Open Innovation: Strategy and Environment - Case Study Example

Open Innovation: Strategy and Environment Introduction: The FMCG sector is experiencing a time consuming changes towards higher productivity gains despite of declining retail prices. In this situation it is significant for the organizations to innovate, use economy of scale and investigate about the new markets which are profitable. The innovation has been the vital aspect in the management of the organizations, “it is also widely recognized that, without innovation, companies will quickly lose their competitive edge. Peter Drucker has stated that although the importance of innovation is clear, how to achieve it remains a largely unanswered question. In practice, recognizing the need to become more innovative and achieving it are two vastly different things, as many managers have realized” (The Role of Innovation n.d.). Recommendations to the CEO: “Numerous organisations in both manufacturing and service settings have come to embrace the idea of open innovation, that is, “the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the market for external use of innovation” (Chesbrough et al. 2006, p.1)” (Salge et al. 2012). Accordingly we have to speed up the pace to make competence in core functions, because each day implementation will stay behind as a significant aspect for success. They have to provide up-and-coming markets better, react to the increasing importance on price and reap the settlement of scale and scope. “The innovation process requires both the development of new technologies (inventions) and the acceptance and implementation of these technologies (adoption) by industry. Decisions in both these areas are related to the overall strategy and structure of a business, and its commitment to technological innovation and change (Ettlie, Bridges and O'Keefe, 1984)” (Geffen & Rothenberg). The Average performance and best practices have to be improved enormously in every area because the companies need to have found the various kinds of the biggest differences in the product development. “In the face of challenging economic conditions and growing international competition, many industrial companies are attempting to capture additional value from their technologies. In particular, many companies are trying to profit from open innovation, which involves actively collaborating with external partners throughout the innovation process” (Lichtenthaler et al. 2011). To maximize the value of business expenses money should be passed to retailers to enable increased sales. Managers should be able to assign possessions intelligently as well as brands but also advertising tools and customer segment. In sales, to manage good relations with retailer and the client interface they organization should know the importance of multi-category of degree and scope. “Similarly, firms appear to require a match between the strategic type and the level of resource commitments in different functional areas (e.g., first mover strategies and competence in basic technology) (Maidique and Patch, 1982)” (Eesley et al. 2000). 1. To lead innovation strategy and project achievement from market point of view to accomplish and obtain good results. 2. To have focus to new possible brands and new product opportunities, and to make certain right necessities and possessions for innovation 3. Overcome obstruction to make sure projects are transported in time, and within financial plan 4. Expand an area and offer ongoing discussion on customer and consumer issue all through the organization 5. Construct short and long term impending strategy to hold product innovation and common brand management 6. Evaluate organization’s novelty capabilities and make out growth opportunities 7. Construct the business innovation strategy to expand innovation capabilities all through the organization 8. Bring a collection of innovative initiatives to complete innovation pipeline in different time period. 9. Organize food for consideration and create inspiration / Innovative workshops with major stakeholders and / strategic teams like the Marketing, Sales, R&D, and, Customer Service. 10. Direct, and make available the market research efforts, bring coherency all through the development. “HRD Department must have the ability to formalize training and development plan, its alignment with the business strategy, and its implementation and evaluation to enhance organizational performance. Training and development not take place in a void but within specific contexts as perceived by scholars” (Niazi 2011). The Reasons behind the Recommendations: While dealing with the challenges from the previous all produced consumer goods have a uniform strategy. They start by redesigning their product portfolios by mergers and acquisitions, with the intention of becoming leaders in the FMCG industry. “Open Innovation – The new imperative for Creating and Profiting from Technology” that appeared in 2003. He describes how companies in the 20th century have invested heavily in internal R&D and hired the best people – enabling them to develop the most innovative ideas and protect them with IP strategies” (Fredberg 2008). It is very important to focus on core brands, where the aggressive marketing can be flourishing which the weaker ones are discarded. The Strengthened and the established brands make it harder to be firm on price cut. It is identified the global giants concentrate on few brands and make their presence felt in the market. “Products like the Mozilla Firefox web browser and the Linux operating system are successful examples of the open source model, but open source, while appropriate for software development, may not be particularly suited for other applications. The most compelling reasoning behind this doubt of the open source model lies in the concept of self-interest and in material demands of production” (Brabham 2008). Next, to decreased costs and finance development, the industry should not go behind the productivity gains. Huge saving can be inherited from the global purchase supply chains assisted by information technology. Outsourcing and start up of plants in the rural areas can contribute to benefit tax. The advantage is an evident sign in the drive for higher productivity and efficiency. “A special case of open innovation is the private-collective innovation model of innovation incentives, where firms and individuals expend private resources to create public goods innovations, characterized by non-rivalry and non-exclusivity (von Hippel and von Krogh, 2003; 2006)” (Spaeth n.d.). The strategy creates a righteous circle. Productivity gain finances the reserves in selling and product innovation. Brands should achieve the market share and spread out globally. The expansion should set free extra efficiency gains to meet the economies of scale, of various companies. “In open innovation the firm commercializes both its own ideas and innovations from other firms and buyers. The boundary between the firm and its environment is porous, enabling innovations to flow more easily between the two. Innovation beyond firm boundaries, hinges on mobilizing outside talent needed to experiment with markets and technologies, without using hierarchy and/or firm-internal incentive systems to shape their free engagement” (Krogh 2003). The strategy has certain drawbacks to face, the main drawback being it is at times hard to drive the virtuous sphere outside portfolio restructuring. Therefore, these are the main areas where the company should concentrate to be successful in its operations. Reference List Brabham, DC 2008. Crowd Sourcing as a Model for Problem Solving. Sage Publications. Print. Eesley et al. n.d.. Focus or Diversify? Aligning Founding Teams with Strategy and Environment. Print. Fredberg et al. 2008. Managing Open Innovation. VINNOVA. Available at [Accessed on 14 April 2012] Geffen, CA. & Rothenberg, S. Suppliers and Environmental Innovation: The Automotive Paint Process. Krogh, GV 2003. Innovation beyond Firm Boundaries. ETH. Print. Available at [Accessed on 14 April 2012] Lichtenthaler et al. Is Your Company Ready for Open Innovation? MIT Sloan. Available at [Accessed on 14 April 2012] Niazi, AS 2011. Training and Development Strategy and its Role in Organisational Performance. Macrothink Institute. Available at [Accessed on 14 April 2012] Salge et al. 2012. Open Innovation Research Forum. Spaeth et al. n.d. Incentives and Cost in Implementing Private – Collective Innovation. Print. The Role of Innovation n.d. Oxford English Dictionary. Print. Read More