CLOSED AND OPENINNOVATION

Venkata Swamynath channaVenkata Swamynath channa

WHAT IS INNOVATIONWHAT IS INNOVATION

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

MY BMW WITH iDRIVEMY BMW WITH iDRIVE

CLOSED INNOVATIONCLOSED INNOVATION

No new Technologies and Ideas outside No new Technologies and Ideas outside of firmof firmCompetitors Could not take benefitsCompetitors Could not take benefitsMore beneficial to companyMore beneficial to company

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Traditional Innovation ModelTraditional 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 idea

Fuzzy Front-End Development Commercialization

Inputs

InputsX LaunchX

X

X

Source: Clorox, Andy Gilinkski, Director Innovation

EROSION OF CLOSED EROSION OF CLOSED INNOVATIONINNOVATION

Increased Mobility of skilled workersIncreased Mobility of skilled workers

Expansion for venture capitalExpansion for venture capital

Increased availability of Highly-Capable Increased availability of Highly-Capable Outsourcing PartnersOutsourcing Partners

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Why Change?Why Change?

Can companies always employ best people ?Can companies always employ best people ?

Obvious No !!!!!Obvious No !!!!!

88

2,0002,000

90,00090,000

1MM External Solution Providers1MM External Solution Providers

The Kraft View ~ An ExampleThe Kraft View ~ An Example

EmployeesEmployees

ResearchersResearchers

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What is Open InnovationWhat is Open Innovation

If…If… Innovation is the process of doing new Innovation is the process of doing new

things that delver valuethings that delver value Then…Then… Open Innovation Open Innovation is the is the process process of doing of doing

new things new things with with outsiders outsiders that that deliver deliver valuevalue

OPEN INNOVATIONOPEN INNOVATION

Combining internal and external ideasCombining internal and external ideas

Open Innovation is a term promoted by Henry Open Innovation is a term promoted by Henry ChesbroughChesbrough

Permeable boundariesPermeable boundaries

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Open Innovation ModelOpen 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 idea

Fuzzy Front-End Development Commercialization

Inputs

InputsX LaunchX

X

X

Ideas/PatentsOut-licensed

TechnologyIn-licensed

Line extensionProduct In-licensed

Externalendorsement/relationships

An Example: Boeing 787An Example: Boeing 787

Innovation Partner: Innovia TechnologyInnovation Partner: Innovia Technology Innovation Need: passenger comfort on long Innovation Need: passenger comfort on long

flightsflights Result: advanced LED lighting that made Result: advanced LED lighting that made

cabin more spacious and emotionally cabin more spacious and emotionally comforting.comforting.

Who is practicing it?Who is practicing it?

The World’s Most The World’s Most Innovative Innovative Companies - Companies - 20072007http://bwnt.businessweek.com/interactive_reports/interactive_reports/most_innovative/index.aspmost_innovative/index.asp

•Particularly strong in Particularly strong in Consumer Package Consumer Package Goods, ElectronicsGoods, Electronics

Rank Company Name1 APPLE 2 GOOGLE 3 TOYOTA MOTOR 4 GENERAL ELECTRIC 5 MICROSOFT 6 PROCTER & GAMBLE 7 3M 8 WALT DISNEY CO. 9 IBM 

10 SONY 11 WAL-MART 12 HONDA MOTOR 13 NOKIA 14 STARBUCKS 15 TARGET 16 BMW 17 SAMSUNG ELECTRONICS 18 VIRGIN GROUP 19 INTEL 20 AMAZON.COM 21 BOEING 22 DELL 23 GENENTECH 24 EBAY 25 CISCO SYSTEMS 

Rank Company Name26 MOTOROLA 27 SOUTHWEST AIRLINES 28 IDEO 28 IKEA 30 DAIMLERCHRYSLER 31 HEWLETT-PACKARD 32 NIKE 33 BP 34 RESEARCH IN MOTION 35 AT&T 36 CITIGROUP 37 VERIZON 38 ROYAL PHILIPS  ELECTR. 39 NINTENDO 40 COSTCO WHOLESALE 41 VOLKSWAGEN 42 PFIZER 43 BEST BUY 44 JOHNSON & JOHNSON 45 AMGEN 46 MERCK 47 NEWS CORPORATION 48 MCDONALD'S 49 LG ELECTRONICS 50 EXXONMOBIL 

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

Closed innovationClosed innovation

Our employees is Our employees is our worldour world

Open innovationOpen innovation

World is our World is our employeesemployees

Harness the wave energy of Harness the wave energy of knowledge abundanceknowledge abundance

Conclusion: work in progress…Conclusion: work in progress…

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

Co-evolution of open innovation and corporate Co-evolution of open innovation and corporate innovationinnovation

Open sphere central to innovationOpen sphere central to innovation Creativity needs openness (Lessig, Christensen)Creativity needs openness (Lessig, Christensen)

Open as an efficient management modeOpen as an efficient management mode Strength? Weaknesses?Strength? Weaknesses?

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

University patentUniversity patent