Intels Internal Innovation versus Microsofts External Innovation - Essay Example

Intel’s Internal Innovation versus Microsoft’s External Innovation Intel’s internal innovation versus Microsoft’s external innovation Intel Corporation implemented the closed innovation strategy during its initial stages of development in the semiconductor manufacturing business field. Intel Company embraced the use of internal innovation in which Noyce principle of minimum information was applied. This was done during the early era of its innovation strategies. The strategy was based on the philosophy that aims to design and make excellent chips and not to publish brilliant papers. This Intel’s strategy was implemented by Dr. Garginin who was the director of technology strategy for Intel Corporation. The largest semiconductor industry has its success entirely supported by research and innovation about the continued progress it has recorded over the years. They, however, decided to perform their operations without involving any formal research organization. This approach was not very profitable as ideas and knowledge became limited during innovation (Gawer & Cusumano, 2002). Microsoft, on the other hand, has enjoyed the benefits of open innovation system. The company engaged a system where both internal and external innovations are implemented from the very onset of its operations. Microsoft understood the importance of outflow and inflow of knowledge that is relevant to accelerating innovations. The company embraced acquisition of intellectual property and innovations from other companies and individual researchers in advancement of its product range. They, therefore, advanced their technology through the system of using internal and external ideas, amalgamating them to develop the very best product desirable in the market (White & Bruton., 2007). Success of Microsoft in provision of new products largely relies on the management of its intellectual property. This management system spans both patents to the wider sense of knowledge base that Microsoft has created mostly in its software code libraries. Internal innovations are largely supported by the broader foundation of knowledge that has further led to the efficiency and command of Microsoft product development system. The software code library also spans external innovation within the over 40,000 Microsoft partner firms. The open system of Microsoft started in 1970s during which its first products were directed at assisting programmers in making new applications for computing hardware. The company aimed at creating programming platforms that would help other programmes elsewhere. This was contrary to most companies like Intel that their policy embraced their own ideas. During these times, Microsoft also developed programming components that acted as building units of their intellectual property. This advancement enabled for development of varied software applications that could not have been possible with limited internal ideas. This was successful as researchers could gain access to the frequently used functions and features. However, the company provided for a rule in which some of its core intellectual property components were hidden. The principle of sharing ideas led to the immense expansion of Microsoft. This created new platforms in which codes of products like Excel and Word were shared. In response, the company expanded more and more as extra partners who used their programming models in developing application for Microsoft operating systems ended up utilizing Microsoft tools in the long run (Phelps & David, 2009). This resulted in a gain-gain situation where the partnering company and Microsoft benefited in view of enhancement in productivity and external strength respectively. They were, therefore, able to be ahead of their competitors in the market and as well accumulate Microsoft component libraries. Microsoft was hence able to obtain a level operating field between intellectual properties over multiple product lines of production. This proved to be more beneficial than the internal innovation strategy implemented by Intel. Intel, however, adopted the ‘minimum information principle. Their researchers could guess solution to a problem then work out its possibility in the laboratory to ascertain the guess. In cases where the guess was not right, the researchers could start the whole process once again. This principle gave them a berth as the company could generate more limited spinoff companies. However, Intel’s innovation strategy changed when they merged with IBM and AT&T. they came up with model research laboratories that were of three kinds. These included architecture laboratory, microprocessor research laboratory, and components research laboratory. These laboratories enhanced their external relationships (Shaw, 2000). Through the laboratories, Intel remodeled its structure from internal research to associating with external research laboratories and communities. They started this external association by circulating their Intel technical journals in their website where other researchers could access them. This enabled the company to broaden their ideas and improve product range and profit. For example, within the year 2000, Intel planted over 300 external research projects that resulted in research grants amounting to 100 million dollars. These grants were important as their profit margin greatly increased over time. These external research projects operated by Intel involved their internal employees interacting with universities. They could interact and expand knowledge with students and professors of these universities. These students accessed Intel research laboratories and as a result more information was generated (Mullins & Walker, 2013). Presently, Intel is managing researchers in over 34 countries and research projects in over 150 faculties, in different universities. This external innovation approach has led to the expansion of Intel Company more than the earlier system of internal innovation. It’s hence a profitable practice to connect internal knowledge with external ideas. This connection gives an excellent example of open innovation principle practiced by Microsoft. This leverage between internal and external ideas hence represents a more efficient way of innovation than the paradigm of closed innovation. However, internal research powers help in faster and deeper acceleration of Intels product penetration into the market than those of Microsoft. This is because; internal research gives much deeper comprehension as per the diligence and professionalism of their researchers. Microsoft open innovation strategy is essential as it gives them an advantage in the market. They are able to outdo their competitors as new ideas are generated yearly. Through open innovations knowledge is not limited. New products can be designed, and this increases their product range and hence consumer confidence in the company. It is also through open innovation strategy that Microsoft continuity and efficiency is maintained. This is true as new researchers are trained into the norm of Microsoft research policy and hence sustainability. It is also more profitable in the long run in terms of time taken to the manufacturing stage (Howard, 2013). Internal innovations may take a longer time because of limited ideas whereas open innovations provides an expansive range of ideas that will otherwise lead to minimized time between innovation and production. The internal innovation paradigm of Intel lacked the ability to manage time and was prone to limited ideas and knowledge. Research is a vast area that requires sharing of knowledge to be successful. Furthermore, the success of innovative companies like Intel relies on how many new ideas and products are accumulated over time. If they take a longer period to have their new products reach the market, they may be faced off by competitors. This is possible as other companies may borrow their idea and work on it faster before maturity of their own. This closed system also proves to be less profitable in the long run as even the social aspect of researchers is minimized. Apparently a change from a closed innovation system to an open one would be beneficial for Intel. They need to embrace the wider perspective of knowledge by incorporating and involving other external stakeholders in their research projects owing to its benefits. Since the adoption of the open innovation approach, however, Intel has notably recorded an immense increase in the range of products that reach the market and the scale of their profits and innovations have gone up. It is imperative for both Intel and Microsoft to use the two sets of innovations in generating ideas. This is important as perfect products would be generated when internal ideas are merged with external resources. This will also expand public image of both the companies as sociable and community caring. Sharing of ideas both from internal and external sources, therefore, proof to be more profitable and productive in the long run. This is a good example of an open innovation system with unlimited knowledge as opposed to the closed innovation system where knowledge is limited. Furthermore, embracing use of internal innovation only may prove beneficial at times. In cases where either company wants to protect its innovations from irresponsive outsiders, internal innovation strategy serves the purpose. Protecting a companys ideas until they mature, for example, until release of products, publication or patenting is inevitable. However switching between the two paradigms is important as knowledge gained from external personnel has always proofed to be of greater good than bad (Carlsen, 2007). For a company to achieve maximum exploitation and penetration of the market, the use of open innovation system is important. This is especially fundamental as it is only new ideas and products that define the success of an innovative company like Microsoft and Intel. They have to embrace the interplay between internal and external innovation strategies if they are to compete with the evolving market that has intermittent needs. References Carlsen, R. (2007). Society for Information Technology & Teacher Education International Conference annual March 26-30, San Antonio, Texas, USA. United States: Association for the Advancement of Computing in Education. Gawer, A., & Cusumano., M. A. (2002). Platform leadership: How Intel, Microsoft, and Cisco drive industry innovation. New York: Harvard Business School Publishing. Howard, C. (2013). Strategic adoption of technological innovations. United States: Information Science Reference. Mullins, J. W., & Walker, O. C. (2013). Marketing management: a strategic decision-making approach. New York: McGraw-Hill. Phelps, M., & David, K. (2009). Burning the Ships Transforming Your Companys Culture Through Intellectual Property Strategy. New York: John Wiley & Sons, Inc. Shaw, J. (2000). Strategic management in telecommunications. London: Artech House. White, M. A., & Bruton., G. D. (2007). The management of technology and innovation: a strategic approach. United States: Thomson/South-Western. Read More