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Mercks transition to open innovation strategy - Essay Example

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In 2008, Merck suffered a decline in revenues as a result of lower sales of its products. Most of their drugs on market lost patent. This called for a strategy to be developed that would improve the company’s sales. The company decided to go for open innovation strategy in form of merging with Schering-Plough. …
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Mercks transition to open innovation strategy
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"Mercks transition to open innovation strategy"

Download file to see previous pages The paper will focus on the open innovation strategy by Merck pharmaceutical company in form of merging with Schering-Plough. The writer will provide answers to the following questions:
1. Can open innovation help Merck meet the needs of its customers in creative and cost effective ways that also bring value to its shareholders. Why or why not?
2. Assuming open innovative is the path to follow, what implementation issues would you expect? How would Merck overcome its cultural resistance to change?
3. What positive or negative effects will the recent Schering Plough Merger have on Merck’s transition to a more open innovation strategy?
Introduction.
Merck historically believed in closed innovation strategy. This involves ideas being developed from within the company and the resulting products manufactured and marketed. On the contrary, open innovation involves the search for new ideas from outside and including them in business models. This is through bringing new ideas, personnel and technologies. Open innovation also allows some knowledge to flow outside the companies to other people. Most companies do not use their original technologies because it may be too costly making these ideas unutilized. Open innovations allows some of these good ideas to be shared to companies where they will be put into use. Therefore, open innovations make companies more creative in terms of research and development. ...
It has achieved all this success at only one sixth of the cost. Since the approach has worked in other companies, it can also work in Merck. Through open innovation, Merck can develop new cost effective ideas and products. The breakthrough for such products can bring great sales for the company thus benefiting the shareholders. (Rothaemel, 2008) Question 5: Assuming open innovative is the path to follow, what implementation issues would you expect? How would Merck overcome its cultural resistance to change? Merck has been deeply rooted in the culture of closed innovation. This is the culture that they are the best in what they do and need no assistance from outside. Merck assumed that they had the best and brightest personnel. They believe that whatever they invented was the best. Merck believed that all great discoveries were to be unveiled at Merck. This overconfident notion was deeply instilled in the minds of the people at Merck. This makes everyone in the company to be very rigid to any sought of change. Implementing the new open innovation strategy would therefore, be difficult because of this rigidness. The workers people have strong believe in themselves and would resist any new idea from outside. It would be a problem for the workers at Merck to adapt and accept this change (Rothaemel, 2008). Therefore, for successful development of open innovation at Merck, change has to start with each person. Change from the use of closed innovation to open innovation would mean that people have to change their attitudes and minds. This would erase the earlier culture of closed innovation and replaced it with open innovation. The resistance to change can be dealt with by sending top ...Download file to see next pagesRead More
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