Open versus closed Innovation – Maggie Fikkert
Open innovation describes a process whereby organisations pursue externally generated knowledge and ideas and bring it into the business to solve problems or leverage opportunities. Furthermore organisations also allow internally generated knowledge and ideas to flow outwards. Evidently this is directly in contrast to the traditional methods of innovation where technological knowledge and ideas are developed internally to the organisation within the R&D divisions and retained within the business.
The closed innovation process could be seen as slow when comparing it to the unlimited amount of knowledge available externally to the organisation, especially considering the rapid environmental and technological changes and complexity of information needs. Maintaining the needed specialist knowledge base within an organisation is becoming more difficult and costly and when measuring this knowledge against the vast amount of technical expertise and knowledge available externally to the organisation it becomes obvious that the value add of open innovation is immense. Open innovation however needs a very different culture than the traditional closed model of innovation, in that it necessitates more collaborative thinking, insofar that organisations are increasingly offering co-created value-added solutions to their customers.
Open innovation needs to be taken as seriously as any other investment in the creation of new ideas, as it creates linkages with partners and customers, crossing the line from external to internal, thus opening windows into your own process of innovation.
Procter & Gamble is a living example of Open innovation. P&G’s goal is to source at least 50 percent of new products from outside the organisation.
a) How could SMMEs leverage off open innovation to grow?
b) How can open innovation create a competitive advantage for an organisation?
c) How can you protect your IP by opening up?
Maggie Fikkert
I’d like to briefly reply to all three of the questions in Maggie’s blog posting.
a) NineSigma just recently signed an agreement with the Italian government (Piedmont Region)to develop an open innovation program for small to medium-sized enterprises for the purposes of economic stimulus and regional growth. It is the first of its kind anywhere, where a regional government is funding open innovation programs to allow its SMEs to run open innovation programs through the world’s largest open innovation network. This allows smaller enterprises to seek and acquire innovative solutions via open innovation the same as large enterprises.
b) Open innovation provides competitive advantage from two perspectives: Speed and Capacity. OI enables a company to bring in new ideas, concepts and IP at an excellerated rate, thus reducing new product development time and cost, and more importantly, reducing time-to-market for new products. Increased innovation capacity through OI provides enterprises with a rich diversity of choice when it comes to new ideas and technologies being sought for new product ideas. Increased capacity also helps mitigate the risk of going to market with a product and/or technology that could be near the point of obsolesence.
c)Protecting IP is a common practice (and requirement) of an open innovation intermediary firm. By working through an independent intermediary, such as NineSigma, both the solution seeker and the solution provider are protected through proven deal facilitation procedures that protect the seeker’s strategic intent and the solution provider’s intellectual property.
I look forward to any other thoughts and insights regarding these great questions.
a) How could SMMEs leverage off open innovation to grow?
Through leveraging existing R&D and the significant thought capital that exists in SA and even globally, but firstly SMMEs will need acknowledge and see open innovation as an opportunity. Secondly, SMMEs should/could clearly identify their (or that of their customers) challenges or rather the problem that needs to be adressed through open innovation.
b) How can open innovation create a competitive advantage for an organisation?
Speed, reduced costs and higher quality solution (or product or service)