In the mid twentieth century, key technologies were developed by large enterprises within their Research and Development departments and were always applied to a firms own products. It was the vertical integration within those companies that provided their competitive advantage. Furthermore, the economies of scale of these large companies set them apart from their smaller rivals. This is seen as the traditional setting for closed innovation as the innovations are produced and commercialized only within a companies boundaries.
So what do we do when our highly skilled, highly mobile, knowledge employees are coupled with a world of rapid change and alternations in consumption and production functions are ever shortened? Well, we have to make an R&D paradigm shift. We need to shift to an Open Innovation Paradigm.
R&D needs to start enhancing technology and out-sourcing. By out-sourcing I mean incorporating a larger pool of your companies brain capacity, resourcing your customers to crowd-source better product development and incorporate your suppliers into your decision making processes. This provides the sum of collaborative Innovation and is in essence the Open Innovation Paradigm. As organizations we need to thrive and in order to do so we need to find new ways to access knowledge through technology in an ever-increasing world of complexity and uncertainty.
I have written frequently about how Social Business Software (SBS) can reform and assist businesses into becoming more openly innovative. So consider the following: an effective deployment of SBS will allow your business to improve in the following innovation Performance areas namely; new products, new methods of production, new sources of supply, exploitation of new markets and even new ways to organize business.
On the one hand an organizations ability to improve the effectiveness of what it does is greatly increased and by incorporating other stakeholders namely Customers into the process product options, design and even aesthetic, symbolic or emotional meanings of products can be enhanced. Another stakeholder group to incorporate into the open innovation transfer is that of the suppliers. Suppliers are able to assist and streamline supply chain management processes as well as assist with new product development.
The ability of an organisation to innovate with the cooperation of different stakeholders during the R&D processes will improve the firm’s absorptive capacity to recognize the value of these stakeholders and make use of them.