| Open Innovation: A Definition |
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| Written by James A Gardner |
| Monday, 10 May 2010 14:29 |
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Can you imagine the response of management if you were to suggest you should license your patents to competitors, hand over your hardly-used trade secret to emerging start-ups, and examine what potential collaboration might be like with other organizations in aligned segments? The most probable response is a quick "surely you are mad" as leaders look at you with that slight unnerving expression you get when you've done something which is not quite socially right. There is, however, an emerging movement in the innovation space called Open Innovation which suggests you do just this. The thinking is, if you have unused intellectual property or uniqueness, your best economic interests are served by licensing that to competitors who might make use of it, rather than let it sit idle. And, in reverse, if competitors have something of value you need, that you reach some accommodation with them that lets you make use of it . Open Innovation is one of the ramifications of the Innovation Economy which is based on the premise that competitive advantage derives from how well you use know-how, not what know-how you have. The understanding of the ability to use know-how well in a particular problem space is a hard to copy advantage that requires investment, development, and in most cases, sustained effort over a long period of time. This is why it is a source of competitive advantage. Open Innovation is currently a very fashionable business model for innovators working in many different sectors. It is especially popular in industries where products do not have very great levels of differentiation, like fast moving consumer goods. It is also well adopted in industries where the products are very differentiated, such as aerospace. On the other hand, companies that have chosen not to pursue Open Innovation are tending to lag competitors. This is because they are forced to rely only on their own R&D efforts, rather than taking what's best from industry around them. Failing to share is turning out to be a significant competitive dis-advantage. About the Author: Open Innovation is a technique that innovators are regularly using to create new value in their businesses. To find out how you can use it it too, read James Gardner's free, online innovation book. |