Open Innovation

Innovation is a central to the survival of modern companies. Many product managers have experienced different changes in the framework factors that define innovation:

• A decrease in the innovation lifecycle has taken place, and products need to be reinvented more frequently than ever to allow the company to stay ahead of its competition.
• The knowledge intensity of new product development has increased, and companies need to keep pace with technological changes, which take place at rates higher than ever.
• In several industries the knowledge requirements have increased, leading to skills shortages in particular in those areas that are responsible for the development of innovative products.

The Open Innovation Approach

In earlier times companies were closed, and tried to compete in the marketplace with unique products thereby avoiding the outflow of knowledge to the external world. The open innovation approach goes back to the work of Henry Chesbrough. In contrast to closed approach, this approach is used to accelerate innovation by means of openness, as it heavly relies on distributed knowledge flowing in, and out of a company. The business rationale behind this openness is that today’s companies can not only rely on their own knowledge and research, but need to use external interlectual property when it advances the business model. Openness helps to gather many more ideas that it would be possible with a closed approach. And it allows a company to use skills from external experts.

On the Website of the European Community can you find a nice table, which compares closed an open innovation

“Closed Innovation Principles —-> Open Innovation Principles

The smart people in the field work for us. —-> Not all the smart people in the field work for us. We need to work with smart people inside and outside the company.

To profit from R&D, we must discover it, develop it, and ship it ourselves. —-> External R&D can create significant value: internal R&D is needed to claim some portion of that value.

If we discover it ourselves, we will get it to the market first. —-> We don’t have to originate the research to profit from it.

The company that gets an innovation to the market first will win. —-> Building a better business model is better than getting to the market first.

If we create the most and the best ideas in the industry, we will win. —-> If we make the best use of internal and external ideas, we will win.

We should control our IP, so that our competitors don’t profit from our ideas. —-> We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.”"

Source: → Open Innovation in the European Community

Interesting Internet Links

The following internet links include additional information about this topic:

• Henry Chesbrough’s → Open Innovation Blog
• University of Berkeley → Center for Open Innovation
• → Open Innovation in the European Community

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