Today I found myself again reading about open innovation. One of the underlying principles of this is that in a world of widely distributed knowledge, it’s pretty hard, inefficient and expensive for companies to simply rely on their own research for innovative purposes. Therefore the suggestion is to spin-off, share, license, joint-venture or any variation therein to acquire innovative practises from others and also open your own for others to figure out how your company and theirs could benefit together. It’s a structurally collaborative path to value creation.
Closed innovation in turn goes like this: a company only uses it’s internal knowledge and research and is not open to uses and learnings form others. Quite uncool these days though it was the paradigm before World War II.
I find the premises of open innovation quite enticing ( – inspite of potential headaches to Legal Counsel…?) and I hereby list some of the thinking that governs the model:
Not all the smart people work for us. We need to work with smart people inside and outside our company
External R&D can create significant value; internal R&D is needed to claim some portion of that value
We don’t have to originate the research to profit from it
Building a better business model is better than getting to market first
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
Tags: closed innovation, collaborative models, distributed knowledge, joint-ventures, open innovation, research and development, spin-offs, wisdom of the crowds
