Open and Closed Innovation

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CLOSED AND OPEN INNOVATION

Venkata Swamynath channa

WHAT IS INNOVATION

It may refer to incremental and radical and revolutionary changes in thinking, products, processes, or organizations.

MY BMW WITH iDRIVE

CLOSED INNOVATIONNo new Technologies and Ideas outsideof firm Competitors Could not take benefits More beneficial to company

Traditional Innovation Model Inputs at front end; innovation protected from external leakage Funnel used to downselect to best ideas and launch them Partners (when used) selected to advance internal ideaFuzzy Front-End Development Commercialization

XInputs

XInputs

X

Xwww.imaginatik.com

Launch

Source: Clorox, Andy Gilinkski, Director Innovation5

EROSION OF CLOSED INNOVATION Increased Mobility of skilled workers Expansion for venture capital Increased availability of Highly-CapableOutsourcing Partners

Why Change?

Can companies always employ best people ? Obvious No !!!!!

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www.imaginatik.com

The Kraft View ~ An Example2,000 Researchers

90,000

Employees

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1MM External Solution Providers

What is Open Innovation If Innovation is the process of doing newthings that delver value Then Open Innovation is the process of doing new things with outsiders that deliver value9 www.imaginatik.com

OPEN INNOVATION Combining internal and external ideas Open Innovation is a term promoted by HenryChesbrough

Permeable boundaries

Open Innovation Model Porous-walled funnel builds ideas with external partnerships Goal in funnel is to build, not just downselect Partners can influence, change, revise the ideaFuzzy Front-End Development Commercialization

XInputs

Ideas/Patents Out-licensed

Line extension Product In-licensed

XInputs

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XTechnology In-licensedwww.imaginatik.com

Launch

External endorsement/ relationships

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An Example: Boeing 787

Innovation Partner: Innovia Technology Innovation Need: passenger comfort on long flights Result: advanced LED lighting that made cabin more spacious and emotionally comforting.

Who is practicing it?The Worlds Most Innovative Companies 2007http://bwnt.businessweek.com/ interactive_reports/ most_innovative/index.aspRank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Company Name APPLE GOOGLE TOYOTA MOTOR GENERAL ELECTRIC MICROSOFT PROCTER & GAMBLE 3M WALT DISNEY CO. IBM SONY WAL-MART HONDA MOTOR NOKIA STARBUCKS TARGET BMW SAMSUNG ELECTRONICS VIRGIN GROUP INTEL AMAZON.COM BOEING DELL GENENTECH EBAY CISCO SYSTEMS Rank 26 27 28 28 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Company Name MOTOROLA SOUTHWEST AIRLINES IDEO IKEA DAIMLERCHRYSLER HEWLETT-PACKARD NIKE BP RESEARCH IN MOTION AT&T CITIGROUP VERIZON ROYAL PHILIPS ELECTR. NINTENDO COSTCO WHOLESALE VOLKSWAGEN PFIZER BEST BUY JOHNSON & JOHNSON AMGEN MERCK NEWS CORPORATION MCDONALD'S LG ELECTRONICS EXXONMOBIL

Particularly strong inConsumer Package Goods, Electronics

What makes gives open innovation an outer edge??Closed innovation

Open innovation

Our employees is our world

World is our employees

Harness the wave energy of knowledge abundance

Conclusion: work in progress

Open innovation vs. Innovation open Chesbrough defines a weak form of open innovation

Co-evolution of open innovation and corporateinnovation Open sphere central to innovation Creativity needs openness (Lessig, Christensen)

Open as an efficient management mode Strength? Weaknesses?

The patent issue: threat? Part of the solution? Open science vs. Science open University patent