The present business world is characterized by digital technology that is changing certain aspects of business such as marketing in fundamental ways. The challenge for businesses to operate smarter faster and better is not only limited to software and hardware and business process but also in the fundamental approach to product development partnerships and marketing. The majority of business executives are realizing that innovation does not only need to come from within the business but can take place outside of the traditional boundaries of the organization. at the center of the evolving ways of thinking in the various business activities is the concept of open innovation.
The idea of open innovation involves the open and collaborative efforts of organizations in developing products services and strategies. It relies on the introduction of external ideas that is incorporated with internal strategies and thinking so as to take innovation in the organization to better and new levels (Greengard, 2017). In the majority of cases, the notion of open innovation is suitable with spin-offs, joint ventures, business incubators startups and crowdsourcing. Consequently, open innovation is important to a company as it is more distributed, more, decentralized and more participatory in that in todays business environment is vital information is distributed widely and no organization with all its capabilities can effectively innovate on its own.
Open innovation is valuable on the fact that presently, a large amount of information exists outside of an organization. Furthermore, when employees move from one organization to another they move with the knowledge they have acquired which in effect result in the flow of knowledge between various companies. In addition, currently, the availability of adequate capital to various organizations has increased significantly that enables the further development of promising and effective strategies outside the organization. Subsequently, open innovation is vital in that it enables an organization to reduce costs of development of products, process improvement thus reducing the time to market for newly developed products (Onisor, 2015:301). Hence open innovation is valuable as it can effectively exploit various expertise in the market while reducing the risk for individual organizations. Also, it enables companies to acquire required skills, assets and services from partner originations. This sharing enables organizations to improve their flexibility and capabilities in its business activities and strategies.
In the other hand, open innovation also has some drawbacks to organizations. The openness required for the open innovation concept raises various issues that pertain to intellectual property right and how they are affected by open collaboration. Furthermore, open innovation may not always lead to a reduction of costs for instance in a situation where one collaborative partner does not have adequate expertise, or in a situation where a partner implements certain protection measures aimed at eliminating information leaks (Coras, and Tantau, 2014). In such situations, and also in situation where there is too much diversity among the collaborating partners open innovation is limited and organizations thus cannot reap the full benefits.
In conclusion, the use of outside relationships for an organization is rapidly being viewed as a chief factor that is critical for the performance of the business. As such, the ability to efficiently and effectively acquire external information and resources as well overcoming the limitations of the open innovation concept can result in a competitive edge of an organization. Open innovation is the new ways of conducting business and developing business strategies.
Coras, E.L. and Tantau, A.D., 2014. Open Innovation-The Good, The Bad, The Uncertainties. USV Annals of Economics & Public Administration, 14(1).
Greengard, S., 2017. Both Inside, Outside Ideas Are Core Of Open Innovation. [Online] Available at: http://www.cmo.com/features/articles/2016/11/7/marketers-open-the-door-for-open-innovation.html#gs.z7ADRbo[Accessed 30 May 2017].
Onisor, L.F., 2015. Marketing Techniques Enhance Closed Innovation to form Open Innovation. Procedia Economics and Finance, 32, pp.298-306.
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