Open innovation

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Open Innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at Berkeley. The concept is related to (but distinct from) user innovation, innofusion, cumulative innovation and distributed innovation.

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). In contrast, closed innovation refers to processes that limit the use of internal knowledge within a company and make little or no use of external knowledge. Some companies promoting open innovation include IBM, InnoCentive, InnovationXchange, Nerac, NineSigma, Nokia, Procter & Gamble, and Yet2.com.

Prior to World War II, closed innovation was the paradigm in which most firms operated. Most innovating companies kept their discoveries highly secret and made no attempt to assimilate information from outside their own R&D labs. However, in recent years the world has seen major advances in technology and society which have facilitated the diffusion of information. Not the least of these advances are electronic communication systems, including the internet. Today information can be transferred so easily that it seems impossible to prevent. Thus, the open innovation model states that since firms cannot stop this phenomenon, they must learn to take advantage of it.

It is the business model of the firm that determines what external information to bring inside, and what internal information to take outside.

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[edit] Open source vs. Open Innovation

While open source and open innovation might conflict on patents issues, they are not mutually exclusive, as participating companies can donate their patents to an independent organization, put them in a common pool or grant unlimited license use to anybody. Hence some open source initiatives can merge the two concepts, this is the case for instance for IBM with its Eclipse platform which IBM is advocating as a case of open innovation, where competing companies are invited to co-operate inside an open innovation network.[1]

[edit] Difference between traditional innovation and open innovation

Open innovation needs a different mindset and company culture than traditional or closed innovation.

Closed innovation Principles Open innovation Principles
The smart people in our field work for us. Not all the smart people work for us. We need to work with smart people inside and outside our company.
To profit from research and development (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 market first. We don't have to originate the research to profit from it.
The company that gets an innovation to market first will win. Building a better business model is better than getting to 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 innovation process, so that our competitors don't profit from our ideas. We should profit from others' use of our innovation process, and we should buy others' intellectual property (IP) whenever it advances our own business model.

[edit] References

  1. ^ Eclipse and Open innovationPDF
  • Chesbrough, Henry (2003) Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business School Press, Boston.
  • Chesbrough, Henry (2006) Open business models: How to thrive in the new innovation landscape. Harvard Business School Press, Boston.
  • Chesbrough, Henry, Wim Vanhaverbeke, and Joel West, eds., (2006) Open Innovation: Researching a New Paradigm. Oxford University Press, Oxford.
  • Christensen, Jens Frøslev, Michael Holm Olesen and Jonas Sorth Kjær, (2005). "The industrial dynamics of Open Innovation - Evidence from the transformation of consumer electronics" Research Policy Vol. 34, pp. 1533-1549.

[edit] See also

[edit] External links

Retrieved from "http://en.wikipedia.org/wiki/Open_innovation"
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