Open Innovation and Co-Innovation Defined
Innovation and innovators play a critical role in the business world. When speaking of innovators, the role of outside innovators is considered to be fundamental, and the success of companies like Apple Inc. confirms this fact. The aspect of having a reliance on outside innovators is what has given companies like Apple Inc. a name, especially when looking at the iPhone. Open innovation is the tendency of businesses to make use of knowledge inflows and outflows as the sources for ideas and acceleration of innovation strategies. Co-innovation, on the other hand, is considered to be a type of open innovation. Co-innovation is to involve the collaboration of two or more partners that work purposively in the management of the flow of mutual knowledge across the boundaries of the organizations through joint innovation and commercialization of the said innovation. Overall, open innovation allows companies to commercialize its ideas as well as those from other firms and as a result, identify ways of taking its in-house ideas to the market through the adoption of pathways outside its current business set up. It is apparent that the concepts of open innovation and co-innovation have set root in the present world, and they have profound implications for business. The implications of open innovation and co-innovation are felt in areas such as the firm’s strategy, generation of ideas, performance, business models and intellectual property.
Business strategy is considered to be a vast field. As a matter of fact, business strategy has been linked to a firm’s plan to use its opportunities against the threats that may manifest in its environment. Open innovation has transformed the design of business strategies. As businesses shift from the closed innovation, where research and development departments took the center stage, to open innovation, changes to the business strategies have been noted to take place. Some of the changes that are deemed as being imperative in the open business strategies take note of value creation and value capture. Creation of value through the open innovation would tend to take the approach of a public good. In such a case, value creation is not a rival, where it can be consumed, and its experience will not be degraded. Additionally, value creation would allow access to all comers.
When looking at the concepts of value creation and value capture as the implications of open business strategies, it essential to understand the concepts of knowledge creation in open invention, and ecosystem creation in open coordination. Value creation is dependent on knowledge, which can, in turn, be profitable. The very essence of pooled knowledge in value creation is superior to the knowledge that is drawn from an individual contributor. Similar to the concept of the open invention that is achievable under pooled knowledge creation, it is essential to note that open coordination is also imperative. This is in the sense that it has fostered the instigation of building consensus on topics that include technology standards, which have played a fundamental role to the flourishing of business ecosystems.
From the above, it is clear that open innovation and co-innovation have fostered changes to the strategies that firms adopt. Open innovation has implications on the performance of businesses. Businesses with a greater innovation capacity tend to be more prepared to respond to their environments in a successful manner. As a matter of fact, these businesses tend to have the capabilities they need to gain a competitive edge, while they improve their overall performance. Collaborations, under the concepts of co-innovation/ co-production, allow businesses to inaugurate innovations much faster and in an effective manner. Innovation orientation practices in businesses are considered to be a critical addition to collaborations. Innovation orientation will in turn foster creativity and the overall development of innovation practices in business, thus activate the cycle of performance improvement.
Implications of Open Innovation on Business Strategy
The implication of open innovation and co-innovation is felt on business models that are adopted by firms. The new model of open innovation is based on a wide pool of knowledge, which must be put to use immediately, if firms are to reap the benefits of the value that they possess. The new open innovation model holds that organizations must not have restrictions in the knowledge that it unveils in its research; particularly to the market pathways that are internally based. In addition, the internal pathways must also not be restricted to only taking a given business’ internal knowledge capabilities to the market.
The open innovation model promotes rules that are defiant of those that are propelled by the old closed innovation model. In reality, a difference rests with the principles that are upheld by the open and the closed business innovation models. The principles in the closed business innovation model, take note of the fact that smart people in the field of a given business, work for the said firm. Another principle considers the fact that for businesses to benefit from R & D, they ought to come up with ideas, develop it and then market it by themselves. Another principle in the model consider that if businesses discover an idea by themselves, then they ought to take the idea to the market by themselves. Other principle consider the fact that if businesses commercialize an idea, then the win and if they create the best ideas in the field they also stand a winning chance. Finally, the model lives by the principle of controlling a business’ intellectual property so that competitors do not benefit from the firm’s ideas.
In contrast, to the closed business innovation model, the principles upheld by the open business innovation model consider the following facts. Not every smart person works for the company, and so great ideas ought to be sourced from outside. External R&D is essential in the creation of significant value, which internal R&D can claim a section of it. Another principle under the model is that businesses do not have to come up with ideas to benefit from them. Another principle identifies the fact that the development of a sound business model was essential than taking an idea to the market. Making good use of both internal and external R&D allows companies to garner success. Finally, the open innovation model, businesses should allow other firms to use their IP, and the said companies should buy other’s IP, especially if it propels a given company’s business model.
Its a fact that innovation had been linked to the role that communities play. The role that is played by outside communities is especially important when looking at the creation, shaping, and transferring of technology and social-based innovations. Evidently, communities play a critical role in idea creation, in open innovation, which ends up being adapted, adopted or disseminated. It is essential to note that a significant implication of open innovation rests with the essence of new idea generation, which can be developed and commercialized by firms.
Asides from the positive implications that open innovation displays for businesses, as presented above, it is essential to note that the concept of open innovation has challenges, rests with three concepts namely maximization, incorporation and motivation. Under maximization, firms have to be in a position where they can find vast approaches of maximizing the returns that emanate from internal innovation. Under incorporation, firms have to understand that they cannot locate the benefit of external innovation, where there is a lack of the relevant knowledge that can allow incorporating its knowledge to the innovation activities. Finally, firms have to ensure that a source of replenishing the individual external contributors through motivation.
Open innovation under the concepts of crowdsourcing allows flow of ideas from diverse groups of people that are different from those in the organization, as a means of finding new solutions to challenges. Open innovation is unpredictable for firms and engagement in it, calls for the presence of time and resources. Crowdsourcing and citizen participation via the web heighten the workload level for companies, which ought to be managed, that requires the time of planners. Participation time is also of the essence for the participants to a challenge, given that it is considered to be leisure-time.