Open
innovation (OI) is a strategy by which companies allow a flow of knowledge
across their boundaries as they look for ways to enhance their innovation
capability. Company boundaries become ‘permeable’, enabling the matching and integration
of resources between the company and external collaborators. In a closed approach
to innovation, a company relies on internal resources only.
It was involved by the elements of mindset
+ culture + web, constraint
driven + open and market
driven + co-creation. So that we will go through to the
reason why nowadays encourage to follow OI.
Technology
intensity has increased in many industries, so that not even the most capable R&D
firms are able or willing to afford technology development on their own. Today,
many difficult and intractable scientific problems call for interdisciplinary
research. This in turn typically results in higher costs
and risks of the innovation process. Therefore, it becomes more and more
unlikely that a single firm can solely rely on internal R&D to generate
radical innovations. Many firms outsource routine
research tasks to research partners or contractors but are still reluctant to
do so with critical technologies. However, the technological knowledge market
is highly dynamic and its actors are expected to play a central role in the
future. Capable external suppliers can usually offer sufficient quality that
may even exceed the quality that a firm can
achieve internally. Thus, firms do not need to perform every function of the
value chain on their own.
The growing market for
technological knowledge and the increasing capabilities of external suppliers
are strongly affected by an increasing availability and mobility of knowledge workers.
The increasing availability of well-trained and knowledgeable workers
means that more people are able to produce useful knowledge. It also implies
that this useful knowledge is widely distributed and located at suppliers,
customers, partners, start-ups, consultants , universities, or research
institutes. The increase in mobility of skilled workers leads to an
increase in knowledge diffusion and knowledge spillovers. Since highly
qualified workers are able to constantly migrate from one firm to another,
working for the one with the best offer, firms can tap that extensive knowledge
and experience by simply hiring away talent from other firms or even
competitors. Thus, the individual’s knowledge, skills, experience, as well as
its informal network ties are brought to the firm at the time of . This
phenomenon is most intense in Silicon Valley and exquisitely depicted by KIMBERLY
AND BOUCHIKHIH that was becomes more difficult for a firm to appropriate and
control its R&D investments.
One way to access the worldwide
distributed and diversified knowledge is the use
of innovation intermediaries. The business model of idea
brokers, such as NineSigma, yet2.com and InnoCentive, is based on bringing
together technology seekers and solution providers. One major advantage is the comparatively
low financial risk if the desired solution to a problem
cannot be found. Making use of this opportunity provided by yet2.com, DuPont was able to find a licensee for an
artificial soil technology – based on a newly developed polymer – a technology
that could not be used within DuPont.
The biodegradable polymer can be utilized in the form of in-ground fiber balls,
providing an optimal balance of water and gas supply for plant growth. In
addition to the availability and mobility of highly skilled people, the growing
presence of private venture capital created significant risks to firms that
heavily relied on internal innovation. The
large pool of venture capital has increased the tendency of individual employees
to establish their own or join existing start-up firms. Due to limited
resources, start-ups are often more inclined to search for external
ideas and technologies than established firms.
Another
factor that increases pressure on firms to seek outside support is the phenomenon
of industry convergence, which becomes increasingly relevant in some
industries. Convergence, defined as the blurring of boundaries between
industries due to converging value propositions, technologies and markets. One
current example concerns the convergence of the marketing-driven food industry
and the science-driven pharmaceutical and chemical industry, which results in
the new industry segment of nutraceuticals and functional foods (NFF). Here, a
company requires knowledge possessed in another industry because of lack sufficient
technological knowledge in order to develop functionalized products based on certain
ingredient technologies (e.g. low-density lipoprotein (LDL)-cholesterol
lowering food products).
According
to WEST AND GALLAGHER, this valuable IP either waits to be picked up again by internal
innovation teams or waits for its research proponents to leave the firm in
order to further advance it to the commercialization stage. For example, due to
their mobility, advocates of the stored IP could leave the firm to establish
their own start-up financed by venture capital. However, these
developments and trends do not generally apply to every industry and every firm
because its dangerous possibility for IP to leave the firm. Contingencies have
to be considered in order to take into account context factors, which have
implications for the organization. As regards the management of innovation,
this implies that, depending on a special context, an appropriate approach to
innovation has to be identified.
Regarding
the abovementioned factors, following an Open Innovation approach is usually
appropriate in high-technology industries or when the focus is on emerging
technologies. However, a survey by CHESBROUGH AND CROWTHER found that firms
across a wide range of low-technology or mature industries also apply Open Innovation
to a certain extent.
http://www.ifm.eng.cam.ac.uk/uploads/Resources/Reports/OI_Report.pdf
