Closed innovation
Encyclopedia
Before being open, innovation happened in closed environments often performed by individuals, scientists or employees. However, the expression closed innovation was coined later and not before the paradigm of open innovation
became popular by works of Henry Chesbrough
and Don Tapscott
et Anthony D. Williams
Closed Innovation was described in March 2003 by Henry Chesbrough
, a professor and executive director at the Center for Open Innovation at UC Berkeley
, in his book Open Innovation: The new imperative for creating and profiting from technology. The concept is related to user innovation
, Know-How Trading
and mass innovation and subject of recent research projects
(IP). A company should control the creation and management of ideas. Roots of closed innovation go back to the beginning of the twentieth century when universities and governments were not involved in the commercial application of science. Some companies therefore decided to run their own research and development units. The entire new product development (NPD) cycle was then integrated within the company where innovation was performed in a "closed" and self-sufficient way.
The period between the end of World War II
and the mid 1980s was the area of closed innovation and internal R&D. Many R&D departments of private companies were at the leading edge of scientific research. The setup of internal R&D was perceived as a strong barrier for potential new competitors, as large investments had to be done to be able to compete
Often, closed innovation paradigms are set equal to the “Not Invented Here” syndrome sometimes referred to by decision makers: everything coming from outside is suspicious and not reliable. However, there are ongoing research projects and emerging companies that investigate the pros and cons of closed innovation versus open innovation.
adapted from
was formally described. As a result it was found that when seeking to increase customer loyalty and attracting new customers, companies needed to increase customer involvement in research and design (R&D) operation. Brokering and social networking processes lie at the heart of the open innovation paradigm. The technology brokering process model by Hargadon and Sutton (1997) describes the shift towards open innovation.
Open Innovation
Although the idea and discussion about some consequences date back at least to the 60s, open innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at the University of California, Berkeley, in his book Open Innovation: The new...
became popular by works of Henry Chesbrough
Henry Chesbrough
Henry Chesbrough coined the term open innovation and is the author of Open Innovation: The New Imperative for Creating and Profiting from Technology...
and Don Tapscott
Don Tapscott
Don Tapscott is a Canadian business executive, author, consultant and speaker, specializing in business strategy, organizational transformation and the role of technology in business and society. Tapscott is chairman of business strategy think tank New Paradigm , which he founded in 1993...
et Anthony D. Williams
Anthony D. Williams
Anthony D. Williams is a consultant, researcher, and author. He co-authored Wikinomics along with Don Tapscott and is a vice president of research with international think tank New Paradigm...
Closed Innovation was described in March 2003 by Henry Chesbrough
Henry Chesbrough
Henry Chesbrough coined the term open innovation and is the author of Open Innovation: The New Imperative for Creating and Profiting from Technology...
, a professor and executive director at the Center for Open Innovation at UC Berkeley
University of California, Berkeley
The University of California, Berkeley , is a teaching and research university established in 1868 and located in Berkeley, California, USA...
, in his book Open Innovation: The new imperative for creating and profiting from technology. The concept is related to user innovation
User innovation
User innovation refers to innovation by intermediate users or consumer users , rather than by suppliers ....
, Know-How Trading
Know-How Trading
Know-how trading is a web-based research and design phenomenon related to open innovation and crowdsourcing. It denotes Fee-based knowledge markets that treat knowledge and expertise as commodities that can be traded for financial gain...
and mass innovation and subject of recent research projects
Origin of Closed Innovation
The paradigm of closed innovation says that successful innovation requires control and ownership of the Intellectual propertyIntellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
(IP). A company should control the creation and management of ideas. Roots of closed innovation go back to the beginning of the twentieth century when universities and governments were not involved in the commercial application of science. Some companies therefore decided to run their own research and development units. The entire new product development (NPD) cycle was then integrated within the company where innovation was performed in a "closed" and self-sufficient way.
The period between the end of World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
and the mid 1980s was the area of closed innovation and internal R&D. Many R&D departments of private companies were at the leading edge of scientific research. The setup of internal R&D was perceived as a strong barrier for potential new competitors, as large investments had to be done to be able to compete
Often, closed innovation paradigms are set equal to the “Not Invented Here” syndrome sometimes referred to by decision makers: everything coming from outside is suspicious and not reliable. However, there are ongoing research projects and emerging companies that investigate the pros and cons of closed innovation versus open innovation.
Comparison between Open and Closed Innovation
| Closed Innovation Principles | Open Innovation Principles |
|---|---|
| The smart people in the field work for us. | Not all the smart people in the field work for us. We need to work with smart people inside and outside the company. |
| To profit from R&D, we must discover it, develop it, and ship it ourselves. | External R&D can create significant value: internal R&D is needed to claim some portion of that value. |
| If we discover it ourselves, we will get it to the market first. | We don't have to originate the research to profit from it. |
| If we create the most and the best ideas in the industry, we will win. | If we make the best use of internal and external ideas, we will win. |
| We should control our IP, so that our competitors don't profit from our ideas. | We should profit from others' use of our IP, and we should buy others' IP whenever it advances our business model. |
adapted from
From Closed innovation to open innovation
In the 29th Information Systems Research Conference in Scandinavia in 2006 the transition path from closed innovation to open innovationOpen Innovation
Although the idea and discussion about some consequences date back at least to the 60s, open innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at the University of California, Berkeley, in his book Open Innovation: The new...
was formally described. As a result it was found that when seeking to increase customer loyalty and attracting new customers, companies needed to increase customer involvement in research and design (R&D) operation. Brokering and social networking processes lie at the heart of the open innovation paradigm. The technology brokering process model by Hargadon and Sutton (1997) describes the shift towards open innovation.