yes, of course, because its amazing store has generated more than 150,000 new apps in barely two years, creating a hotbed of innovation out of nothing. No, never, because of its control-freakishness in shutting out Flash animations (endemic on YouTube), exploiting a monopoly payments system and very strict take-it-or leave it rules about the process of making apps.

The trouble is that this Kremlinesque approach has resulted in such beautiful game-changing products as the iPhone and iPad that are a delight to use as reported in the Observer. Contrast that with Google's adoption of open source software for its Android phones. This is much better in theory as it allows developers to do their own thing but in practice, at least so far, this results in all sorts of different software versions that don't always work too well on the varying sizes and hardware of different Android phones. As Steven Johnson has pointed out, Steve Jobs has turned a walled garden into a rainforest.

There is no doubt that open source solutions are on a roll and there are lots of areas where they will sweep all before them. The problem yet to be solved is how to harness the freedom and creativity that open collaboration offers with the need to have consumer friendly products that non-geeks will want to buy with their own money.

The free Linux operating system, devised by volunteers all over the world, is one of the wonders of the web but it still hasn't had much impact on Microsoft's near 95% domination of the market. Does the open innovation movement need a benevolent dictator like Steve Jobs or is that not possible because of its, laudable, democratic base?

• This article was amended on 16 April 2010. The original said that CloudMade was responsible for openstreetmap.org. This has been corrected.

