Open and Radical Innovation

Open Innovation is an important business model approach as far as small enterprises and university spin out companies are concerned. In the current global situation, knowledge is distributed widely and no single organisation will have the best expertise in every area necessary to create the best possible product. In the traditional alternative model, closed innovation refers to processes that limit the use of internal knowledge within a company and make little or no use of external sources.


Closed Innovation is:
• Well developed and accepted
• Internally generated and operated
• Losing effectiveness due to nature of global innovation process; cost ineffective

Limitations of Closed Innovation include:
• Expensive to operate
• Assumes knowledge base is entirely in your control
• Huge risk due to rapid developments occurring elsewhere
• New knowledge spaces are complex and crowded
• Flawed because of restrictions imposed

Companies cannot afford to rely entirely on in-house expertise and will need to obtain intellectual property through purchase or licence from universities, research institutes and other companies as appropriate. Similarly, a company’s own IP which is not central to its own business should be made available externally through for example, joint ventures, spin-offs and licensing.



Open Innovation:
• Multiple points of entry and exit
• Can be technology, product or business
• Able to lever or scale others’ ideas
• Obtain rapid customer feedback for product development

Benefits for small companies include accessing markets dominated by large organizations (such as pharmaceuticals or aerospace), finding new employees and the potential for pre-selling, prior to launch of a product. However, there are some potential drawbacks to the model. An organization needs to be careful regarding loss of control of its own technology to partners or the public domain. Collaborations require well-structured management and employees may be wary of the uncertainty over possibilities of future outsourcing. One particularly problematic issue is that of IP. Situations where the ownership of IP is unclear can be extremely difficult to handle.

Open innovation approaches will be favoured by the development of geographical and/or sectorial clusters, situations where groups of universities, large and small companies have improved access within their network. Large, world-class universities will hold an advantage over smaller institutions due to the proximity and easy access to leading researchers in multiple fields and businesses eager to commercialise ideas.

Radical Innovation is an open innovation process that is oriented to delivering a step change to meet a user need of a radical nature, such that it could not be conceived through normal processes of (closed) innovation.

Accelerated Radical Innovation can be done rapidly using best possible available tools and processes in assessment of opportunities and pathways yielding significant benefits on short timescale. Routes to achieving open and radical innovation include:
• Peer to peer networks
• Supply chain networks
• Internal networks
• Feeder networks
• Events and forums

Acknowledgements:
Figures courtesy of Michael Docherty, Venture2
Thanks to Professor Richard Williams and Dr Sean Kelly, University of Leeds

References:
Henry Chesbrough, (2003) Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business School Press, Boston Henry Chesbrough, Wim Vanhaverbeke, and Joel West, Eds., (2006) Open Innovation: Researching a New Paradigm. Oxford University Press, Oxford Keld Laursen and Ammon J.Salter, (2006) “Open for Innovation: The role of openness in explaining innovation performance among UK manufacturing firms.” Strategic Management Journal, 27, 2 (February): 131-150

Source websites:
http://www.openinnovation.net/
http://www.openinnovation.eu/
http://www.openinventionnetwork.com/
http://www.venture2.net/
http://www.raeng.org.uk/events/pdf/John_Dismukes.pdf