Changing business strategies with "Open innovation"

Abstract

The face of innovation for businesses has been changing. Innovation for organizations used to be proprietary activity conducted largely within the organizations. But, the last decade or so has seen a change with organization‘s opening up their product development processes to inculcate the ideas from outside their walls with the inclusion of suppliers, independent inventors, labs and sometimes even competitors. Open Innovation is the innovation process in which firms interact extensively with their environment, leading to a significant amount of external knowledge exploration and exploitation. The open source movement in the IT industry where the access to source code was allowed promoted innovation and experimentation, and the advent of internet furthered the innovation process by increasing the interaction and co-creation. Moving on, the trend for Open Innovation has caught up with the developers of other products such as consumer products and fashion wear as well. One good example of open innovation is P&G‘s ?Connect + Develop? innovation strategy. These strategies have provided the businesses with a goldmine of ideas, which they would have otherwise missed. On the other hand it has also enabled the independent developers to reach out more easily to the businesses. Under the concept of open innovation research results are able to traverse the firm‘s boundaries. Other companies that are willing to use the research results and technology can license it, creating a win-win situation. Similarly the firm will be able to license the technologies of other firms.