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Nowadays, probably every company has heard about innovations and has tried to introduce them. Innovations have become a huge part of our lives. However, with constant development even innovative ideas and approaches become obsolete. Therefore, we need to develop approaches to working with innovations, developing and implementing them. We should experiment not only with end products, but also with the business models and development processes. And this is where the open innovation model comes in handy. This model was first described by Henry Chesbrough, a professor at Harvard and California Universities, in his book “Open Innovation: The New Imperative for Creating and Profiting from Technology”.

About the open innovation model

“It’s impossible to make all smart people work in one company. It means that you need to learn how to find smart people both inside and outside the company, and involve them in work together.”

– Henry Chesbrough

In the past, innovation models involved new approaches and creativity within a particular company. However, in the modern world, it is more and more difficult to create and maintain new ideas and technologies within one company. Companies are getting closer to their end users, they have the opportunity to get feedback and use the customers’ ideas to modify their products. Thus, the innovation process is already beyond the boundaries of an individual company. Nowadays, innovations are emerging not in a particular discipline, but rather at the intersection of two or more fields: for example, biology and IT, or physics and medicine. In addition, the smartest and most creative people are not concentrated in one place, but are distributed around the world: in different companies and even different countries. For the successful development of innovations, it is necessary to find a way to connect these remote resources together [1].

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It’s not just customers and users who help the company become more “open”. For example, IT startups are partnering with research institutes and laboratories to develop and test new technologies. Some companies join forces on complex projects where each side contributes to the final value of a new product. Others run idea competitions or hackathons that help them attract young professionals.

However, the open innovation model does not imply that the company will rely entirely on external sources of knowledge. It is necessary to both absorb information from the outside and to be able to adapt new information in order to improve internal processes and expand the company’s markets [1, 2]. Open innovation involves a balance between the internal innovation processes in a company and external cooperation. Open innovation is an opposite to a closed approach to research and development. It includes both the use of third-party ideas and the willingness to share their internal resources and knowledge [3].

 

Open or closed?

So, what is better when working with innovations: to use only the internal resources of the firm, thereby protecting its intellectual property, or to partially open the development for cooperation and get a great benefit as a result?

The open innovation model has several business benefits. First, it allows costs to be shared among the participants. This makes it cheaper for each party to develop, test, and bring new products to market. Second, it helps you bring products to market faster. We save time since the company doesn’t need to provide an entire development cycle. This, in turn, is a competitive advantage for the company. Third, it opens up new opportunities for future innovation. Cooperation and joint projects contribute to the emergence of new markets and sources of income [4].

On the other hand, this model also has its drawbacks. Open innovation always carries the risk of disclosing confidential information that is not intended to be shared. This can deprive the company of a competitive advantage in a new market. In addition, when multiple parties are involved, it is difficult to measure, track and regulate the contribution of each party to the overall project. Therefore, it can be difficult to divide the total profit.

Speaking of innovations created outside the company, it is extremely important that the company is able to find and integrate innovative ideas in its internal processes. Several studies highlight the importance of the “absorptive capacity” in the firm – its ability to recognize the value of new information, assimilate and apply it for commercial purposes. This ability can and should be developed through continuous improvement of internal innovation processes. This can be viewed as both an advantage and a disadvantage: open innovations cannot be effective for a company on their own, only together with sufficiently developed internal processes [4, 5].

Practical cases

One of the best examples of the successful development of open innovation (although extremely unexpected) is the DIY-Bio movement [6]. These are people who build their own laboratories based on instructions and open resources found on the Internet. One of the projects of this movement is “Open Insulin” – a team of biohackers who work to create their own insulin in order to reduce the cost of this drug in the USA. In order to fight the established system of monopolies, Anthony Di Franco founded this project that develops a technique based on standard methods for the production and purification of proteins. His ultimate goal is to provide hospitals and pharmacies with self-sufficient insulin production.

Another DIY-Bio project is e-Nable. It is a group of volunteers who make prostheses on 3D printers, mainly for children from low-income families. Volunteers find instructions and add them to the library of available “blueprints”. As a result, the product is much cheaper, easier to assemble and more functional than a conventional prosthesis. Moreover, this project takes great care of the psychological aspect of disability and helps children boost with self-acceptance. For example, instead of a boring iron prosthesis, a child can get a superhero’s hand.

 

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Skeptics might think that “bio-hackers” are just a bunch of amateurs playing with test tubes in a garage and point out how dangerous this can be. However, researches destroying the myths of the DYI biology community state that most of the participants have advanced degrees or even professional careers in the field [7].

In 2011 open innovations in medicine led to another significant breakthrough that scientists have been trying to achieve for 15 years. In 10 hours a team of gamers was able to decipher the crystal structure of the retroviral protease (M-PMV) that causes AIDS in monkeys [8]. Now, many are confident that open access to knowledge and innovations in the medical field will once again help unite the efforts and capabilities of various specialists in order to cope with the consequences of the pandemic and find a cure for the COVID-19.

During quarantine open innovations also help employees who work remotely. Nowadays, discussing ideas and projects over a cup of coffee is not available for people, but this is an important part of work that increases productivity and gives a boost of creativity. One of the solutions to the problem is a Friday-bot that brings together colleagues to maintain informal communication in the “random coffee” format. This bot allows you to develop and maintain connections in companies and communities, connecting people and making work from home a little more social.

 

Who is promoting open innovations?

What is the driving force behind open innovations? Often these are not the companies themselves, but some kind of common spaces that allow for sharing experience. These are platforms where different people can meet: company representatives, university employees, scientists, young specialists and even students. A striking example is industrial and technology conferences, where participants share their experience and make new contacts for future joint projects.

More and more such open platforms and communities are being formed both offline and online. As 2020 has shown, conferences also keep up with the progress and introduce remote online formats. We at SAMSONOWA & Partners have noticed that such communities are becoming interdisciplinary and global, bringing together experts from different fields and industries, different countries and cultural backgrounds. Today people are ready not only to receive new information and new knowledge, but also to share their experience and their expertise with each other. We support the idea of ​​developing open innovation with our project the circle.

Sources:

  1. Chesbrough H. W. (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. — Cambridge, MA: Harvard Business School Publishing 
  2. Grimpe, C., & Kaiser, U. (2010). Balancing internal and external knowledge acquisition: the gains and pains from R&D outsourcing. Journal of Management Studies, 47(8), 1483-1509
  3. Chesbrough H. W. (2011). Everything You Need to Know About Open Innovation. Forbes: Leadership and Strategy, (3)
  4. Grimpe, C., & Kaiser, U. (2010). Balancing internal and external knowledge acquisition: the gains and pains from R&D outsourcing. Journal of Management Studies, 47(8), 1483-1509
  5. Dushnitsky, G., & Lenox, M. J. (2005). When do incumbents learn from entrepreneurial ventures?: Corporate venture capital and investing firm innovation rates. Research Policy, 34(5), 615-639
  6. Talbot, M. (2020). The Rogue Experimenters. The New Yorker.
  7. Grushkin D, Kuiken T. & Millet P. (2013). Seven myths and realities about do-it- yourself biology. Washington DC: Wilson Center.
  8. Filatova, A. (2020). DIY biology: redefining the boundaries of science. Don state technical universuty.