Exploring the Field of Open Innovation - Term Paper Example

A Summary of “Exploring the field of open innovation” Introduction: Elmquist, Fredberg and Ollila (2009) attempt to systematically review the emerging research field of open innovation. They also vividly describe the major tendencies of research and suggest steps to future investigation. The authors draw their concept of open innovation from Chesbrough’s (2003) conceptualization. Innovation helps companies grow and become competitive. Chesbrough (2006) defines open innovation as: “a paradigm that assumes that firms can and should use external ideas as well s internal ideas, and internal and external paths to market, as the firms look to advance their technology” (qtd in Elmquist et al., 2009; p.327).This is an approach towards increasing the efficiency and effectiveness of the innovation process. Further, this review shares an increased understanding about the emerging research of open innovation along with suggesting potentially important fields of investigation. Two major reviews were conducted, a systematic review of the literature and asking the researchers. Analysis: This article is a systematic literature overview of the publications on open innovation published in key databases until 20 November 2007. Two major databases of management journals including an additional innovation journal, which was not included in the database, were used. The search and the search terms were limited. Publications that were closely related to this topic, which did not have the set terms, were undoubtedly excluded. The search was also limited to Social Sciences publications. This way the scope of search of the publications had included only a portion of the vast opportunity. The study had included 49 publications. Out of this, 10 were book reviews or columns and 4 of them were books. The books were grouped in thematic content after the research team read and analysed the content. They found many publications related to the themes generated. The following themes were identified: The notion of Open innovation: This review identified that Chesbrough had asserted that a lot of focus and attention was given to the internal R&D and hiring of people by companies as this heavy investment helped them in getting the best innovative ideas and protected their intellectual property strategies. The profits gained were further diverted to the R&D. However, by the end of the twentieth century closed innovation process started to lose ground. The open-innovation model came to showcase ideas where firms could commercialize both internal and external ideas. Projects could enter the market in many ways like out-licensing or spin off ventures in addition to the regular sales channels. Business Models: When companies adapt their business model to open innovation, they can generate value from IP (Intellectual property). However, a study in Netherlands showed that very few companies had a clearly defined business model which makes it difficult for them to be flexible with each other. Organisational design and boundaries of the firm: Considering that external knowledge exploitation becomes a strategic activity, and is aligned to other strategies, cross functional collaboration helps in reducing interface problems. Creating networks helps in situations when there is uncertain demand for goods and services. Strong ties lead to incremental innovations. Leadership and culture: Leaders of open innovation require external sourcing in their practices as they are often trained to think internally. They must make strong technical contributions to bring the community together. The need to transform systems, processes, values and culture comes with sourcing more external innovation. Tools and technologies: This article identifies that coordinating/aggregating, liberating and allowing/including are three major tools and processes that are used in open innovation. However, the main risks are loss of know-how, dependence on customers’ views and personality etc. IP, patenting and appropriation: It is asserted that the firms should be an active buyer and seller of IP and lot of ideas exist outside the firm. This is one of the assumptions made by open innovation. To increase profits from innovations, the companies must adopt the method of “free revealing” of ideas. Industrial dynamics and manufacturing: This study reveals that depending on the position of the innovative system, the stage of maturity, and considering the value proposition, the firms manage the open innovation and technology. Moreover, theoretical depth in the analysis of open innovation is to be developed further. Researchers have explored issues in general terms. Case studies from a few companies are presented very often. This shows that the field of research is in its early phase. To apply open innovation to firms, business models must change. Another approach to arrive at an understanding of the questions currently being addressed in this field was to ask researchers what they considered most crucial for future research. The aim was to use the individual researchers’ perceptions as valuable indications. In the thematic analysis of the research frontier, four areas were identified. Firstly, for open innovation to emerge as a model of innovation, it requires development of a more precise terminology, finding the right people and broadening the scope of partners, all of which are critical challenges along with organisational structure. Secondly, from the contingency perspective of open innovation, researchers identified a number of questions related to contingency perspective, cost and comparative advantages over closed versus open innovation under different conditions. Another perspective was the timing of open innovation and relation to the product life cycle. Thirdly, implementing and using open innovation comes with the problem of organising the external environment to make use of the wisdom of the crowd and organise internally to make use of knowledge and ideas. The survey revealed a number of issues related to implementation of open innovation. Another challenge included integration of external ideas from customer involvement and open innovation practices into already existing systems and structures. Overcoming the problem of not-invented-here was an issue. Most companies are yet to adapt to the culture of proudly-invented-elsewhere. The policies that were developed needed to be changed to accommodate user-centred or community centred innovation. Next, the role of management in open innovation field led researchers to come up with many questions related to the steps to be taken by leaders on driving open innovation. Conclusion: The review concludes by comparing the themes of the two approaches i.e., through reading the literature and the individual perceptions of the researchers; it shows that the authors of this article seek more depth in the concept in many aspects. Finally, Elmquist et al., (2009) argue that open innovation is a collaborative process between different parties rather than a market of ideas. While the literature study revealed several practitioner accounts of open innovation, authors call for more research and a systematic study across organisations. Elmquist et al., (2009) also focus on the role of management. New dimensions have been identified that distinguish open innovation process with several other innovation processes, which include the locus of the innovation process and the extent of collaboration. It is agreeable that if the locus of innovation is not limited to the R&D department alone, and applied in the field of collaboration between the firm and outside actors, it helps in clearly understanding on how innovation happens in a firm. References Elmquist, M, Fredberg, T and Ollila, S. (2009). Exploring the field of open innovation. European Journal of Innovation. 12(3), 326-345. Read More