Open Innovation in Service Sectors - Essay Example

As a way of meeting the expansion and evolution in the service sector, which is mostly focused on changes in customer preferences for service delivery, players within the service sector have used research and development (R&D) to identify specific changes that customers desire, so that they can direct or focus their attention on these areas of change. Once companies and institutions adopt this strategy to change with the changing environment in which they do business, we say the companies are engaged in innovation (Harabi 2005).

Writing on innovation within the service sectors, Hagedoorn and Cloodt (2003) pointed out that the rate of change and expansion experienced of late demands that companies do just more than the traditional idea of innovation. It is in light of this that writers and reviewers have followed up with research on the most advanced ways in which the service sector can make the best use of innovation. Lately, companies such as LEGO, Barclays Bank and British Broadcast Corporation (BBC) have introduced the all new term of open innovation in the transaction of most of the businesses they are engaged in, as a way of building on the traditional ideas of innovation. . On his part, Chesbrough (2003) sees open innovation as a meta-innovation that involves the practice of co-creating with customers in the service industry, where it is traditionally said that for customers to have their way in specifying what they want is very difficult because the experience there is tacit (Meyer 2012).

By implication, it can be said that it is the customer that decides on the value of innovation as most forms of changes in the service industry are focused on changes in customer preferences for service delivery. From this opinion, the external stakeholder base that is talked about could be said to be the customer. In some other fields of study, open innovation in the service sector has been regarded to go beyond the customer and include a larger non-shareholder stakeholders such as suppliers, quality assurance teams and marketers (Johne & Storey 2008).

A similar definition was put up by Chesbrough (2003, p. 3) who this time round explained open innovation as ‘a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology’. For various organisations, open innovation has been approached using different models and parameters of change. For example, LEGO, Barclays Bank and BBC have all used different models of open innovation, which gives a signal that the best way to approach open innovation in the service sector is to open the concept according to what a company is involved in (Gallouj 2002).

Open innovation is also expected to have three major phases made up of transition strategy, dynamic management practice and open innovation culture. These