Wednesday, September 8, 2010

Open Innovation in Corporate America

Ok, so I have heard and seen many marketers and innovators out on the web mention the term “Open Innovation” or even refer to themselves as “open innovators”. The term seems at first self explanatory. The collective and collaborative, likely rooted in the digital world, create an open-forum to create. Remember “Open-source coding” – a rather arcane term that became popular in the 1980s as computer programmers looked to gather and write new software based on someone elses starting point. Seems like it brought us ahead quite quickly. Also seems at first an intriguing counterpoint to the long and difficult process of internal innovation.

So how do we view this in light of the more traditional model of Corporate America, where more traditional goods and services are created based on prorietary innovation. The goal there is creation of an ownable, proprietary asset to generate revenue. By the way, we refer to this as “Closed Innovation”

First lets get a working definition of Open Innovation

A noted author and promoter on the subject of Open Innovation is Henry Chesbrough, a professor and executive director at the Center for Open Innovation at UC Berkely.

“Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology”[1]. The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (e.g. patents) from other companies. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g., through licensing, joint ventures, spin-offs)[2].

     1. Chesbrough, H.W. (2003). Open Innovation: The new imperative for creating and profiting from technology. Boston: Harvard Business School Press, p. xxiv

   2. Chesbrough, H.W. (2003). The era of open innovation. MIT Sloan Management Review, 44 (3), 35-41

Taken a step further than this definition, can innovation itself utilize a collective forum (possible internet based) to bring ideas, even strategies forward in a fraction of the time it takes to generate these ideas internally. And further than that, lets say the environment competitively moves in that direction and your organization is left falling behind?

Potential Benefits to the world of corporate America seem to be intriguing. Speed to concept, stronger process, more supplier engagement, more consumer engagement, sharing of best practices across organizations, etc, etc.

I know the answer is yes. But what are those tools, and where do you apply them.

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