Now Is the Time for Open Innovation

I’ve been reading and thinking about Open Innovation a lot lately. So many books talk about the success of Open Innovation and Mass Collaboration – recently I’ve read “Wikinomics” by Don Tapscott and Anthony D. Williams, and “Burning the Ships: Intellectual Property and the Transformation of Microsoft” by Marshall Phelps and David Kline. Next on my reading list is “The Game Changer: How You Can Drive Revenue and Profit Growth with Innovation” by (one of the most famous champions of Open Innovation) A.G. Lafley of Procter and Gamble and Ram Charan.

But what is Open Innovation and why are experiencing a culture shift due to Mass Collaboration?

According to Wikipedia, Open Innovation is:

the new imperative for creating and profiting from technology. The concept is related to user innovation, cumulative innovation, Know-How Trading, mass innovation, and distributed innovation. “Open Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology. (1)” The boundaries between a firm and its environment have become more permeable (emphasis added), innovations can easily transfer inward and outward. The central idea behind Open Innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (e.g. patents) from other companies.

Wow! It sounds like Open Innovation is the easy answer to finding creative ideas to solve all of our business problems. Maybe, but maybe not. In the oil, gas, and petrochemical industry, Open Innovation is going to be a very hard pill to swallow. These industries, like the former Microsoft personality, have conducted primarily in-house research and development for the lifetime of the company, with only occasional forays to universities with specific R&D questions. Protecting trade secrets, patents, and know-how have resulted in vast legal departments staffed with smart people watching the trade literature and able to pounce on the first indications of infringement. And, of course, many in the oil and gas industry are just beginning to patent extensively where they had previously relied upon trade secrets for protection of their vast knowledge storehouses.

So, in a vast number of corporations, Open Innovation is one of those things that is much easier said than done. If we have an internal R&D department, what work do they do and what work is brought in from outside? Do we patent the combined effort so that we can gain from the new/new innovation? If we license out technologies, how do we protect our competitive advantage for that technology in-house? How do we gain customers if we are in a joint development effort with another company?

Great questions. And, if nothing else, having a discussion about Open Innovation in your company may spur the creativity of your New Product Development teams. Maybe the NPD team will look a little more at what your customers need and what your competitors are doing. Maybe the NPD team will talk about a few more topics with that university professor. Maybe folks on the NPD team will join industry associations and learn what’s new in their specialty field of technology. Maybe “synergies” will occur naturally with your suppliers and vendors. Maybe, just maybe, Open Innovation will work in industries that are marching down the experience curve to bring them to a disruptive technology gaining market entry and shareholder value.

Whether Open Innovation means going to the world-wide internet community asking for solutions to your problems or whether Open Innovation simply means looking at new sources of ideas, now is the time to look at mass collaboration. As the world grows smaller daily, competition becomes fiercer and companies are pressed to develop faster, cheaper, and better.

Dip your toe into the waters of Open Innovation slowly or dive in.

References

(1) Chesbrough, H.W. (2003). Open Innovation: The new imperative for creating and profiting from technology. Boston: Harvard Business School Press, p. xxiv.

orignally poted 4 March 2010

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