Open and Closed Innovation
Different Cultures for Different Strategies
Published on 4. February 2009
XVIII, 262 pages
978-3-8349-8090-8 (ISBN)
Description
Firms acting in an environment of rapid technological change are often dependent on externally developing knowledge sources in order to generate radical innovations. This pressing need of integrating external R&D sources has forced many firms to shift from a Closed Innovation model to an Open Innovation model. In the chemical industry - as the industry of focus in the present work - the innovative force slowed down in the last 20 years. As a consequence, many chemical firms strive for implementing new forms of innovation management and follow an innovation strategy that involves the external environment to a greater extent. They implement the Open Innovation concept by setting up separated organizational units (e.g. Degussa's 'Creavis Technologies & Innovation' or BASF's 'Joint Innovation Lab'), which focus on innovation projects that cannot be operated by their internal R&D departments alone. However, many firms are facing difficulties during the implementation. While the implementation effort often focuses on external ideas and technologies and the processes to identify them, cultural challenges are neglected.
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Persons
Dr. Philipp Herzog ist wissenschaftlicher Mitarbeiter am Institut für betriebswirtschaftliches Management im Fachbereich Chemie und Pharmazie der Universität Münster.
Content
Innovation and the Open Innovation concept.- Innovation culture.- Conceptual framework and hypotheses.- Analysis and results.- Discussion of findings and implications for theory and practice.- Summary and conclusion.
"1 Introduction (p. 1)
1.1 Research problem
In the past, researchers and managers in the field of technology and innovation management associated strong internal R&,D capabilities with innovativeness. Ideas and inventions were generated within the firm's own research labs and further developed into commercial products by the firm's own engineering department.
Eventually, the market diffusion of innovations was driven by the firm's own marketing and sales department via the firm's own distribution channels. Overall, firms only sporadically shared their innovative results with others as a means to generate competitiveness. The underlying opinion of innovation managers and researchers was that ""successful innovation requires control"". This strongly self-reliant way to innovate was coined Closed Innovation by CHESBROUGH in 2003.
In the context of Closed Innovation, research in the field of technology and innovation management has largely focused on finding the optimal innovation process which resulted in a multitude of different process models with the stage-gate model probably being the most wide-spread used concept. Subsequently, portfolio management became the next major wave in helping firms to improve their innovation management.
Today, however, one cannot think of research on technology and innovation management without thinking of Open Innovation, a term also introduced by CHESBROUGH.
Several reasons, such as stronger global competition, increased technological complexity, or greater availability and mobility of highly skilled research &, development (R&,D) personnel, have caused the former 'do-it-yourself' mentality of Closed Innovation being not longer sustainable in many industries.
Firms have realized that the importance of overall control diminishes. Instead, valuable ideas and technologies do not need to origin within the own firm and the release of those ideas and technologies into the market does not need to be accomplished by the firm's own activities.
In order to generate radical innovations and/ or build new businesses, firms are quite often depending on externally developing knowledge sources. This pressing need to integrate external R&,D sources has prompted many firms to shift from a Closed Innovation model to an Open Innovation model, using external ideas and knowledge in conjunction with internal R&,D to achieve and sustain innovation.
Open Innovation denotes, on the one hand, the use of external and internal knowledge sources to accelerate internal innovation and, on the other hand, the use of external paths to markets for internal knowledge.
However, many of the Open Innovation tools, such as licensing, joint R&,D agreements, minority investments and corporate venture capital, or spin-offs, were well known before the term took root in theory and practice. But Open Innovation is more than just the sum of its parts.
Open Innovation is a holistic approach to innovation management as ""systematically encouraging and exploring a wide range of internal and external sources for innovation opportunities, consciously integrating that exploration with firm capabilities and resources, and broadly exploiting those opportunities through multiple channels"".
In corporate practice, the trend towards opening up the firm's boundaries to outside innovation seems to continue. As the latest annual survey of the Industrial Research Institute (IRI) on R&,D trends forecast revealed, firms expect a significant increase in the use of outside resources."
1.1 Research problem
In the past, researchers and managers in the field of technology and innovation management associated strong internal R&,D capabilities with innovativeness. Ideas and inventions were generated within the firm's own research labs and further developed into commercial products by the firm's own engineering department.
Eventually, the market diffusion of innovations was driven by the firm's own marketing and sales department via the firm's own distribution channels. Overall, firms only sporadically shared their innovative results with others as a means to generate competitiveness. The underlying opinion of innovation managers and researchers was that ""successful innovation requires control"". This strongly self-reliant way to innovate was coined Closed Innovation by CHESBROUGH in 2003.
In the context of Closed Innovation, research in the field of technology and innovation management has largely focused on finding the optimal innovation process which resulted in a multitude of different process models with the stage-gate model probably being the most wide-spread used concept. Subsequently, portfolio management became the next major wave in helping firms to improve their innovation management.
Today, however, one cannot think of research on technology and innovation management without thinking of Open Innovation, a term also introduced by CHESBROUGH.
Several reasons, such as stronger global competition, increased technological complexity, or greater availability and mobility of highly skilled research &, development (R&,D) personnel, have caused the former 'do-it-yourself' mentality of Closed Innovation being not longer sustainable in many industries.
Firms have realized that the importance of overall control diminishes. Instead, valuable ideas and technologies do not need to origin within the own firm and the release of those ideas and technologies into the market does not need to be accomplished by the firm's own activities.
In order to generate radical innovations and/ or build new businesses, firms are quite often depending on externally developing knowledge sources. This pressing need to integrate external R&,D sources has prompted many firms to shift from a Closed Innovation model to an Open Innovation model, using external ideas and knowledge in conjunction with internal R&,D to achieve and sustain innovation.
Open Innovation denotes, on the one hand, the use of external and internal knowledge sources to accelerate internal innovation and, on the other hand, the use of external paths to markets for internal knowledge.
However, many of the Open Innovation tools, such as licensing, joint R&,D agreements, minority investments and corporate venture capital, or spin-offs, were well known before the term took root in theory and practice. But Open Innovation is more than just the sum of its parts.
Open Innovation is a holistic approach to innovation management as ""systematically encouraging and exploring a wide range of internal and external sources for innovation opportunities, consciously integrating that exploration with firm capabilities and resources, and broadly exploiting those opportunities through multiple channels"".
In corporate practice, the trend towards opening up the firm's boundaries to outside innovation seems to continue. As the latest annual survey of the Industrial Research Institute (IRI) on R&,D trends forecast revealed, firms expect a significant increase in the use of outside resources."
