Open Innovation: What is it and What We Need to Know About it
Most of us are knowledgeable about innovation. Yet, to enable a seamless transition from innovation to open innovation, let us first discuss innovation.
Innovation as we know is something new, original and more effective or at least more efficient than the existing one. Though innovation and invention are closely related, they are not the same. Only those inventions that have practical applications and make it to the market are termed as innovations. This implies that all inventions need not be innovations and it is also true that not all innovations require an invention.
The present literature is replete with the different definitions of innovation; a survey of literature conducted in 2014 revealed more than 40 definitions. A definition given by Crossan and Apaydin considered to be the most complete is as follows (Edison, Ali, & Torkar, 2014):
Innovation is production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and the establishment of new management systems. It is both a process and an outcome.
It worthy to note that there are two main dimensions to innovations; they are degree of newness (i.e. whether an innovation is new to the firm, new to the market, new to the industry, or new to the world) and kind of innovation (i.e. whether it is product service or process-system innovation).
Recently researchers have also distinguished innovation to be separate from creativity, by providing an updated definition of these two related but distinct constructs:
Creativity refers to how people tackle problems and their ability to put existing methods/ideas together in new combinations. Creativity depends more on ones intelligence and personality. Hence, creativity at workplace is the cognitive and behavioural processes applied to generate novel ideas whereas workplace innovation is the involves application of the processes to implement new ideas.
As we know, companies innovate by using their R&D capabilities and other internal resources. Also, the usual innovation procedure is followed where only the best and most promising ideas are selected and the others are dropped. These kind of innovations are called Closed innovations. By contrast, Open innovations are those that use inflows and outflows of knowledge across the company boundaries. This is the term adopted to denote an utterly new mind-set toward innovation; this process is bereft of secrecy and silo mentality of traditional corporate research.
However, it is not now that external linkages to the in-house innovation process have been discovered for the first time. In 1985, the network model of innovation propounded by Rothwell and Zegveld emphasised the need for external linkages (Rothwell & Zegveld, 1985). For this reason some say ‘open innovation’ is old wine in new bottles (Hartmann & Trott, 2009). Although the concept of openness have been observed and discussed several years earlier the use of the term ‘open innovation’ in reference to the increasing embrace of external cooperation has been promoted by Henry Chesbrough, faculty director of the Centre for Open Innovation of the Haas School of Business at the University of California (Chesbrough, 2003).
Chesbrough presents six notions (see Table 1) that lie behind the closed model of innovation.
Table 1. Contrasting ‘closed innovation’ principles and ‘open innovation’ principles.
One example of open innovation comes from P&G. Their CEO, A.G.Lafley was of opinion that no matter how good the people are and how many ideas they develop, it is only a fraction of the intellectual pool available globally. This mind-set led P&G’s to bring out Connect & Develop program which in their own words is as follows:
“To put it simply, P&G aims to partner with the world’s most innovative minds– from individual inventors and small businesses, to Fortune 500 companies– to deliver on the company’s most challenging opportunities.
Connect + Develop helps P&G engage with innovators and patent-holders to meet needs across the P&G business: for products, technology, in-store, ecommerce and the supply chain”.
Since its inception, this programme has been very successful for them. This “open innovation” trend set by P&G has seen some followers in some form or the other. Other sectors, such as electric engineering, aviation and publishing companies are adopting similar practices. Because of firms adopting different forms of open innovation, there is a wide variation on the its definition. However, what is common to all different forms of open innovation is the act of involving externals for getting new ideas and sharing of some knowledge. The degree to which the externals are used vary from company to company.
In spite of some people not accepting open innovation as something new, it has emerged as an important concept in both academic research and industrial practice, and it is now also becoming increasingly important in the public policy domain (Bogers, Chesbrough, & Moedas, 2018). The advent of digital technologies is making science and innovation more open, collaborative, and global. The European Commission has stipulated that researchers should publish in open access journals only and EC refunds the cost incurred in publishing. Further, all the EU countries have agreed that all publicly funded research be published in open access journals.
There are number of factors that has contributed to the growth of open innovation, as a concept and also as a research field. A basic hypothesis is that knowledge for innovation is widely distributed in the world.
While the westerners are arguing about closed and open innovation and presence of knowledge,
Rigveda sums up the limitless open mindedness in one all encompassing richa
”Aano bhadra krtavo yantu vishwatah”(1.89.1 rigveda)
“Let noble thoughts come to me from all directions”
P.S. Do you know that the opposite of innovation is exnovation ?.
Bogers, M., Chesbrough, H., & Moedas, C. (2018). Open Innovation: Research, Practices, and Policies. California Management Review, 60
Chesbrough, H. (2003). Open innovation: The new imperative for creating and profiting from technology.
Boston, MA: Harvard Business School Press.
Edison, H., Ali, N., & Torkar, R. (2014). Towards innovation measurement in the software industry. Journal of Systems and Software , 86
Hartmann, D., & Trott, P. (2009, Dec). “WHY ‘OPEN INNOVATION’ IS OLD WINE IN NEW BOTTLES” . International Journal of Innovation Management, 13
(4), 715–736. doi:10.1142/S1363919609002509.
Rothwell, R., & Zegveld. (1985). Reindustrialisation and Technology.