Open innovation is a term used to promote an Information Age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs. The benefits and driving forces behind increased openness have been noted and discussed as far back as the 1960s, especially as it pertains to interfirm cooperation in R&D. Use of the term 'open innovation' in reference to the increasing embrace of external cooperation in a complex world has been promoted in particular by Henry Chesbrough , adjunct professor and faculty director of the Center for Open Innovation of the Haas School of Business at the University of California, and Maire Tecnimont Chair of Open Innovation at Luiss .
44-429: The term was originally referred to as "a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology". More recently, it is defined as "a distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with
88-403: A software framework . They are normally specific to a hardware platform and operating system combination. To create applications with advanced functionalities such as advertisements, push notifications, etc; most application software developers use specific software development kits. Some SDKs are required for developing a platform-specific app. For example, the development of an Android app on
132-504: A change in the use, management, and employment of intellectual property as it is in the technical and research driven generation of intellectual property. In this sense, it is understood as the systematic encouragement and exploration of a wide range of internal and external sources for innovative opportunities, the integration of this exploration with firm capabilities and resources, and the exploitation of these opportunities through multiple channels. In addition, as open innovation explores
176-417: A common pool, or grant unlimited license use to anybody. Hence some open-source initiatives can merge these two concepts: this is the case for instance for IBM with its Eclipse platform, which the company presents as a case of open innovation, where competing companies are invited to cooperate inside an open-innovation network. In 1997, Eric Raymond , writing about the open-source software movement, coined
220-507: A constant growth of data and cognitive tools. Open innovation ecosystems bring together the symbiotic forces of all supportive firms from various sectors and businesses that collectively seek to create differentiated offerings. Accordingly, the value captured from a network of multiple actors and the linear value chain of individual firms combined, creates the new delivery model that Fasnacht declares "value constellation". The term Open Innovation Ecosystem consists of three parts that describe
264-421: A large quantity of innovative ideas, while also providing a deeper insight into the needs of their customers and contributors. While mostly oriented toward the end of the product development cycle, this technique involves extensive customer interaction through employees of the host organization. Companies are thus able to accurately incorporate customer input, while also allowing them to be more closely involved in
308-457: A paradigm shift toward accelerating co‐development of sustainable innovation. West researched open innovation ecosystems in the software industry, following studies in the food industry that show how a small firm thrived and became a business success based on building an ecosystem that shares knowledge, encourages individuals' growth, and embeds trust among participants such as suppliers, alumni chef and staff, and food writers. Other adoptions include
352-408: A third party. This type of open innovation is when companies use freely available external knowledge, as a source of internal innovation. Before starting any internal R&D project a company should monitor the external environment in search for existing solutions, thus, in this case, internal R&D become tools to absorb external ideas for internal needs. In this type of open innovation a company
396-434: A wide range of internal and external sources, it could be not just analyzed in the level of company, but also it can be analyzed at inter-organizational level, intra-organizational level, extra-organizational and at industrial, regional and society. Recent studies have also started to explore Open Innovation at individual level (decision-makers, managers, or entrepreneurs), its Human Side, and how companies' decision-makers frame
440-425: Is also quoted as saying that 'one cannot code from the ground up in bazaar style. One can test, debug, and improve in bazaar style, but it would be very hard to originate a project in bazaar mode'. In the same vein, Raymond is also quoted as saying 'The individual wizard is where successful bazaar projects generally start'. In 2014, Chesbrough and Bogers describe open innovation as a distributed innovation process that
484-486: Is based on purposefully managed knowledge flows across enterprise boundaries. Open innovation is hardly aligned with the ecosystem theory and not a linear process. Fasnacht's adoption for the financial services uses open innovation as basis and includes alternative forms of mass collaboration, hence, this makes it complex, iterative, non-linear, and barely controllable. The increasing interactions between business partners, competitors, suppliers, customers, and communities create
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#1732798460945528-575: Is buying innovation from its partners through licensing, or other procedures, involving monetary reward for external knowledge Open source and open innovation might conflict on patent issues. This conflict is particularly apparent when considering technologies that may save lives, or other open-source-appropriate technologies that may assist in poverty reduction or sustainable development . However, open source and open innovation are not mutually exclusive, because participating companies can donate their patents to an independent organization, put them in
572-449: Is defined as any "individual or group who adapt, modify, or transform a proprietary offering". Traditional consumers simply use and consume products and services, creative consumers do the same but also change them in some way. Examples include: In 2005, The Economist published an article about the future of innovation, ‘The rise of the creative consumer’. This article explained that some companies rely on identifying and leveraging
616-404: Is more significant for startups since they face larger obstacles in their pursuit of innovation. This approach involves developing and introducing a partially completed product, for the purpose of providing a framework or tool-kit for contributors to access, customize, and exploit. The goal is for the contributors to extend the platform product's functionality while increasing the overall value of
660-424: Is termed inbound open innovation. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g. through licensing, joint ventures or spin-offs ). This is called outbound open innovation. The open innovation paradigm can be interpreted to go beyond just using external sources of innovation such as customers, rival companies, and academic institutions, and can be as much
704-463: Is the direction of innovation, whether from outside the company in, or from inside the company out: This type of open innovation is when a company freely shares its resources with other partners, without an instant financial reward. The source of profit has an indirect nature and is manifested as a new type of business model. In this type of open innovation a company commercialises its inventions and technology through selling or licensing technology to
748-866: The GNU Lesser General Public License are typically usable for proprietary development. In cases where the underlying technology is new, SDKs may include hardware. For example, AirTag 's 2012 near-field communication SDK included both the paying and the reading halves of the necessary hardware stack. The average Android mobile app implements 15.6 separate SDKs, with gaming apps implementing on average 17.5 different SDKs. The most popular SDK categories for Android mobile apps are analytics and advertising. SDKs can be unsafe (because they are implemented within apps yet run separate code). Malicious SDKs (with honest intentions or not) can violate users' data privacy , damage app performance, or even cause apps to be banned from Google Play or
792-500: The Java platform requires a Java Development Kit . For iOS applications (apps) the iOS SDK is required. For Universal Windows Platform the .NET Framework SDK might be used. There are also SDKs that add additional features and can be installed in apps to provide analytics, data about application activity, and monetization options. Some prominent creators of these types of SDKs include Google, Smaato, InMobi, and Facebook. An SDK can take
836-472: The choice between implementing Open Innovation or more traditional approaches to innovation (e.g. closed innovation). Open innovation offers several benefits to companies operating on a program of global collaboration: Implementing a model of open innovation is naturally associated with a number of risks and challenges, including: In the UK, knowledge transfer partnerships (KTP) are a funding mechanism encouraging
880-750: The client experience and adds value to consumers. The drawback is that it is also threatening incumbent banks from the U.S. and Europe due to its legacies and lack of agility and flexibility. Bogers, M., Zobel, A-K., Afuah, A., Almirall, E., Brunswicker, S., Dahlander, L., Frederiksen, L., Gawer, A. , Gruber, M., Haefliger, S., Hagedoorn, J., Hilgers, D., Laursen, K., Magnusson, M.G., Majchrzak, A., McCarthy, I.P., Moeslein, K.M., Nambisan, S., Piller, F.T., Radziwon, A., Rossi-Lamastra, C., Sims, J. & Ter Wal, A.J. (2017). The open innovation research landscape: Established perspectives and emerging themes across different levels of analysis. Industry & Innovation, 24(1), 8-40. Creative consumer A creative consumer
924-572: The commercial application of science. As a result, it was left up to other corporations to take the new product development cycle into their own hands. There just was not the time to wait for the scientific community to become more involved in the practical application of science. There also was not enough time to wait for other companies to start producing some of the components that were required in their final product. These companies became relatively self-sufficient, with little communication directed outwards to other companies or universities. Throughout
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#1732798460945968-430: The company's actions toward these creative consumers are active or passive and whether the company's attitude towards creative consumers is either positive or negative. The four stances are: Software development kit A software development kit ( SDK ) is a collection of software development tools in one installable package. They facilitate the creation of applications by having a compiler, debugger and sometimes
1012-399: The correct product is developed as fast as possible, while reducing the overall cost of development. Dr. Henry Chesbrough recently supported this model for open innovation in the optics and photonics industry. Similarly to idea competitions, an organization leverages a network of contributors in the design process by offering a reward in the form of an incentive . The difference relates to
1056-485: The design process and product management cycle. Similarly to product platforming, an organization incorporates their contributors into the development of the product. This differs from platforming in the sense that, in addition to the provision of the framework on which contributors develop, the hosting organization still controls and maintains the eventual products developed in collaboration with their contributors. This method gives organizations more control by ensuring that
1100-581: The economy. Basically there are three dimensions that increasingly converge, i.e. e-commerce, social media and logistics and finance, termed by Daniel Fasnacht as the golden triangle of ecosystems . Business ecosystems are increasingly used and drive digital growth.[3] and pioneering firms in China use their technological capabilities and link client data to historical transactions and social behaviour to offer tailored financial services among luxury goods or health services. Such open collaborative environment changes
1144-637: The end of their KTP project, the three actors involved have to prepare a final report that describes KTP initiative supported the achievement of the project's innovation goals. Open innovation has allowed startup companies to produce innovation comparable to that of large companies. Although startups tend to have limited resources and experience, they can overcome this disadvantage by leveraging external resources and knowledge. To do so, startups can work in tandem with other institutions including large companies, incubators, VC firms, and higher education systems. Collaborating with these institutions provides startups with
1188-569: The fact that the network of contributors are used to develop solutions to identified problems within the development process, as opposed to new products. Emphasis needs to be placed on assessing organisational capabilities to ensure value creation in open innovation. In Austria the Ludwig Boltzmann Gesellschaft started a project named "Tell us!" about mental health issues and used the concept of open innovation to crowdsource research questions. The institute also launched
1232-501: The first "Lab for Open Innovation in Science" to teach 20 selected scientists the concept of open innovation over the course of one year. Innovation intermediaries are persons or organizations that facilitate innovation by linking multiple independent players in order to encourage collaboration and open innovation, thus strengthening the innovation capacity of companies, industries, regions, or nations. As such, they may be key players for
1276-531: The form of application programming interfaces in the form of on-device libraries of reusable functions used to interface to a particular programming language , or it may be as complex as hardware-specific tools that can communicate with a particular embedded system . Common tools include debugging facilities and other utilities , often presented in an integrated development environment . SDKs may include sample software and/or technical notes along with documentation, and tutorials to help clarify points made by
1320-514: The foundations of the approach of open innovation, innovation systems and business ecosystems. [1] While James F. Moore researched business ecosystems in manufacturing around a specific business or branch, the open model of innovation with the ecosystem theory was recently studied in various industries. Traitler et al. researched it 2010 and used it for R&D , stating that global innovation needs alliances based on compatible differences. Innovation partnerships based on sharing knowledge represents
1364-429: The innovation potential of creative consumers. However, many companies may feel threatened or upset by the actions of creative consumers. Hotz, Avila, and Hill all received negative, and in some cases threatening, reactions from the companies whose products and services they had repurposed. Berthon, et al., proposed that companies can take four general stances on creative consumers. These stances are determined by whether
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1408-440: The level of the consumer, the firm, an industry, and society. Because innovations tend to be produced by outsiders and founders in startups , rather than existing organizations, the central idea behind open innovation is that, in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (i.e. patents) from other companies. This
1452-425: The organization's business model". This more recent definition acknowledges that open innovation is not solely firm-centric: it also includes creative consumers and communities of user innovators. The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward between firms and other firms and between firms and creative consumers, resulting in impacts at
1496-473: The partnership between a firm and a knowledge-based partner. A KTP is a collaboration program between a knowledge-based partner (i.e. a research institution), a company partner and one or more associates (i.e. recently qualified persons such as graduates). KTP initiatives aim to deliver significant improvement in business partners’ profitability as a direct result of the partnership through enhanced quality and operations, increased sales and access to new markets. At
1540-465: The platform tool-kit. The high scalability of platforming often results in an increased complexity of administration and quality assurance. This model entails implementing a system that encourages competitiveness among contributors by rewarding successful submissions. Developer competitions such as hackathon events and many crowdsourcing initiatives fall under this category of open innovation. This method provides organizations with inexpensive access to
1584-417: The potential of open innovation is exaggerated, while the merits of closed innovation are overlooked. There is an ongoing debate on which paradigm will dominate in the future. Modern research of open innovation is divided into two groups, which have several names, but are similar in their essence (discovery and exploitation; outside-in and inside-out; inbound and outbound). The common factor for different names
1628-411: The primary reference material. SDKs often include licenses that make them unsuitable for building software intended to be developed under an incompatible license. For example, a proprietary SDK is generally incompatible with free software development, while a GNU General Public License 'd SDK could be incompatible with proprietary software development, for legal reasons. However, SDKs built under
1672-446: The product for everyone involved. Readily available software frameworks such as a software development kit (SDK), or an application programming interface (API) are common examples of product platforms. This approach is common in markets with strong network effects where demand for the product implementing the framework (such as a mobile phone, or an online application) increases with the number of developers that are attracted to use
1716-417: The proper resources and support to successfully bring new innovations to the market. The collaboration between startups and large companies, in particular, has been used to exemplify the fruits of open innovation. In this collaboration, startups can assume one of two roles: that of inbound open innovation, where the startup utilizes innovation from the large company, or that of outbound open innovation, where
1760-419: The startup provides internal innovation for the large company. In the inbound open innovation model, startups can gain access to technology that will allow them to create successful products. In the outbound innovation model, startups can capitalize on their technology without making large investments to do so. The licensing of technology between startups and large companies is beneficial for both parties, but it
1804-503: The telecom industry or smart cities. Ecosystems foster collaboration and accelerate the dissemination of knowledge through the network effect , in fact, value creation increases with each actor in the ecosystem, which in turn nurtures the ecosystem as such. A digital platform is essential to make the innovation ecosystem work as it aligns various actors to achieve a mutually beneficial purpose. Parker explained that with platform revolution and described how networked Markets are transforming
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1848-423: The term the cathedral and the bazaar . The cathedral represented the conventional method of employing a group of experts to design and develop software (though it could apply to any large-scale creative or innovative work). The bazaar represented the open-source approach. This idea has been amplified by a lot of people, notably Don Tapscott and Anthony D. Williams in their book Wikinomics . Eric Raymond himself
1892-428: The transformation from closed to open modes of innovation. The paradigm of closed innovation holds that successful innovation requires control. Particularly, a company should control the generation of their own ideas, as well as production, marketing, distribution, servicing, financing, and supporting. What drove this idea is that, in the early twentieth century, academic and government institutions were not involved in
1936-477: The years several factors emerged that paved the way for open innovation paradigms: These four factors have resulted in a new market of knowledge. Knowledge is not anymore proprietary to the company. It resides in employees, suppliers, customers, competitors and universities. If companies do not use the knowledge they have inside, someone else will. Innovation can be generated either by means of closed innovation or by open innovation paradigms. Some research argues that
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