Open Innovation Process - Report Example

Open Innovation Process Open Innovation Process Introduction Open innovation involves the use of considered inflows and outflows of knowledge by a firm in accelerating internal instigation and escalating markets. In addition, targeted policies set out by different government agencies stimulate external conditions, which co-evolve with the changing nature of innovation at the management level of firms. Notably, open innovation has become a vital development in pursuing latest innovations in high-tech organizations. In addition, diverse firms stimulate the progress of open innovations through team building activities and knowledge exchange with outside or foreign firms. These accomplishments expose employees of firms to experiences that encourage innovation. The knowledge borrowed from open innovation is imperative for internal expansions. Ideas established in open innovation commercialize through peripheral and interior channels of different firms. It encourages growth of open innovation from outside and inside companies, with extension of the firm’s markets. The concepts incorporate internal consumption and external markets. This paper analyzes open innovation as applied in Apple Inc. in the advancement of iPod. It analyses open innovation processes at Apple Inc., which mainly entails knowledge exchange, especially with other companies and how the ideas settle through knowledge assisted in interior origination and extension of markets for the sale and promotion of iPods for Apple Inc. System knowledge System knowledge incorporates how components integrate and link together. It involves the structure works and various components configuration, when working together conjointly. Henderson and Clark (1990) refer to it as architectural knowledge (Chesbrough 2006, p. 56). Moreover, Scheme awareness encourages innovation and use of diverse components of its advancement. As an example for Apple Inc., the coordination data for the progress of iPod is as shown in the diagram. Component and System Knowledge A system comprises the interaction of components within open innovation growth. For Apple Inc., the system machineries that make up the iPod encourage improvement of open innovation in order to make modules work effectively. Module understanding in open innovation ensures that all the components of an iPod functions. System knowledge forms core design concepts embedded in the components. The components of an iPod are summarized in the following diagram: The system and component module design uses, the CPU, planar lithium battery (Sony), interface controller (Texas Instruments), 1.8 inch hard disk drive (Toshiba), power management system (Linear Technologies Inc.) and digital-to-analog converter (Wolfson). The above components work together in enabling the iPod to work effectively. Notably, the various components were initial ideas from different firms but integrated by Apple Inc. to form the iPod. Absorptive Capacity Open innovation encourages firms to gather knowledge on their products from external sources. Chesbrough (2006) argues that Absorptive capacities recognize the value of new external information in the innovative process, assimilate it, and apply it to commercial ends (Chesbrough 2006, p. 78). Besides, absorptive capacities promote open innovation since advances made is through gathering information generated externally. Moreover, absorptive capacities exploit relevant information used in the innovation process to build different ideas and awareness concerning a particular product. At Apple Inc., dissimilar absorptive information are, gathered for the development of mechanisms used in making iPod. New external information gathered from different firms assisted Apple Inc. in the improvement of diverse machineries when assembling iPod. Organization’s Capacity Because open innovation deals with exploitation of external understanding, it encourages the participation of peripheral parties in the innovation process. Notably, outdoor parties tend to have different ideas that encourage innovations within firms. The knowledge acquired is used internally, for the improvement of altered programs, with the aim of expanding external markets and growth of competitive advantage within the firm. In open innovation, organizations take part in the growth of new ideas and the final assembly of the new product. Besides, absorptive capacity assists in maintaining and assimilating new philosophies depending on the following factors: (i) Exposure to Relevant Knowledge Open innovation advancement depends on the information to which an individual is exposed. Revolution encourages relevant familiarity acquired using appropriate networks, (Boudreau, K. J & Lakhani, 2012, p.1). In addition, the values added by outsiders in the diversity enlarge innovations in high tech technologies such as iPod. Moreover, exposure to relevant information encourages diverse innovation practices to materialize and hence increasing external markets for a particular product (Wayne 2012, p.156). At Apple Inc., the expansion of iPod relies mainly on the exposure of enough information and knowledge sourced on iPods. Wayne (2012) suggests that Innovative information has various relevancy and acquaintance, which assists Apple Inc. in evolving quality iPods, with different features, making it marketable and effective for consumers. Therefore, open innovation and absorptive capacity depends on the exposure of relevant information from people or any other sources, such as journals and magazines, to promote quality innovation. (ii) Innovation Networks Network can comprise of a number of nodes, positions, business units, governments, customers, individuals, firms interacting between the nodes. In open innovations, the network model facilitates factors such as improved communication technologies, developments in computer hardware and software such as CAD and CAM and growth of strategic alliances. All these factors are established from open innovation and inflow of data from computer hardware and software in making iPod components. According to Wayne (2012), Open innovation comprises of paradigm, which assumes firms use of external ideas, as well as internal ideas. Moreover, open innovation encourages the use of both internal and external ideas in developing and coming up with different ideas concerning unlike models. At Apple Inc., external ideas concerning the components of iPod assist in developing iPod and generating components from other companies. On the other hand, external ideas from other firms assist Apple Inc. in developing iPod components from external factors and ideas (Wayne, 2012, p. 56).it is important for firms to use both internal and external ideas in open innovation since it allows firms to have a variety of information on developing new things. Besides, open innovation encourages both internal and external paths of markets, in enhancing technology. Open Innovation Process Open innovation process begins with the recognition of openness across organizations boundaries. It assists firms and companies to utilize and realize external knowledge for the sustenance of competitive balance in internal and external bases. Firms need to promote open innovation, by encouraging employees and other firm stakeholders to take part in the innovation process openly. The prominence and recognition given to innovation by employees and other stakeholders encourage the improvement and acquisition of knowledge from all the participants. Knowledge gained from the participants directly applies to the innovation processes in coming up with new models and ideas. Models and ideas are important in expanding external markets and encouraging internal origination. The process of openness and recognition across organizations, during the advancement of an idea, encourages a free flow of knowledge within. Further, it enhances participation and extensive research. Open forums, during open innovation processes, encourage stakeholders to participate in extensive research in the innovation process across all the boundaries of Apple Inc. and any other interested sponsors within iPod technology. Additionally, the forums in turn balance competitive advantage internally and externally as open innovation process becomes integral a part of the innovation process and business development of an organization. Moreover, the process of open innovation, for Apple Inc., does not only focus on the development and application of knowledge, but also deals with integration of internal innovation and exploitation of external knowledge with all the other stakeholders of the firm. Exterior acquaintance assists Apple Inc. in evolving diverse iPods programs and ideas, and that tend to market the firm externally. The expansion of the programs is borrowed from external parties, who have relevant and subjective ideas concerning various ideologies that develop iPods. However, it is vital for firms to use internal resources for open innovation, to diversify knowledge and encourage the development in a particular sector. Open Innovation and External Knowledge Open innovation requires extensive manipulation of outer understanding through different partners outside the organization. During the innovation processes, firms need to collaborate with dissimilar partners in coming up subjective ideas concerning particular aspects. Other stakeholders assist in research and development, which later result in commercialization. Collaborating with other stakeholders in open innovation, involves the use of research projects with firm boundaries. The boundaries assist firms in protecting their internal information based on different aspects, and these encourage innovation, within the firm. In addition, commercialization assists in marketing various ideas and aspects of the firm to new and current markets. Theses facilitate open innovation in the external markets since ideas developed attract different markets that tend to generate chains. These chains developed in open innovation form a network of markets that assist in widespread knowledge of ideas in the markets. At Apple Inc., iPod developments begin with research and development and later commercialized as shown in the diagram. From the diagram, open innovation begins with research and development and later commercialized. In inquiry and improvement, research projects are discussed with a focus on firm boundaries. These boundaries protect information generated by open innovation to the public. Internal origination of information researched in the firms is protected to prevent other external parties from accessing information developed by different firms. Moreover, open innovation encourages the use of research projects in developing ideas commercialized in new and current markets. Apple Inc.’s research and development department uses different projects generated during open innovation to come up with iPod new features. The new features are protected within the firm boundaries; later through external path to generate new and current markets, during commercialization. All these innovations done under the firms boundaries enable the protection of internal origination of information based on the aspects developed during research and development. Besides, the separation of research department and commercialization in open innovation, assist in the development of theories concerning innovations. The theories do not involve stakeholders participation. Lack of stakeholders participation arises different cultural conflict in collaboration with other partners.it mainly affects international partners in the commercialization sector. The withdrawals of stakeholders in open innovation, affect open innovation paradigm and the potential of integrated processes. Consequently, collaborating with partners in open innovation becomes difficult and creates conflict in organizations that seek exploitation in external knowledge (Koen & Mario 2008, p. 45). Collaboration with other stakeholders promotes development in different aspects as well as generates conflicts with other firms such as Samsung, Lenovo, and IBMs. In contrast, Conflicts discourage innovation processes and cause loss in current and new markets. Therefore, firms need to stick to clear collaborations with partners, in order to maintain and protect the firms’ brand name in external markets. Moreover, genuine collaborations promote innovation processes and free flow of knowledge both externally and internally within different ideas generated by firms. At Apple Inc., collaboration with different firms that have the same culture as apple has enabled for the wide spread of sales in different markets. Open innovation encourages collaboration of different cultures within sectors, hence having control over new and current markets. Moreover, internal and external information concerning different firms are protected, since cultural theories tend to be internal within firms to maintain their markets. Advantages of Open Innovation Concept Open innovation integrates internal and external ideas into systems and architectures. Moreover, it assumes internal ideas to markets through external channels, outside current businesses of firms in generating additional values (Koen & Mario 2008, p. 78) the combinations of both internal and external ideas promote innovation extensive innovation practices of firms and hence expanding new and current markets for companies and firms. Besides, systems and architectures become more reliable through the combination of internal and external ideas in generating innovative concepts of different firms (Lichtenthaler 2009, p.76). Open innovation increases a firm returns on innovation. It contributes to revenue growth, as well as proportions attributed to radical innovations. Innovation sets up strong focus on firms to form up efforts on revenue. Consequently, the development of revenues aligns firms’ business model. It is therefore, vital for open innovation developments to consider revenue aspects in the process of innovation. It helps in generating and promoting new markets for the sales of various products of the firm. Furthermore, open innovation modifies the way firms interact with customers, competitors, suppliers and external agents. These interactions improve sales of various products and hence establish a large market. It is therefore important for firms to develop open innovation and encourage other stakeholders to take part in the innovation process as they modify interactions. At Apple Inc., development of iPods is successful through joint combination of internal and external ideas in developing the system and architecture of apple iPod. Therefore, open innovation has broad and extensive advantages for not only market development but also durability of the firms products in the markets. Disadvantages of Open Innovation Concept Open innovation concepts involve different cultures in developing ideas and concepts. The cultures have different ideas that corrupt innovation developments of different firms. Consequently, the cultures promote loss of stakeholders in the development of ideas during innovation processes. In addition, internal and external ideas of firms shared within cultures create conflicts during innovation processes. In apple firm, the removal of stakeholders based on cultures, has affected innovation in iPod architectures design. Conclusion Open innovation encourages internal and external flow of knowledge within firms for innovation developments. Moreover, innovations promote the development of new and current markets since systems, concepts and architectural designs are developed. In apple firm, iPod markets have increased because of the development in open innovation through high technologies and collaborations of internal and external ideas developed in open innovation. Bibliography Boudreau, K. J & Lakhani, K. R 2012, How to Manage Outside Innovation, Image, Retrieved March 1, 2015, from http://sloanreview.mit.edu/article/how-to-manage-outside-innovation/ Chesbrough, H., Vanhaverbeke, W West, J 2006, Open Innovation: Researching a New Paradigm, Oxford University Press. Chesbrough, H 2006, Open Innovation: The New Imperative for Creating and Profiting from Technology; Illustrated, Business Press. Koen De. B & Mario., C 2008, Open innovation in global networks, PECD publishers, Paris. Lichtenthaler, U 2011, Open Innovation: Past Research, Current Debates, And Future Directions, The Academy of Management Perspectives, 25, 1, p.75-93. Wayne Gould, R 2012, Open Innovation and Stakeholder Engagement, Journal of Technology Management & Innovation, 7, 3, p.1-11. 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