Open innovation – are we ready for the change?

24 April 2012 14:20

(updated: 21 December 2016 14:22)

Open innovation – are we ready for the change?

Open innovation may require substantial changes to your underlying business model – an issue that should not be treated lightly.

One of the hottest topics in innovation management is open innovation. The logic behind the concept is as simple as compelling: companies can no longer rely on internal resources alone to compete in today’s market place; but need to draw on both external and internal ideas to develop innovative opportunities.

To successfully capture value from its open innovation activities, the company must have the right business model in place that fits the open innovation strategy. For example, an open business model must allow for internal and external knowledge flows to surpass organizational boundaries; requiring the underlying organizational structure of the company to be adapted accordingly. Important internal factors such as incentive systems, key performance indicators, culture, organizational processes and capabilities need to be redesigned to benefit from inbound and outbound knowledge flows.

Hence, shifting towards open innovation may imply fundamental changes to how a company conducts business.

Strikingly, the importance of the latter point is being consistently downplayed – especially in practitioners’ literature. Starting with the early work of prominent open innovation advocate, Chesbrough (2003), a decade’s worth of research has documented the importance and benefits of open innovation. What is missing is a critical account of the risks and costs of openness. What are the costs of shifting towards open business models? Have we truly understood the challenges involved in business model change and do we have the necessary managerial resources to implement such a change effectively?

It seems to me, that open innovation and business model change should not be treated lightly. Rather, such a change requires a deep understanding of the potential implications at the organizational, project and individual levels at companies.

It will be the aim of the blog series to unravel the critical success factors of open innovation and business model change. As in the true spirit of open innovation, I believe that knowledge exchange is crucial in advancing our innovative capabilities and hence I look forward to your sharing of opinions on this matter.