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Papers - Chesbrough - The Era of Open Innovation

30 important questions on Papers - Chesbrough - The Era of Open Innovation

What is the philosophy of the closed innovation model?

Successful innovation requires control. Companies must generate their own ideas that they would then develop, manufacture, market, distribute and service themselves

What is meant with a 'virtuous cycle of innovation' in the closed innovation model?

Heavy R&D investing, getting the best people that discoverd great innovations, allowing them to get to market first, reaping great profits by protecting their Intellectual Property, reinvesting their profits heavily in R&D, and then more break through discoveries

What are the factors that erode the underpinnings of closed innovation in the US?

Rise in the number of knowledge workers; making it difficult to control proprietary ideas and expertise
A growing availability of private venture capital; helped finance new firms and the commercializing of their ideas outside of the silos of corporate research labs

What is one major difference between closed and open innovation?

How companies screen their ideas, false positives (bad ideas that initially looked promising) are in both instances 'weeded out', however, open innovation incorporates the ability to rescue these false negatives.

Why do companies that have closed innovation miss out on the opportunities of 'false positives'?

Closed innovation companies are often focussed too internally, many of these opportunities fall outside of the organisation's current business or will need to be binded with external technology to unlock their potential, thus need open innovation

What is an example of a 'false positive' that turned out as surprisingly valuable?

Xerox and their Palo Alto Research Center (PARC), developing Ethernet and the GUI.

What is an example of an industry that will probably not migrate towards open innovation?

The nuclear reactor industry, as they depend heavily on internal ideas, have low labor mobility, little venture capital, few and weak startups, and little research on universities.

What are the closed innovation principles?

The smart people in our field work for us.
To profit from R&D, we must discover, develop and ship it ourselves.
If we discover it ourselves, we will get it to market first.
If we are the first to commercialize an innovation, we will win.
If we create the most and best ideas in the Industry, we will win.
We should control our intellectual property (IP) so that our competitors don't profit from our ideas.

What are the open innovation principles?

Get knowledge and expertise from outside the company, as they no longer all work for us.
External R&D to create significant value; internal R&D to claim some portion of that value.
We don't have to originate the research in order to profit from it.
Better business model over getting to market first.
Making the best use of internal and external idea to win.
Profit from others' use of our IP, and buy others' IP whenever it advances our own business model.

What are the three primary areas where companies have focused their activities to exploit open innovation?

Funding, generating or commercializing innovation

What is the Innovation Investor?

Originally, the innovation investor was the Corporate R&D budget. Nowadays, Venture Capital (VC) firms, angel investors, corporate VC entities, private equity investors etc, have taken over that role

What is the role of the innovation investor?

Their capital helps move ideas out of corporations and universities and into the market, typically through the creation of startups. They also provide valuable advice on avoiding start up growth problems.

What are some examples of innovation benefactors?

The National Science Foundation, companies that want a first look at promising ideas, philantrophy from private foundations.

What is the role of the innovation benefactor?

They provide new sources of research funding, but unlike investors, benefactors focus on the early stages of research discovery. Usually funding ideas that are favorable for their own industry.

What is the role of the innovation explorer?

They specialise in performing the discovery research function that previously took place in corporate R&D laboratories.

What is the role of the innovation merchant?

They also explore, but their activities are focused on a narrow set of technologies that are then codified into intellectual property and aggressively sold to (and brought to market by) others.

What is one of the main differences between innovation explorers and innovation merchants?

Merchants will innovate, but only with very specific commercial goals in mind, whereas explorers tend to innovate for innovation's sake

What is one of the major downfalls of innovation merchants?

They rise and fall based on the strength of their IP portfolios.

What is an example of an innovation merchant company?

Qualcomm, they conduct extensive internal research on telecommunications, licensing various technologies, and producing associated chipsets for other manufacturers

What is the role of innovation architect companies?

They create value for their customers by developing architectures that simplify the complexity of technology worlds, and enabling other companies to provide pieces of this architecture.

What is an example of an innovation architecture company?

Boeing, they engineer the overall design of an aircraft. Then other companies can provide parts within the aircraft.

What is an important element of success for the innovation architect?

They must create a way to capture some portion of the value they create, otherwise it is impossible to sustain and advance their developed architecture

What is the main difference between innovation missionaries and the architects and merchants?

The missionaries are creating and advancing technologies on the basis of their ideological mission rather than seeking profits, which merchants and architects seek

What are the two types of organisations that bring innovations to market?

Innovation marketers and one-stop centers

What is the role of the innovation marketer?

They have overlap with regard to the other types of innovation organisations, but their defining attribute is their keen ability to profitably market ideas, both their own as well as others

What is the role of the innovation one-stop centers?

They provide comprehensive products and services, taking the best ideas and delivering those offerings to their customers at competitive prices

What is the difference between innovation marketers and innovation one-stop centers?

They both thrive by selling others' ideas, but innovation one-stop centers differ in that they form strong end users connections

What are fully integrated innovators?

Companies that focuss on all three areas of innovation, funding, generating, and commercializing

What are some challenges innovation merchants face?

They must figure out how to gain access to complementary assets needed to commercializa an innovation
Laws for IP are not well defined, making it risky for merchants to limit their revenue streams solely to the marketing of their IP

What are some challenges innovation architects encounter?

The abundance of ideas makes it difficult to create useful systems
Finding the balance between creating value and the need of capturing a portion of that value

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