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Open innovation: P&G - Essay Example

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An ability to continuously innovate is a way of survival in the present fast changing business environment. 90% of businesses claim that innovation is their priority. The importance of innovation is increasing and ways in which companies innovate is constantly changing. The concept of innovation is not new…
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Open innovation: P&G
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Download file to see previous pages According to closed innovation model, a firm should hire only the smartest and best candidates. The model also believes that in order to achieve highest share in market, it is critical for research and development ideas to originate within the firm. The closed innovation approach also implements restrictive IP strategies, which ensure that other competitors do not profit from technologies and ideas of the firm (Zollo and Winter, 2002). Summarizing the above, it can be said that in a closed innovation concept, organisations believe to perform in a self-sufficient manner, starting from idea generation to production and marketing to distribution, marketing, financing and services. Another important characteristic of this approach is that once ideas are rejected or projects are cancelled, they get stored in the firm’s internal database and remain unused. Thus, closed innovation is essentially an inward looking model, where many business technologies and ideas are often left unexplored (Chesbrough, 2003a; Euchner, 2010).
Open innovation, on the other hand, dissolves the boundary between a company and its external environment, making it more porous. According to Chesbrough (2006, p 1); “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.” Unlike closed innovation, open innovation ideas can be launched by either external or internal technology or idea sources. ...Download file to see next pagesRead More
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