Open Innovation
Encyclopedia
Although the idea and discussion about some consequences (especially the interfirm cooperation in R&D) 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 imperative for creating and profiting from technology. The concept is related to user innovation
, cumulative innovation, Know-How Trading
, mass innovation and distributed innovation.
“Open innovation is 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”. The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward.
The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (i.e. patents) from other companies. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g. through licensing, joint ventures or spin-offs).
says that successful innovation requires control. A company should control (the generating of) their own ideas, as well as production, marketing, distribution, servicing, financing, and supporting. The main cause behind this idea is that, in the beginning of the twentieth century, universities and government were not involved in the commercial application of science. Some companies therefore decided to do it all on their own. They created their own research and development departments to be able to control the whole new product development (NPD) cycle inside the company. There just was not the time to wait for the scientific community to become more involved in the practical application of science. There also was not enough time to wait for other companies to start producing some of the components that were required in their final product. These companies became relatively self-sufficient ‘castles’, with little communication directed outwards to other companies or universities.
Throughout the years several factors emerged that paved the way for open innovation paradigms:
These four factors have resulted in a new market of knowledge. Knowledge is not anymore proprietary to the company. It resides in employees, suppliers, customers, competitors and universities. If companies do not use the knowledge they have inside, someone else will. Innovation can be generated either by means of closed innovation or by open innovation paradigms. There is an ongoing debate on which of both paradigms will dominate in the future.
and open innovation might conflict on patent issues, they are not mutually exclusive, as participating companies can donate their patents to an independent organization, put them in a common pool or grant unlimited license use to anybody. Hence some open source initiatives can merge the two concepts, this is the case for instance for IBM with its Eclipse
platform which IBM is advocating as a case of open innovation, where competing companies are invited to co-operate inside an open innovation network.
In 1997, Eric Raymond
, writing about the open source software movement, coined the term 'the cathedral and the bazaar'
. The cathedral represented the conventional method of employing a group of experts to design and develop software (though it could apply to any large-scale creative or innovative work). The bazaar represented the open source approach. This idea has been amplified by a lot of people, notably Don Tapscott
and Anthony D. Williams
in their book Wikinomics
. Eric Raymond himself is also quoted as saying that 'one cannot code from the ground up in bazaar style. One can test, debug, and improve in bazaar style, but it would be very hard to originate a project in bazaar mode.' In the same vein, Raymond is also quoted as saying, 'The individual wizard is where successful bazaar projects generally start'.
Open Source specialist François Letellier
advocates that open source (or free software
) is a natural way of innovation in the software industry and that it is an exemplary and very effective form of open innovation – as open-source projects/communities act as innovation intermediaries.
Open innovation intermediaries
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 the University of California, 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 ....
, cumulative innovation, 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...
, mass innovation and distributed innovation.
“Open innovation is 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”. The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward.
The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (i.e. patents) from other companies. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g. through licensing, joint ventures or spin-offs).
Closed versus open innovation
The paradigm of closed innovationClosed innovation
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...
says that successful innovation requires control. A company should control (the generating of) their own ideas, as well as production, marketing, distribution, servicing, financing, and supporting. The main cause behind this idea is that, in the beginning of the twentieth century, universities and government were not involved in the commercial application of science. Some companies therefore decided to do it all on their own. They created their own research and development departments to be able to control the whole new product development (NPD) cycle inside the company. There just was not the time to wait for the scientific community to become more involved in the practical application of science. There also was not enough time to wait for other companies to start producing some of the components that were required in their final product. These companies became relatively self-sufficient ‘castles’, with little communication directed outwards to other companies or universities.
Throughout the years several factors emerged that paved the way for open innovation paradigms:
- The increasing availability and mobility of skilled workers
- The growth of the venture capital market
- External options for ideas sitting on the shelf
- The increasing capability of external suppliers
These four factors have resulted in a new market of knowledge. Knowledge is not anymore proprietary to the company. It resides in employees, suppliers, customers, competitors and universities. If companies do not use the knowledge they have inside, someone else will. Innovation can be generated either by means of closed innovation or by open innovation paradigms. There is an ongoing debate on which of both paradigms will dominate in the future.
Open source versus open innovation
While open sourceOpen source
The term open source describes practices in production and development that promote access to the end product's source materials. Some consider open source a philosophy, others consider it a pragmatic methodology...
and open innovation might conflict on patent issues, they are not mutually exclusive, as participating companies can donate their patents to an independent organization, put them in a common pool or grant unlimited license use to anybody. Hence some open source initiatives can merge the two concepts, this is the case for instance for IBM with its Eclipse
Eclipse (software)
Eclipse is a multi-language software development environment comprising an integrated development environment and an extensible plug-in system...
platform which IBM is advocating as a case of open innovation, where competing companies are invited to co-operate inside an open innovation network.
In 1997, Eric Raymond
Eric S. Raymond
Eric Steven Raymond , often referred to as ESR, is an American computer programmer, author and open source software advocate. After the 1997 publication of The Cathedral and the Bazaar, Raymond was for a number of years frequently quoted as an unofficial spokesman for the open source movement...
, writing about the open source software movement, coined the term 'the cathedral and the bazaar'
The Cathedral and the Bazaar
The Cathedral and the Bazaar is an essay by Eric S. Raymond on software engineering methods, based on his observations of the Linux kernel development process and his experiences managing an open source project, fetchmail. It examines the struggle between top-down and bottom-up design...
. The cathedral represented the conventional method of employing a group of experts to design and develop software (though it could apply to any large-scale creative or innovative work). The bazaar represented the open source approach. This idea has been amplified by a lot of people, notably 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...
and 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...
in their book Wikinomics
Wikinomics
Wikinomics: How Mass Collaboration Changes Everything is a book by Don Tapscott and Anthony D. Williams, first published in December 2006. It explores how some companies in the early 21st century have used mass collaboration and open-source technology, such as wikis, to be successful...
. Eric Raymond himself is also quoted as saying that 'one cannot code from the ground up in bazaar style. One can test, debug, and improve in bazaar style, but it would be very hard to originate a project in bazaar mode.' In the same vein, Raymond is also quoted as saying, 'The individual wizard is where successful bazaar projects generally start'.
Open Source specialist François Letellier
François Letellier
François Letellier , born 1968, is a French proponent of free/open source software as a major means of innovation in the software industry. He served as evangelist and executive director of ObjectWeb in 2003-2006 at INRIA...
advocates that open source (or free software
Free software
Free software, software libre or libre software is software that can be used, studied, and modified without restriction, and which can be copied and redistributed in modified or unmodified form either without restriction, or with restrictions that only ensure that further recipients can also do...
) is a natural way of innovation in the software industry and that it is an exemplary and very effective form of open innovation – as open-source projects/communities act as innovation intermediaries.
See also
- Discovery NetworkDiscovery NetworkA Discovery Network is a community that can include commercial, academic, governmental and independent entities collaborating together and coordinating their efforts to enrich society with new material goods and services, and extracting some value from doing so...
- Ideas bankIdeas bankAn ideas bank is a website where people post, exchange, discuss, and polish new ideas. Some ideas banks are used for the purpose of developing new inventions or technologies. Many corporations have installed internal ideas banks to gather the input from their employees and improve their ideation...
- InnovationInnovationInnovation is the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society...
- Innovation intermediary
Open innovation intermediaries
- Open researchOpen researchOpen research is research conducted in the spirit of free and open source software. Much like open source schemes that are built around a source code that is made public, the central theme of open research is to make clear accounts of the methodology freely available via the internet, along with...
- Science CommonsScience CommonsScience Commons is a Creative Commons project for designing strategies and tools for faster, more efficient web-enabled scientific research. The organization identifies unnecessary barriers to research, crafts policy guidelines and legal agreements to lower those barriers, and develops technology...
- TED (conference)TED (conference)TED is a global set of conferences owned by the private non-profit Sapling Foundation, formed to disseminate "ideas worth spreading"....