Fiat Mio: Open Innovation and Crowdsourcing - Assignment Example

Fiat Mio: Open innovation and Crowdsourcing Name: Tutor: Course: Date: Fiat Mio: Open innovation and crowdsourcing a) Benefits of open innovative experience to Fiat and participants Fiat Brazil developed a platform that combines and collaborates in creative commons, open innovation and crowdsourcing to create Fiat Mio, a futuristic concept car. In just 15 months, the Fiat Mio team interacted with 17,000 participants with more than 11,000 ideas and coming from different countries (Saldanha & Pozzebon, 2015). Upon its launch in Sao Paulo auto show, hundreds of people showed up to claim that Fiat Mio was their own. Fiat Mio and the participants gained from the open innovative experience through collaboration, open innovation and crowdsourcing. Fiat Mio launched a website to invite automotive designers around the world. This enabled the company to create the world’s first crowdsourced car. Being a product type innovation, André (2009) observes that the automobile is designed to be safe, comfortable, and compact and agile. This is a disruptive innovation since it has pollutant free engine and an innovative traffic solution for big cities. The car that is still at the concept stage of the product lifecycle has special attributes such as interface between car and user, changes in configuration and the capacity to receive personalized updates. However, the concept car still experiences low sales, no profits and high costs (Chesbrough, 2003). This car has the potential to gain from first mover advantages of being the first entrant into the crowdsourced car and is likely to have competitive advantages by controlling resources. The benefits are as shown in the table below; Fiat Mio Participants Knowledge The car undergoes radical innovation in design and functionality. ‘Tacit knowledge’ taken seriously. Ability of participants to share knowledge, designs and new technologies in automotive sector (Saldanha & Pozzebon, 2015). Sense of ownership Intellectual rights reserved by the company courtesy of contribution from the public. Distinctive identity through car design, unique shape and configuration (Bekkers et al., 2002) Emotional attachment to the company and the car design they helped create. Badge of identity for the first crowdsourced car. Resources Fiat top management allocates resources that is consistent with their belief for new designs and products Enhances creativity and cooperation among blog users. Competition Unrivalled competitive advantage due to first mover advantages and performance maximization (Jaffe & Lerner, 2004). Company gains by shortening the discovery process and reduction in technology risk. Collaboration among users leads to high levels of competition to engender best innovative designs and technological superiority. Adoption Fiat will be branded as a visionary company that is ‘ahead of the herd’ Participants become technology enthusiasts who will always want to try something new (Saldanha & Pozzebon, 2015). Decision making Company leadership embraces a bottom-up approach to ideas and concepts Participants will have more power in decision making especially on the door configuration and car colors. Brand power Fiat Mio potentially establishes customer loyalty and a strong brand recognition of the innovative car before other entrants enter the market (André, 2009). Ability to connect with the company and its products Markets Fiat Mio may open new markets and potential applications by reshaping the conventional car designs, product markets and automotive knowledge. Selling of innovative product. Participants become the first buyers since they contributed in the design and construction of the car. Benefit from valuation of a new car design that exceeds its price (Lerner & Tirole, 2002). Appropriability strategies Fiat keeps innovating faster than others. Gains from first mover advantage ideas. Participants able to negotiate for lower prices owing to their customer and brand loyalty Commitment Strategic fit between the company and bloggers’ working styles and cultures (Saldanha & Pozzebon, 2015). Willingness to make resource contribution and short-term sacrifices to realize long-term benefits. Organizational synergies Fiat gains from synergistic and complementary effect. Reduced costs of compensating intrapreneurs involved in internal R&D. Participants contribute to internal research and development (R&D) which is also beneficial to their creativity. b) Fiat Mio: The real innovation The Fiat Mio project is a radical innovation based on the needs and ideas of users to develop the first crowdsourced car. The radical innovation was a pollution free car seen as a solution for traffic menace in most big cities around the world. While this is uncommon, it requires a play of critical events that re-shapes product markets, knowledge and designs. Users need cars that guarantee them safety, comfort, agility and compactness. This car exceeds their expectations by becoming an innovation disruptor in ways such as; interface between car and user, changes in configuration and personalized updates (Saldanha & Pozzebon, 2015). This opens up potential applications and new markets. Although the car is still under construction, its final specifications became free to other car companies and everyone after submissions to Creative Commons Licenses (André, 2009). This implies that it is a proven technology that has shortened the discovery process and has reduced technology risks. Besides the synergistic and complementary effect, Fiat can be able to pursue diversification strategies. Contrary to the beliefs that the prototype may not go beyond a certain product or market expectation, the company will gain from technology leadership. Although followers may differentiate from this technology, they try to avoid early technological shortcomings witnessed in early entrants (West & Gallagher, 2006). Given the fast technology and slow market for pollution free cars, the profits of Fiat Mio could be slow and limited. However, a massive investment in R&D may lead to more durable markets. The company leverages on ability of people, bloggers, to generate enthusiasm and creativity into its core competencies. As most of its competitors are running out of tacit knowledge and resources, it is important that the company relies on the broad knowledge of its loyal customers. Fiat will gain from crowdsourcing to enhance brand awareness as first movers almost certainly pay off (André, 2009). However, it may open up opportunities for new entrants as the ideas were shared among existing car companies (Chesbrough, 2003). In reality, the car could create difficulties for existing firms but the prototype requires a different set of scientific and engineering principles. The real innovation is having the production capacity, distribution and large-scale marketing to accompany the fast technological change that comes with new product development (Chesbrough, 2003). The strong R&D is with the participants who themselves are the market and ensured that their designs addressed all the market segments. With large-scale production, marketing and distribution as well as strong R&D, the company may have little chance of long-term success. This means that Fiat will employ quick-in quick-out strategy given that the automotive industry is always under ‘rough waters’. References André, P. (2009). Open innovation success of Fiat Mio. Ideaconnection. https://www.ideaconnection.com/open-innovation-success/Fiat-Mio-the-World's-First-Crowdsourced-Car-00273.html Bekkers, R., Duysters, G. & Verspagen, B. (2002) Intellectual property rights, strategic technology agreements and market structure: the case of GSM. Research Policy, 31(7): 1141-1161. Chesbrough, H.W. (2003) Open Innovation, Boston, MA: Harvard University Press. Jaffe, A. B. & Lerner, J. (2004). Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It. Princeton, NJ: Princeton University Press. Lerner, J. & Tirole, J. (2002). Some Simple Economics of Open Source. Journal of Industrial Economics, 50(2): 197-234. Saldanha, F.P. & Pozzebon, M. (2015). Fiat Mio: the project that embraced open innovation, crowdsourcing and creative commons in the automotive industry. International Journal of Case Studies in Management, 13(1): 45-56. West, J. & Gallagher, S. (2006). Challenges of open innovation: The paradox of firm investment in open-source software. San Jose state University. Read More