Open Innovation

Open innovation can be interpreted as Diffuse Innovation that is based on participation from consumers and various external players, or in the more narrow sense as used by Henry Chesbrough, as structured cooperation for innovation between companies. We prefer the former definition.

It is also the title of a specific book by Henry Chesbrough.

Discussion

"Last week, I read an article on how Coloplast has set-up communities for their users to share experiences and ideas. You can use Google to translate the Danish article and you can check out one of their communities here: International Stoma Innovation Community. In the article, Coloplast claims that they have halved their development time over the last couple of years partly due to the external input and they also mention that they are now using many more external partners than previously.

It sounds good, but nevertheless, I think Coloplast is a nice example of company that is still stuck in the user-driven mindset. The main idea of user-driven innovation is to get input from the users – and perhaps even the eco-system – of your products or services.

Open innovation is about integrating external partners in the entire innovation process. This should happen not just in the idea or technology development phase but also in all other phases towards market acceptance. User-driven innovation is great as it directs your innovation efforts towards market needs. Open innovation takes you to the next step by providing more opportunities through external partners as you address those market needs.

Which red flags did I pick up on Coloplast? First, take at look at their corporate website. I cannot find any guidelines on how to approach Coloplast with ideas or other contributions. Compare this to Procter & Gamble where you can find a very visible link to their Connect+Develop initiative.

Another red flag is the stoma community itself. It really gives you the feeling that it is about how Coloplast can tap into users rather than how they can work together and build relationships with external partners. This is what user-driven innovation is about. It should just not be confused with open innovation." (http://www.15inno.com/2009/11/09/userdriven/)

Examples

1. Procter and Gamble Connect and Develop
2. Philips Sensing Platforms

See also: Networked Innovation Initiatives

Open Innovation Platforms

Compiled by the Openeur blog at http://www.openeur.com/blog/en/2007/08/02/bestprac-en/

Innocentive, solving technical problems Picnic - Sent in your ideas to save the planet Yet2.com - patent trading Ninesigma.com - Innovation networking IXC Australia - Similar approach as ninesigma Eureke medical - Medical Open Innovation platform

Open Innovation Startups

Compiled by the Openeur blog at http://www.openeur.com/blog/en/2007/08/02/bestprac-en/

fellowforce.com - open innovation competions ideawicket.com - evaluating business models crowdspirit.com - product development by the crowds spigit.com - a Startup game - evaluating business ideas Incuby.com - online community for inventors Ideaconnection - Open Innovation - idea marketplace [http://ponoko.com/ Ponoko[ - Rapid Prototyping platform

Key Books to Read

From an earlier list at http://www.openinnovators.net/best-books-on-crowdsourcing-open-innovation-management-wikinomics/:

The Classics

• The Wealth of Networks: How Social Production Transforms Markets and Freedom - by Yochai Benkler

Yochai Benkler shows us how the Internet enables new commons-based methods for producing goods, remaking culture, and participating in public life.

• Democratizing Innovation - by Eric Von Hippel

“Von Hippel presents a persuasive case for the benefits of encouraging lead users to innovate and a truly intriguing look at what they’ve contributed to the world so far”

• Wikinomics: How Mass Collaboration Changes Everything - by Don Tapscott, Anthony D. Williams

As a proponent of peering, sharing, and open-source thinking, Don Tapscott has presented a clear and exciting preview of how peer innovation will change everything.

• We Are Smarter Than Me: How to Unleash the Power of Crowds in Your Business - by Barry Libert, Jon Spector, Don Tapscott (foreword)

In We Are Smarter Than Me, you will discover exactly how to use social networking and community in your business, driving better decision-making and greater profitability. The book shares powerful insights and new case studies from product development, manufacturing, marketing, customer service, finance, management, and beyond.

Others

• Outside Innovation: How Your Customers Will Co-Design Your Company’s Future - by Patricia B. Seybold

Patricia Seybold argues that companies should seek innovation by actively engaging and bringing their customers into the product development process.

• Motivation in Open Innovation - by Robert Motzek

Robert Motzek’s study investigates the motivational profiles of user innovators from a manufacturer’s point of view, focusing on lead users and tool kit users. The analysis is supported by two exploratory case studies of Spreadshirt and Threadless.

• Innovation Happens Elsewhere: Open Source as Business Strategy - by Ron Goldman, Richard P. Gabriel

It’s a plain fact: regardless of how smart, creative, and innovative your organization is, there are more smart, creative, and innovative people outside your organization than inside. Open source offers the possibility of bringing more innovation into your business by building a creative community that reaches beyond the barriers of the business.

• The Global Brain: Your Roadmap for Innovating Faster and Smarter in a Networked World - by Satish Nambisan, Mohanbir Sawhney

Nambisan and Sawhney have written a book that constructs a truly effective bridge between network driven innovation and its application. A refreshing look at innovation and its practice.

Details on Chesbrough's book

Henry Chesbrough's three books

• Open Innovation: The New Imperative for Creating and Profiting from Technology -b y Henry Chesbrough

Chesbrough suggests that companies make themselves more permeable to the flow of knowledge through such strategies as hiring professors and grad students as summer consultants, sponsoring university research, investing in and partnering with high-tech startups and venture capitalists, and disseminating their own innovations through spin-off companies or even by publishing it in the public domain.

• Open Innovation: Researching a New Paradigm - by Henry Chesbrough, Wim Vanhaverbeke, Joel West

Offering theoretical explanations for the use (and limits) of open innovation, the book examines the applicability of the concept, implications for the boundaries of firms, the potential of open innovation to prove successful, and implications for intellectual property policies and practices.

• Open Business Models: How to Thrive in the New Innovation Landscape - by Henry Chesbrough

Chesbrough is not the first academic to grasp the superior economic value of intellectual over tangible property in today’s economy. But he may be the one who has thought most deeply about its consequences for business.

Description and Review

From the publisher:

"In his landmark book Open Innovation, Henry Chesbrough demonstrated that because useful knowledge is no longer concentrated in a few large organizations, business leaders must adopt a new, "open" model of innovation. Using this model, companies look outside their boundaries for ideas and intellectual property (IP) they can bring in, as well as license their unutilized home-grown IP to other organizations.

In Open Business Models, Chesbrough takes readers to the next step—explaining how to make money in an open innovation landscape. He provides a diagnostic instrument enabling you to assess your company's current business model, and explains how to overcome common barriers to creating a more open model. He also offers compelling examples of companies that have developed such models—including Procter & Gamble, IBM, and Air Products.

In addition, Chesbrough introduces a new set of players—"innovation intermediaries"—who facilitate companies' access to external technologies. He explores the impact of stronger IP protection on intermediate markets for innovation, and profiles firms (such as Intellectual Ventures and Qualcomm) that center their business model on innovation and IP.

This vital resource provides a much-needed road map to connect innovation with IP management, so companies can create and capture value from ideas and technologies—wherever in the world they are found."

Jon Lebkowsky at Worldchanging.org:

"Open Innovation tells how technology research and development, formerly "closed" and handled inside megacompanies like IBM and Xerox, increasingly happens in smaller companies and universities. What he calls "Open Innovation" is typically driven by VC-funded startups that build toward acquisition, a model that was popular through the Internet boom of the 90s, and is still common. Chesbrough's book is a good overview of the history of corporate innovation in the USA, and a good explanation of the closed vs open models for innovation.

Closed innovation gave way to the more open model because the workforce started churning, and it became increasingly difficult to contain the ideas that resulted from the best thinking and experimentation within any one company. There's also been a knowledge sharing movement facilitated by the Internet, and the Open Source movement's commons-based peer production model, which is oddly excluded from Chesbrough's consideration.

This is where I had a problem with the book – it didn't go far enough. The model Chesbrough describes is an extension of the top-down corporate model, failing to acknowledge promising "small is beautiful" emergent approaches to innovation and business. Open source is one example, the bootstrap approach (favored by fast-growing groups like Bootstrap Austin) is another.

I do recommend the book for its value in setting context, but I don't think it's truly worldchanging. We would hope to see Chesbrough or someone follow up with an exploration of smaller, more modular approaches to business development and technology innovation, and business structures that are truly open, transparent, and inclined to balance competition with cooperation." (http://www.worldchanging.com/archives/004759.html)

More Information

Introductory articles:

1. Principles of Distributed Innovation. Karim R. Lakhani and Jill A. Panetta.
2. When to engage in open innovation? Bhaskar Chakravorti.

More advanced treatments:

1. special issue of the journal R&D Management, edited by Ellen Enkel, Oliver Gassman and Henry Chesbrough, at http://www3.interscience.wiley.com/journal/122535404/issue

Bibliography:

1. http://www.exnovate.org/mod_db_articles/616/