Open Innovation

Alongside the entrepreneur spirit, Innovation is the process of taking new ideas and implementing them into the market. Key word being “new”, an innovation can be sometimes viewed as the application to better solutions that meet new demand-requirements, inarticulated needs or existing market needs. Innovative ideas range from: goods, services, products, processes, services, technologies or ideas that create value for which customers will pay for. For an idea to be an innovation, it must be replicable at an economical cost and must satisfy a specific need. This means is that one must be ready and willing put their new idea to the test. On the other hand, there is recognition that “innovation is also critical to cultural, environmental, social, and artistic progress as well” (Bullinger, 2006). With this stated, high-tech innovation is ultimately the reason why we can be thankful for the many new conveniences of the 21st century. Although we might see the forefront of innovation being very prominent in today’s world, innovation is truly nothing new. From the start of modern man times, innovative ideas have paved the way for civilization to advance and develop into what we are today and at the same time, we have barely begin to chip away at the tip of the iceberg of our true human potential. Some scholars believe that innovation is a

This research intends to explore innovation at an individual level, but in a context, where the roles and functions of an organization appear eminent either as a promoter or an inhibitor of innovation.

• Creating new concepts with a common vocabulary: The creation of new concepts and a novel vocabulary to go along with it is also one of the keys to innovation. Providing new framework and ideas is critical. New terms that express these ideas better are also equally important, apart from accelerating the change process they make the objectives very clear to personnel who are responsible for executing the proposed plan.

Closed innovation implies that companies try to develop new products and processes based on the idea that the company itself has the best possible knowledge and resources for innovation. (CHRESBROUGH, 2003 p228)

In response to this problem, the purpose of this paper is to increase awareness of the possibilities of investments in research devolvement, along with success stories of companies who have seen success in taking on new technology, along with that discussing strategies that can help the business succeed before adapting technology and after adapting new

Alexy, O., & Reitzig, M. (2012). Managing the business risks of open innovation. Mckinsey Quarterly, (1), 17-21.

In the past decade, the world and the markets alike have experienced rapid change and this change continues at an ever increasing pace. New products emerge in every field resulting in the creation of needs; people have never been aware or thought of. According to Hamel (2000 p18), “the latitude of innovation has never been broader –if only our minds can stretch to it”.

Innovation is the process of using ideas within a company to create new products, services, technology, or processes. Myths used to acknowledge that innovation was the idea of one individual with no support from others. In reality, innovative ideas that become new products and services require the support and knowledge of a significant amount of individuals. The individuals involved in the innovation process become involved in an array of business functions ranging from manufacturing, marketing, sales, and distribution. Companies will

Innovation is normally used to denote the process that takes place when a product or a process is developed, from idea to market; the concept of invention only denotes the process that takes place when new ideas or solutions are generated. Baumol (2002) argues “is it possible to have lots of inventions and still lack innovations. Nevertheless, inventions are a necessary precondition for innovation”.

Many similarities can be seen between Beiersdorf open innovation strategy and the successful P&G model ‘Connect and Development’. Both strategies have the function to explore outside the boundaries of the firm and to include the valuable knowledge found into the product development process (open innovation strategy). Moreover both companies, in order to link internal resources and R&D centres with the outside world, have implemented different ‘bridges’ into their respective business models. In particular, Beiersdorf ‘s open innovation strategy has been based on:

However, in lean economic times, it is the often overlooked “inside-out” aspect of open innovation that can best serve a company. Inside-out open innovation refers to processes whereby a business places some of its assets or projects outside its own walls. That not only saves much of the time and money being invested in those projects, but also can nurture new supplier and partner relationships, promote innovative ecosystems, and generate high-margin licensing income (see the exhibit “The Inside-Out Process”). Consider BT (formerly British Telecom), long the leading phone company in Britain. During the 1990s, the company transformed itself into a global telecommunications services firm. After the telecom bubble burst in 2000, BT needed to marshal its resources and refocus. One critical step was to create a process for placing its homegrown technologies and intellectual property in external hands. Since 2003, BT has formed strategic partnerships with venture capital investors that put their own money into launching spinoff companies (see the sidebar “Inside-Out Venture Capital”). These spin-offs—including Azure Solutions, Vidus, and Psytechnics— produce telecommunications technologies and services that are key components of larger offerings from BT to its customers. And BT can market these offerings without shouldering the long-term burden of funding, developing, and upgrading them. According to the firm’s

From the above analysis we can conclude that the outbound open innovation can really improve enterprise performance. Then, we would like to know how is it to create value for those companies? It is a very sophisticated problem, previous researchers have not make an in-depth analysis for a long time. In order to unravel this ‘ mystery ’, we have to introduce the innovation value chain to help us unlock the ‘secrets’. Van de ven et al.(1999) pointed out that innovation is a variety of roles intertwined, and a complex process of intervention. The innovation process is poorly understood, and at the same time innovation is being enveloped in an unobservable ‘black box’. Subsequently, Hansen&Brkinshaw(2007), Roper, et al.(2008) and other scholars drew on porter 's value chain theory, and introduced the idea of the ‘chain’, the knowledge commercialization of the innovation process is seen as a flow value chain, the three main components including knowledge production, knowledge transfer and knowledge diffusion. Until now, the understanding of the essence of the innovation process has been greatly enriched, and the ‘black box’ of the innovation process seems to have been gradually open. It is the time to

Lafley underwrites the strategy that Jager pursued. He, too, feels the need for more innovation. And also in Lafley´s mind the new global product-based organization structure is the right one in order to get more advantage out of innovations (see Att. 1 for P&G´s organization structure, and Att. 2 for P&G´s Purpose Statement). But when Lafley takes over as CEO he sees the need to improve P&G´s execution, and to take much better care and to grow the core business which has been milked before in order to invest in new brands and products. Under his leadership P&G focuses on a few simple but powerful topics: • P&G puts the consumer at the center of everything they do. Lafley coins the phrase: “The consumer is boss”. • P&G makes sustainable organic growth the priority instead of acquisitions. • P&G´s opens up its innovation system, it innovates innovation. This latter change towards an open innovation system is probably the most revolutionary one. It is based on the following simple logic: P&G has about 9000 employees in R&D working in 150 scientific fields. And the potential of this R&D organization has even grown over the last few years as the sharing of ideas and expertise and the formation of networks is being fostered through intranet sites such as P&G´s InnovationNet. P&G has close to 30,000 patents and each year another 5,000 are added on average. But on the other hand, counting the number

2) Chesbrough, H., W., (2003). The era of open innovation. MIT Sloan Management Review 44 (3): 35–41.

In March 2009, PT launched the ‘Open’ project with the aim of ‘industrialising’ the innovation process, to