Open Innovation Theory - Essay Example

? Open Innovation Theory Executive summary This paper demonstrates a review of open innovation in (OpEx) open innovation exchange programme. Its aim is to produce a scalable and sustainable marketplace to foster innovation between technological industry and academia. The purpose of this paper is to illustrate and analyze new practices by drawing attention to practices on capitalization of a company’s innovation knowledge and potential through participation of resources and external factors (Chesbrough, 2009). OpEx is a project that reinforces and constructs the need of opening an external innovation process to give way to innovation. From a wider perspective, it has been argued that paradigm shift takes place based on how companies commercialize and conceptualize inventions and knowledge leading to firms becoming permeable. On a business perspective, there is inconclusive evidence in defining and understanding open innovation but on this particular subject, the focus on open innovation on a business perspective is more engaging and extensive. There are a number of frameworks on open innovation which can be used to examine the implications and application of open innovation in companies as well as creating various relationships between students and industry. These include crowd sourcing, absorptive capacity, innovation communities, outside-in and inside out process. The approach for identifying open innovation practices is by cases identified in the literature that offers suggestions on how firms can deploy and conceptualize open innovation. Examples of strategies implemented are; Unilever, Volvo and Procter & Gamble to name but a few (Dodgson, 2008). This report focuses more on giving an explanation to issues that surround the establishment of academia industry relationship and tools that can be used in fostering such relations for the open innovation. Factors that affect collaborations between academia and industry are presented and numerous strategies to strengthen the open innovation realization are also elaborated. The internet has become a significant driver on introducing forms of community participation to create and disseminate innovation. (Dahlander, 2008). Disclosing academia industry collaboration through open innovation on the internet has become a viable and an interesting approach to enact open innovation. Introduction This paper consists of a particular focus on the establishment and maintenance of academia industry relations as a way of creating and sharing innovations and ideas. It focuses its attention on exemplar practices to capitalize the knowledge of innovation and its potential leading to external factor’s seamless integration. Interactions rather than occurring in a physical world, it takes place through the internet and is mediated by richly mediated interfaces. The open innovation platforms through integration could enhance access to entrepreneurs, academics, consultants and researchers. Incorporation of particular mechanisms and principles can be recommended into practices of open innovation by allowing interactive and media rich collaborations between academia and industries. According to Chesbrough, “Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open innovation is a paradigm that assumes that firms can and should use external ideas, as well as internal ideas, and external and internal paths to market, as they look to advance to technology” (Chesbrough, 2012: p. vii). This means that organizations should use external technologies and ideas in their businesses while on the hand allowing other companies to use the unused ideas. Open innovation frameworks Numerous open innovation frameworks are used to design and implement open innovation. Moreover, these frameworks can also be used to examine the implications and application of open innovation in companies but also create certain types of academia-industry relationships (Dalmarco, 2008). However, only a few of them offers guidance on the processes and steps that are essential in identifying, developing and sustaining open innovation as a way of valuing creation and capture process. Outside-in and inside-out process These are two significant approaches on open innovation. The outside-in approach is whereby a firm opens up particular processes of open innovation to numerous types of external contributions and inputs (Chesbrough, 2011:21). Hereby, companies that choose this approach have to collaborate with competitors, researchers, universities and so on so as to create new ideas and knowledge that can be integrated into the knowledge of the company. This aspect has gained more attention in both academic research and practice. In order to successfully implement the outside-in process, companies have to maintain and possess the essential skills and capabilities to integrate internal resources and external input of members including inventors and researchers. This approach is characterized as a way of externalizing innovative processes and ideas by using intermediary platforms and technologies to interested members so as to support, value creation, creativity and internal capabilities. Inside-out innovation requires firms to allow underutilized and unused ideas to be outside the firm so that others can use them in their business models. The significance of this approach is to externalize the firm’s innovation and knowledge as a way of expressing innovative products and ideas in the market. It is a process that can lead to an increase of revenues and assets if inventions are commercialized to various markets and industries. The inside-out approach creates collaborations and partnerships between academia and firms for knowledge and technology commercialization reasons (Conboy, 2008). Outsourcing on the other hand can be characterized as an approach to enter new markets and can be produced externally while gaining the internal leverage. This approach promotes and gives a better understanding of the inside-out process .It can also benefit in various ways such as offering access to new technologies, creation of social networks and accessing new fields of knowledge assimilation and construction. It has also enabled firms in improving interaction and communication with various technical specialists from numerous sectors to accelerate the relationship creation with different groups as well as transfer of ideas and technology from various industries. So as to combine the two frameworks, their combination resulted to a coupled process and for both to take place simultaneously, the companies are open to forming certain types of partnerships including strategic alliances, spin offs and joint ventures. Thus, it is fundamental for the co-creation of complementary partnerships to commercialize and develop innovation jointly (Chesbrough, 2009). For the purpose of this OpEx, the coupled process can be used as an overarching framework to model the architecture and conceptual design of the marketplace in regards to obtaining knowledge between academia and industry so as to shape inter-organizational network. Absorptive Capacity Absorptive capacity offers a market place online which acts as the driver to sustain and establish a competitive advantage with the use of external knowledge to generate particular innovations as proposed by the platform users (Camison, 2011). This suggests that innovation should be as a result of distributed inter-organizational network and not from single organizations. Crowd sourcing Crowd sourcing is whereby inter organizational relations become the hallmark for eternal innovation usage and co creation value. This involves the collaboration of teams and people who have the expertise in various domains and such relationships can therefore be viewed in stages on open innovation. The exchange of collaboration and knowledge with outside entities that are known already by the company’s network can be regarded as the initial stage of the developmental process. These relationships can depend on interactions and connections that already exist so as to avoid new collaborations in a range of networks. Many types of open innovations can encompass usage of various networks with a particular expertise in numerous areas which would make it necessary for the companies to think again about collaboration models as well as intellectual strategies. This would result to immediate response on the absorptive capacity of the firm in terms of knowledge exploitation between outside sources in which the company lacks the pre existing relation (Chesbrough, 2006). Such collaborative strategies and processes come in hand with nurturing and creation of innovation communities online as a way of accessing specialized expertise and knowledge which may not be readily available through traditional innovation and hierarchy relationships. Such collaborations through mediated and direct means illustrate a kind of collective intelligence being enabled by emerging technologies and represents crowd sourcing. Crowd sourcing is a strategy that has a magnificent potential of creating an open innovation strategy and can be useful in designing the innovation intermediaries (DiGangi, 2009). The innovation intermediaries therefore enable firms to make use of external knowledge and information as well as users in order to find a place or market to sell their ideas. These intermediaries also helps firms to outside users who have particular skills of carrying on specific tasks on innovation and also be able to support a wide range of demand of outside innovators to provide their skills and experiences (Chesbrough, 2007). Discussion and analysis The practices on open innovation include actual implementation of particular processes and strategies which companies deploy to create value through external and internal collaborations. This requires that the companies should make informative decisions regarding such collaborations which have skills and competence to contribute to a company’s requirements. Additionally, it improves the innovations the company has developed already. Technology transfer is a magnificent driver for socio economic development and innovation. For a company to access the technological innovations being informed through research, companies need to create collaboration with universities and research institutions (Dahlander, 2010). More companies are opening up their innovation approach. Leading companies have a clear perception on where to be open. Open innovations approaches are practiced by most firms today by either indulging suppliers to technical details, contract research and so on. A company does not have to be an open innovator if it does not pursue the external ideas but can still have the open innovation approaches. However, the external innovators base for various firms has been constant for years because the innovators usually work with similar external innovators that they have worked with in the past. Most often the externals are familiar with the company’s peculiars thus bringing forth ideas which can be presented easily to the company or are within the range of their competence. As a consequence, the quality and substance of open innovation derived from the externals reduces with time (Chesbrough, 2011). Open innovation plays an important role in the growth and transformation of technology. Numerous research and industry forums have created platforms and frameworks so as to enable open innovation implementation based on business models. From a company’s perspective, research provides the potential to increase competitiveness in translation of expertise and knowledge into services and products. Studies indicate that interactions between industrial firms and academia are widely complex, subtle and indirect because of some challenges. For instance, the relationship between industry and academia pertaining conflicts revolve around ownership and confidentiality. The use of platforms on open innovation and appropriate mechanisms can play a significant role when opening the innovative process as well as creating value by collaborating and communicating with people, tools as well as resources (Dreyfuss, 2009). The provision of particular tools are of major importance for the users to enable the externalization of innovation to parties that are interested and also be able to get skills and expertise through an online tool that will match academia and industry. To enable openness, then collaboration and feedback have to be prevalent so as to allow to new ideas derived from various communities and be at a position to annotate feedback and rate the ideas. References Camison, C., & Fores, B., 2011. Knowledge creation and absorptive capacity: The effect of intra-district shared competences. [Online] Available at ? [Accessed Dec 23, 2010]. Chesbrough, H, & Crowther, K., 2006. Beyond Hightech: early adopters of open innovation in other industries. Journal of R&D Management, Vol 36 Issue 3?, pp. 56-78. Chesbrough, H, & Garman, A., 2009. How open innovation can help you cope in lean times. [Online] Available at [Accessed Oct 31, 2009]. Chesbrough., H., 2011. Bringing Open Innovation to Services. 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