The innovation process in this technology world are getting more complex day by day. Innovation is playing a vital role in todays business world. There is not a single area where innovation has not occupied its place. Effective innovation has been identified as a critical success factor to all the business sectors. Therefore, to acquire “State of the art innovation”, which increase competitiveness and effectiveness, we need to know the factors which affect the process of innovation. The success of innovation to be “State of the art innovation” is dependent on the appropriate way of innovation process. In this process, open and closed innovation play an important role. Open innovation is about involving far more actors in the innovation process, from researchers to entrepreneurs, to users, to governments and civil society. The selection of a suitable innovation process is a complex human act. Therefore, in this thesis, on the basis of literature review of innovation and open and closed innovation and an interview with respective personnel of RUBBLE MASTER HMH GmbH, I will come to conclusion that, we should be innovative in a way which are accepted by consumers and users. But before coming to conclusion, I would do a detailed study on how RUBBLE MASTER HMH GmbH is performing its innovative activities. I would examine if its base on open innovation or closed innovation, and also if one of them is not appropriate for RUBBLE MASTER and its society, what is the reason behind it. Keywords: State of the art innovation, RUBBLE MASTER HMH GmbH (RM), Open and close innovation.