Running Head: HENRY CHESBROUGH’S OPEN INNOVATION 1
HENRY CHESBROUGH’S OPEN INNOVATION 6
HENRY CHESBROUGH’S OPEN INNOVATION
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Open innovation is an ideology that is founded in the belief that a firm has to use both internal and external ideas and opportunities as a means of advancing innovation and growth (West & Bogers, 2017). It is a common paradigm that is used in many business models today propelled by the technology era, that is contrary to the traditional closed innovation models. There are two types of open innovation models described by Chesbrough that are applied in business models. The inbound open innovation is a strategy that a company uses where the activities involve the use of external information and knowledge to improve the internal innovations or technology. On the other hand, in outbound open innovation, information, knowledge and technology outside the business for the purpose of exploration (West & Bogers, 2017). This paper will discuss the differences in principles and fashion between these two models. It will also discuss the important considerations for technological collaboration an important aspect of the open innovation paradigms
Closed innovation models are the traditional way that businesses used to be innovative. One significant difference between closed and open innovation models is the human capital. Closed models are focused on hiring the best intellectual talents in the market for their intentional internal benefits (Leitao et al., 2020). They may hire top performers from top institutions in a region to work for them. the idea is to tap into the fresh knowledge and ideas attained in school to improve their internal technology that will help the company to gain competitive advantage in the market with a new product. However, in this practice, it is a matter of who can afford the top performers of top institutions, hence creating unreasonable competition among the companies in the same industry. On the contrary, open innovation does not rely on smart people in the organization alone for innovation. It looks at the possibility of acquiring some knowledge from outside the company to supplement what the company already had within (Leitao et al., 2020). That means that companies that cannot afford the top smart performers from outside the company can benefit from interacting with them from outside the company and use the knowledge from the interaction to improve internal innovations.
Another difference is with the research and development strategies. Closed models relied on their internal abilities of innovation such that a new product would only be made and discovered by the company without any insight or help from outside the company (Leitao et al., 2020). The research and development leaders are trusted to come up with the best ideas for development and companies control the intellectual property to make sure that their competitors do not have the ideas they developed. This means that the competitors would have an advantage if they were the first to invent a product. The idea was to be the first to introduce a product to the market and maximize the opportunities for profit. The reverse is true for the open innovation system.
With this background of information, open innovation can be further dissected to find the differences between inbound and outbound open innovation. While open innovation allows for free flow of information and technology in and out of the company, inbound and outbound designs had distinctive differences. Businesses in inbound open innovation model receives external knowledge and technology through a decision channel that sieves the kind of information and technology that they are going to utilize in the company for their benefit (West and Bogers, 2017). Therefore, the inbound model refers to the inward movement of technology and information that is used to supplement the company’s already existing technology and innovation. An example of such a movement is the use of customer feedback to innovate a certain product. In that case, the customer feedback is used to supplement R&D of the company.
In the outbound open innovation model, the company has a focused target where it wants the information or technology from the company to go. It utilizes company’s innovations and technology to study their market (Leitao et al., 2020). In this mode, the company does not gain any financial benefits with sharing their internal information with the competitor because of the high costs of protecting innovations and appropriation costs (Leitao et al, 2020). Instead, outbound open innovations gain from joint ventures that arise from the shared information.
Technological collaboration is a common occurrence in business today. Technological collaborations are the tools and strategies that are introduces in a company to improve their internal functions (Kganyogo et al., 2018). They can involve strategies for marketing, or new additions to a product, or improvement of service through technology among many other variaties. There are some factors that are critical and need to be considered when venturing into technological collaborations. One of them is the venture’s capability to allow the company to perform and compete favorably in the market. This is made possible by the venture’s ability to help the company grow its niche. A technological venture should enable a product or service of a business to grow and develop faster (Kganyogo et al., 2018). As the R&D team should consider the viability of the venture both in the short term and the long term. Another consideration that the technological venture should consider is how well it helps in the R& D activities of the company. The growth aspect of technological venture is as a result if research and development of a company and hence it should be able to boost it. By doing so, the company finds relevant information that helps to study the venture and possible means of improving it. Comment by Microsoft Office User: This part u answer the question b, add two of the Critical factors for sucess: compatibility,control,communications,common aims,conclusion,contingencies,contracts,commitment."
Apart from growing the business, technological collaborations help the company to diversify their functions. It presents opportunities for the company to discover and take advantage of new opportunities in their market or acquire new ones. The company hence has the ability to manage product of service demand through development programs. These advantages are only realistic through the open innovation systems that are now adopted by many companies in this technological era.
References Comment by Microsoft Office User: For the reference, u should use at least one of the recommend reference, so fix it.
Kganyago, T. T., & van der Lingen, E. (2018, August). Influence of External Funding and Intellectual Property Protection on the Success of Technological Ventures: Case study. In 2018 Portland International Conference on Management of Engineering and Technology (PICMET) (pp. 1-6). IEEE.
Leitão, J., Pereira, D., & Brito, S. D. (2020). Inbound and Outbound Practices of Open Innovation and Eco-Innovation: Contrasting Bioeconomy and Non-Bioeconomy Firms. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 145.
West, J., & Bogers, M. (2017). Open innovation: current status and research opportunities. Innovation, 19(1), 43-50.