Open And Closed Innovation

CLOSED AND OPEN INNOVATION

Venkata Swamynath channa

WHAT IS INNOVATION

It may refer to incremental and radical and revolutionary changes in thinking, products, processes, or organizations.

MY BMW WITH iDRIVE

CLOSED INNOVATION No new Technologies and Ideas outside of firm Competitors Could not take benefits More beneficial to company

Traditional Innovation Model • Inputs at front end; innovation ‘protected’ from external leakage • Funnel used to downselect to best ideas and launch them • Partners (when used) selected to advance internal idea Fuzzy Front-End

Development

Commercialization

X Inputs

X Inputs

X

X

Launch

Source: Clorox, Andy Gilinkski, Director Innovation 5

www.imaginatik.com

EROSION OF CLOSED INNOVATION  Increased Mobility of skilled workers  Expansion for venture capital  Increased availability of Highly-Capable Outsourcing Partners

Why Change?

Can companies always employ best people ? Obvious No !!!!!

7

www.imaginatik.com

The Kraft View ~ An Example 2,000

Researchers

90,000

8

Employees

1MM External Solution Providers

What is Open Innovation  If…  Innovation is the process of doing new things that delver value  Then…  Open Innovation is the process of doing new things with outsiders that deliver value 9

www.imaginatik.com

OPEN INNOVATION  Combining internal and external ideas  Open Innovation is a term promoted by Henry Chesbrough

 Permeable boundaries

Open Innovation Model • Porous-walled funnel builds ideas with external partnerships • Goal in funnel is to build, not just downselect • Partners can influence, change, revise the idea Fuzzy Front-End

Development

Ideas/Patents Out-licensed

X

Commercialization

Line extension Product In-licensed

Inputs

X Inputs

11

X

X Technology In-licensed

Launch

External endorsement/ relationships www.imaginatik.com

An Example: Boeing 787

 

Innovation Partner: Innovia Technology Innovation Need: passenger comfort on long flights  Result: advanced LED lighting that made cabin more spacious and emotionally comforting.

Who is practicing it? The World’s Most Innovative Companies 2007 http://bwnt.businessweek.com/ interactive_reports/ most_innovative/index.asp

•Particularly strong in Consumer Package Goods, Electronics

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Company Name APPLE  GOOGLE  TOYOTA MOTOR  GENERAL ELECTRIC  MICROSOFT  PROCTER & GAMBLE  3M  WALT DISNEY CO.  IBM  SONY  WAL-MART  HONDA MOTOR  NOKIA  STARBUCKS  TARGET  BMW  SAMSUNG ELECTRONICS  VIRGIN GROUP  INTEL  AMAZON.COM  BOEING  DELL  GENENTECH  EBAY  CISCO SYSTEMS 

Rank 26 27 28 28 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name MOTOROLA  SOUTHWEST AIRLINES  IDEO  IKEA  DAIMLERCHRYSLER  HEWLETT-PACKARD  NIKE  BP  RESEARCH IN MOTION  AT&T  CITIGROUP  VERIZON  ROYAL PHILIPS ELECTR.  NINTENDO  COSTCO WHOLESALE  VOLKSWAGEN  PFIZER  BEST BUY  JOHNSON & JOHNSON  AMGEN  MERCK  NEWS CORPORATION  MCDONALD'S  LG ELECTRONICS  EXXONMOBIL 

What makes gives open innovation an outer edge?? Closed innovation

Open innovation

Our employees is our world

World is our employees

Harness the wave energy of knowledge abundance

Conclusion: work in progress…

 Open innovation vs. Innovation open  Chesbrough defines a weak form of open innovation

Co-evolution of open innovation and corporate innovation  Open sphere central to innovation

 Creativity needs openness (Lessig, Christensen)

 Open as an efficient management mode  Strength? Weaknesses?

 The patent issue: threat? Part of the solution?  Open science vs. Science open  University patent