Npd - Open Innovation Essay
NPD – Open Innovation Essay Introduction At a purely objective level, the definition for open innovation as defined by Henry Chesbrough is – “the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation” (Chesbrough, 2012). However, much has changed in the world of business since Chesbrough first coined the term in 2003, and the concept of open innovation has been adapted to suit modern business practice to varying degrees of success.
In this essay, I aim to explore the current trends for open innovation within business, evaluate the critical challenges companies face in its adoption, and also exploring the future possibilities of open innovation and how it can be further utilized more efficiently and effectively. Current Trends for Open Innovation Open innovation invites a new paradigm of collaboration and co-creation into the business landscape that was not seen before.
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The coming of interactive web technologies and the growing interest in the consumer as an agent of co-creation has seen Chesbrough’s fundamental aspirations of open innovation questioned and open for debate. This leaves the original definition for open innovation extremely dated. Some questions asked by Gobble in her article on “Defining Open” show this disparity. She asks if it’s “open innovation to gather ideas from users and potential users – and the feed those ideas into the NPD pipeline? , and “what does open innovation really mean in this hyper-connected, always on world? ” (Gobble, 2012) For me, this translates to – as the world evolves over time, so must open innovation. Chesbrough’s view on open innovation presumed relationships between institutions, corporations and university labs (Gobble, 2012). Reaching and interacting with consumers and individuals was never an aspect of the original concept, and yet, it has become an integral part of the open innovation process.
Social media is an ever growing phenomenon that has yet to reach its full potential in both the commercial, and in the user reach capabilities. Many firms have attempted to utilize technologies such as Twitter, LinkedIn and Facebook, incorporating customer feedback into product and marketing through crowdsourcing. However, none yet have found a one size fits all best practice strategy for open innovation. According to Brian Solace (2012), a social media blogger, “51% of people who like a Facebook fan page are more likely to buy from that page’s products or services. The future of open innovation practice arguably rests on proper utilization of social media; companies must demonstrate that they truly value their fan/user opinions through meaningful use of crowdsourcing. Critical Challenges Facing Open Innovation The challenges I have outlined above do not show the complete picture; I judge them to be some of the most important issues when dealing with open innovation. There are further challenges that need to be overcome, but those are outside the scope of this essay.
In light of this, I have labelled the above three as “critical challenges”. There are some inherent challenges when dealing with an open innovation environment. The most important that I can see, yet is oftentimes overlooked, is the idea of an inherent culture or mind set within an organization. Some firms are completely immalleable in their business practice and are unwilling to adopt new alternatives. In such a case, the only way forward is in the changing of culture that Nakagaki, Aber and Fetterhoff (2012) present.
However, it is easier said than accomplished, and yet an action that individuals within an organisation must take upon themselves in order to align thought processes with open innovation ideals. (Nakagaki, Aber and Fetterhoff, 2012) Many top tier managers are still set in their ways and do not believe open innovation is the next logical step forward. This is not just because they are firmly ingrained in their current beliefs and business structures. While open innovation has been proven to work and has made major contributions to business practice, its benefits can only be measured in a case-by-case basis.
Therefore, if an individual wants to introduce open innovation measures, they would usually have to prove (to its top management) how and why such an initiative would yield tangible value to the company (Nakagaki et al, 2012). It doesn’t help that it would be extremely difficult to place a specific value on the contribution of an open innovation project. Ollila and Elmquist (2011) found that partners consider each other peers as opposed to suppliers. However, while companies may engage in open innovation as peers, they still act upon opportunistic goals to further their home organisation’s desires.
I think that such self-serving bias is unavoidable and is of frequent occurrence in business; it is also a problem that does not have any single long-term solution. Relationship and trust building efforts between partners are the only ways in which incremental progress can be achieved for a challenge such as this; even then, such progress isn’t easily measureable or quantifiable. The Future of Open Innovation/Conclusion This year at the Thought Leadership Symposium, open innovation was voted as the top research priority (Di Benedetto, 2012).
For Di Benedetto, the final results weren’t as surprising as the questions raised for high-potential research topics. And so we must ask these questions as we look to the future of open innovation. Does the value of open innovation depend on the type of firm, or type of innovation? How can we overcome the critical challenges facing open innovation practice? And, how can we encourage and motivate customers to be productive open innovation partners? As I’ve stated before, social media has become an integral part of the open innovation process.
Companies have to find new and more effective strategies for utilizing social media for their internal innovation practices and aligning them with external partners (Barczak, 2012). A heightened focus on the melding of both internal and external contributions, plus the tearing down of the borders surrounding the two is the next step for open innovation. However, I personally feel that only when the challenges I have outlined in this paper as resolved, or at least progressively worked through, can we see the next major breakthroughs in this area. Word Count: 1016