Open innovation Innovating successfully in the 21st century

Open innovation Innovating successfully in the 21st century

Open innovation Innovating successfully in the 21st century

Open Innovation people will give different definitions of the term making it difficult for that outside academia to put the concept into practice effectively. In the same way that the Eskimos have many words for "snow," the term "open innovation" has taken on multiple meanings. call this model of vertical integration "closed innovation." To sum it up in one sentence, open innovation is "the use of internal and external flows of knowledge to accelerate internal innovation and expand markets for external use of such innovation. It presupposes that companies can and should use ideas and pathways both internal and external to the market as they see progress in their innovation. These business models access internal and external ideas to create value while defining internal mechanisms to retain part of that value. There are two main avenues through which ideas flow in open innovation: from 'outside in' and 'from inside out. Unlike the outside-in path, this aspect of the model has been less explored and, therefore, is still not well understood in either the academic or the business world.

SCHISM IN THE DEFINITIONS OF OPEN INNOVATION

This interpretation ignores the business model and does not take into account the concept of "false negatives. Eric von Hippel's work, for example, analyzes "open and distributed innovation", drawing inspiration for his analysis from the case of open-source software. Although quite careful to clarify that open innovation is not synonymous with a software model. Openly, this distinction disappears both in the work of von Hippel - who does not even cite work in his analysis - and in that of his colleagues. This is somewhat ironic because the truth is that there has been a schism within open software, the true object of Von Hippel's study. Within that community, there is marked disagreement between supporters of "free software" and those of "open software." Supporters of free software, and others, think that "software must be free." Projects like the GNU operating system were made with a copyleft approach. This means that any use of the GNU code has to be shared with the rest of the community that develops it. This fits quite well with that intellectual property does not need to be protected and, of course, does not aid innovation. envisions open innovation, users should share their knowledge for free within the community, since, as users, they already benefit directly from the innovation. Business models have no place in his approach. The capital that organizations may need to introduce their innovations — and how to obtain a return on that capital — is of no interest, however, his analysis completely ignores concepts such as investment capital, intellectual property, and business models, On the other hand, a sector of the open software community uses the term to indicate that companies that use open source can make additions to that code without being forced to share them with the community. Linux is organized like this. Companies like Google, which make extensive use of Linux, have developed several extensions to the base code that they have kept private and do not share with the rest of the Linux community. Open software allows companies to work from open or shared sources, investing in proprietary extensions. The two factions of open software agree on the value of a common heritage from which programmers can extract useful reference designs, source code, coding tools, and software testing. Linus Torvalds, the creator of Linux, is clearly in the "open" field (not the "free" field). He is dismissive of Richard Stallman's proselytizing of "free software": In my idea of open innovation, intellectual property is not only allowed, but it is what enables companies to collaborate and coordinate with complete confidence because they know that they will be able to enjoy some protection against direct imitation by other members of the community. It is a pragmatic view of innovation that leverages input from users, but also other players, such as investors, intellectual property holders, and marketing and business development staff. Both conceptions of innovation have in common the notion that being open is a power-generating mechanism that stimulates innovation. . At this point, hobbyists give way to companies that go to the market to commercialize these innovations, create business models to make a profit, and need capital investment to generate growth. The true social impact of an innovation is not evident until it has been commercialized and produced on a large scale in the market.In short, supporters of open innovation think that a legal regime and business models can and should be in place to activate the open process, while supporters of free innovation (or "open and distributed innovation") do not.

THE OPEN INNOVATION MODEL

In a closed model of innovation, research projects are launched from the scientific and technological base of the company (Graph 1). Then they enter the development phase, where some are rejected and others move on to the next process. Only a few projects that have passed all phases will end up on the market. AT & T's Bell Labs is a good example of this model, with notable advances in research but the culture was withdrawn in itself. Other famous cases of this model in the 21st century would be IBM's TJ Watson Research Center, Xerox's PARC, GE's Schenectady Laboratories, Merck, and Microsoft Research (it is worth mentioning that each of these prestigious institutions significantly altered their model of research).

INNOVATE THE BUSINESS MODEL

As the Xerox PARC analysis and the intellectual property debate demonstrate, the business model plays a crucial role in the innovation process. As I pondered this point more carefully, I discovered that I could afford a book. Hence Open Business Models, published in 2006. In it, instead of considering fixed business models, as I had done in my first book, I have examined the consequences of being able to innovate in the business model itself. The book also offers a maturity framework for business models, from consumer goods (offering undifferentiated products) to the most valuable, platform business models. Platform models are more open because they allow third parties to innovate in our architecture, our system, our platform. And they often allow others to license their unused technologies for other business models. This makes continuous investment in R&D more sustainable and even generates competitive advantages. P&G, for example, is famous for embracing open innovation from the outside through its Connect + Develop initiative. But P & G's business model is also open to licensing technologies to others. This is not as weird as it might sound, because P & G has a clear strategy on how, when, and under what conditions it licenses these technologies. As Jeff Weedman of P&G confided to me:

OPEN INNOVATION FOR SERVICES

Recently it has begun to study how innovation occurs in service companies. Half or more of the GDP of most of the 40 most prosperous OECD economies comes from the service sector. In addition, many companies are experiencing a turnaround towards services. Xerox now derives more than 25% of its revenue from services. Sometimes what is happening is that the business model is changing: a product business becomes a service business. For example, a GE aircraft engine can be sold for tens of millions of dollars to an aircraft manufacturer. That same engine could also be leased from the same manufacturer through the company's Power by the Hour program. In the first case, it would be a product transaction. In the second, a service. GE's benefits from the transaction come from after-sales services, parts, and other ongoing revenue that will accrue over the thirty-year life of the engine. When you sell your engine as a product, you have to compete with many independent suppliers for after-sales service. With a Power by the Hour offers, all that value stays with GE. More generally, to innovate in services it is necessary to find a balance between standardization and customization. Standardization allows repeating activities many times with great efficiency and spreading the fixed costs of those activities among many transactions. Personalization allows each client to obtain a product or service that is fully tailored to their needs. The problem is that standardization denies customers many of the things they want, while personalization counteracts some of the benefits that standardization brings.

Conculation

The effectiveness of open innovation is not limited to a few elite companies. Makes more effective use of internal and external knowledge of all types of organization