Open Innovation

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Innovation at the heart of business is the cornerstone of their competitive advantage. Traditionally, innovation was generated  within organizations by designers, engineers or scientists. It can now be derived from participation of any active protagonists in the process of product development, whether they’re experts or standard users. It's the principle of Open Innovation. Indeed, why not let all potential externals take active participation in the development of new products, therefore solving problems or funding projects? Collaborative tools offered by new communication technologies greatly facilitate this implementation. So, how can businesses understand the process of Open Innovation? What are the impacts for R&D but also marketing and business models?

Strategies

Many companies already have programs on Open Innovation, thus taking advantage of outside talents. Among the first standing Procter & Gamble, which adopted Open Innovation Platform via its Connect + Develop. It's a way for the company to share its philosophy, its developments field of researches but also its needs (product development) and interests (marketing, engineering models, services…). The company invites everyone, whatever their profiles, to submit their ideas.This new logic of open innovation demonstrates that knowledge is widely distributed, but the company well beyond its speaker, ie in the society as a whole or in organizations of all sizes, whether they're professionals or not.

The goal is to glean innovation in all ecosystems: the company itself through its divisions, but also suppliers, customers, competitors, universities, startups, other industries protagonists as well as any individuals – C to B model of Crowdsourcing.

Enterprise Models

When technologies and consumer preferences for a product are well-controlled, one might think that the task of the company is simplified, but when it remains unknown Open Innovation and outside world ideas can give significant benefits.

Therefore, what is the best way to exploit these external resources through collaboration in a competitive market?

The market offers us some relevant examples of success whether the need concerns problem solving, transfer of ideas or funding.

Problem Solving

Nine Sigma

NineSigma is one of the most widely deployed platforms for open innovation. Founded in 2000, NineSigma provides via its approximately 130 000 researchers outsourced innovation.

Hypios

Hypios via its Open Innovation platform also helps connect researchers in companies and a global community of experts.

InnoCentive

Founded in 2001, InnoCentive supports research and problem solving on sectors as diverse as engineering, computer science, mathematics, chemistry, life sciences, physics …
As the first global community, it allows scientists, engineers, professionals and entrepreneurs to collaborate
on more advanced solutions.

Creativity

Linux

Linux, the operating system created in 1991 by Linus Torvalds develops and maintains the system on collaborative platforms by thousands of developers.

Appstore

Apple Inc. iPhone is a fine example of the significant added value Open Innovation can bring to a company. Thousands of external software developers write applications complementary to the iPhone and have contributed greatly to improve product value and create a advantageous business ecosystem.

CrowdSpirit

CrowdSpirit is a community platform built by individuals for the purpose of electronic products’ design. The best ideas are selected to allow potential investors to provide financing for the development of prototypes.

Dell IdeaStorm

Launched in 2007, Dell IdeaStorm allows the company to speak directly to its clients and collects the desires for new products or services they would like to see developped. In three years, Dell IdeaStorm has received more than 10,000 ideas and implemented nearly 400 of them.

Funding

Kiva

Kiva is a microfinance site that allows individuals to lend up to $ 25 for entrepreneurs in the developing countries. The model's philosophy is to create venture capital available to the poorest countries and generate the empowerment of people of all backgrounds. Kiva, Zopa, Lending Club, Prosper, FriendsClear operate on the same markets thus highlighting the popularity of collaborative loans services.

MyMajorCompany

My Major Company is a music label community. It offers a sharing platform where users can participate in album production of one or several artists of their choice. My Major Company is a pioneer in music production community in France.

People for Cinema

On the trail of MyMajorCompany, People for cinema aims to accompany the film industry. Customers are invited to share their point of view on selected films.

Business  Models

Whatever the product or development covered by Open Innovation, outsourcing means that the work will be done via a platform. And to generate revenues from this platform, an economic model must be involved. The question then focuses on relations between the seller, the buyer and the product. This question raises the issue of technology development management control, flow of income, relationship to the final customer and degree of autonomy desired by innovators.
The degree of control is an important variable, it is particularly leading to models such as the one developed by Apple Inc. iPhone,  retaining control of customer contact, as a buffer between
developers integrators and the latter.
Thus, what would be the best practice? The answer depends on the company's business and its
ecosystem. Depending on circumstances, it is necessary to ensure that members of the community are not reluctant to participate and share their creations or ideas, avoiding them feeling aggrieved by the economical approach. On the contrary, it is not excluded that such control would be perceived positively, as a commitment to the platform on exploitation efforts.

Conclusion

The Open Innovation offers many advantages but is nonetheless facing risk. To reduce them, we must consider commercial models, partnership approaches, resources management and –  last but not least – the concept of intellectual property.
Undoubtedly, companies are seeking for open, diversified, agile organizations, with calculated risks. All these factors are shaped by Open Innovation principles  where complex problems offer solutions with the help of new information and communication technologies.

References

Bingham, A. (2009). Open Innovation: Beyond the Buzz. Harvard Business Journal.
Chesbrough, H.-W. (2003). Open Innovation. Harvard Business School Press.
Hagel III, A. J, & Seely Brown, J. & Davison, L (2010). Open Innovation's Next Challenges: Itself. Harvard Business Review.
Hamel, G. (2007). The future of management. Harvard Business School Press.
Howe, J. (2008). Crowdsourcing. Crown Business.
McAfee, A. – P. (2009). Enterprise 2.0: New Collaborative Tools for Your Organization's Toughest Challenges. Harvard Business Press.

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9 Comments

  1. Le « tout à l’égo » de nombre de dirigeants français n’est il pas une pierre d’achoppement pour l’Open Innovation ?Chacun se prévalant de son pré carré, arguant les secrets de fabrication interne, alors que finalement les entreprises butent simplement sur le bon usage de la propriété intellectuelle.Des chercheurs « réseautent » dans leur microcosme alors qu’à présent ils ont une porte grande ouverte sur les technologies innovantes.Est-ce que le côté” immatériel” de l’Open Innovation rend frileux la France ? A quoi sert la loi sur l’innovation et la recherche de 1999 dans ce cas ?

  2. Raphaëlle LAUBIE on

    Bonjour Marianne,Je poursuis en anglais, if I may so..;)Indeed, according to the OECD 2009 figures, 40% of French companies operate through open innovation practices, which means that it mainly concerns SME…Why so? For big companies, I think, it’s due to IP matters. While US or foreign big companies know pretty well how to make their IP “profitable” by licensing them (Royal Philips Electronics of Netherlands is licensing more than 60,000 patents…), many French companies own IP putting them on the shelf wasting direct financial benefits…Cultural hindrance there?

  3. Cultural hindrances ?L’innovation est une culture peu intensive sur le sol français. La jachère est préférée à la fertilité des esprits. Et pourtant voyons ce concept sous une forme plus « poétique » et plus basique.Petit rappel bucolique : Les fleurs apparurent il y a 100 ou 150 millions d’années. Les abeilles « solitaires » il y a 25 millions d’années et elles devinrent des insectes SOCIAUX il y a 10 ou 20 millions d’années. Les abeilles constituent un élément dans la chaîne interactive des écosystèmes. Le rôle de l’abeille est primordial dans les divers cycles de la vie des diverses espèces. Pas d’abeilles, pas de miel mais surtout non reproduction et disparition de certaines espèces végétales, donc disparition de certaines espèces animales.L’Open Innovation idéale est à l’image d’une ruche dont le cœur est un centre international de compétitivité et de l’innovation. Les abeilles butinent les cerveaux des salariés productifs afin d’en récolter le nectar. De cette pollinisation naissent de nouvelles plantes, de nouveaux produits (miels, cire, gelée royale,…), de nouvelles innovations… Rien ne se perd dans une ruche. La vie d’une ruche frôle la perfection. Toute transformation a une utilité. Mais hélas, la fine fleur directrice des services en R&D français reste close. Pas question de semer à tout vent !Alors, l’ambition asséchée sur un sol aussi pauvre, les cerveaux français passionnés migrent vers des terres plus accueillantes où leur production sera utile pour le plus grand nombre.Pendant ce temps l’élite française bourdonne à l’abri du vent du changement. Retirons leur le Lépine du pied, l’invention n’est pas l’innovation !

  4. Raphaëlle LAUBIE on

    By hindrances I meant cultural barriers. Je continue en anglais because you seem to like it. Please advise. I do agree and the facts reflect your insight.Because these barriers concern big companies (SME seem to be more open), let's bet on globalisation.France will have to adapt and we already have a lot going on (Air Liquide, Renault, Sanofi…)

  5. A lot of people are re-thinking concepts of intellectual property and trying to find ways to manage intellectual commons. Two interesting examples:* Creative Commons, which tries to find a compromise between copyrights and sharing/collaboration: http://creativecommons.org/* The Smithsonian Commons, an effort by the American national museum to broaden access to its wealth of resources to stimulate their use in creative new ways. The prototype can be visited at http://www.si.edu/commons/prototype/index.html and an interesting interview with the Smithsonian’s Director of Web & New Media Strategy http://media.libsyn.com/media/fir/fir-edson2.mp3.

    • I am very interested in your views on how open innovation methodologies can be used to stimulate creativity in the development of Pan-European Open Technical, Data & Document IT Standards. I am currently working within this developing field for the UK wide Government, Public Sector & National Health Service. I see our long term policy aim to exploit open sourced solutions in the provision of IT standards while maintaining market innovation being hit by legal challenges involving both IP and corporate proprietary issues. As the adoption of open standards will have a significant impact on the provision of effective low cost cross-government IT, especially in Health provision, do you think globalization of these standards will help or hinder innovation or should individual European states, like France & the UK, take over responsibility to combat innovation market failure?

  6. nchsclassof88.com on

    On the other hand, a lot of priceless art work has been discovered from the trash plus in garden sales, that's not saying your corporate stamped pocket watches could be the next Patek Philippe that marketed for $11 million bucks at Sotheby's in Dec 1999. In these times where the cost of living increases and wages are not, it seems that charity shops will remain popular not only because of the money they raise for good causes, but also because no other Store offers quite the same mix of exclusivity and in any major agreements in the same way that a charity shop can. While these items maybe fewer and far between, they do exist.

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