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?
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.
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.
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 via its Open Innovation platform also helps connect researchers in companies and a global community of experts.
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.
Linux, the operating system created in 1991 by Linus Torvalds develops and maintains the system on collaborative platforms by thousands of developers.
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 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.
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.
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.
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.
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.
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.
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.
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