The story of Lucent and Cisco is hardly an isolated instance. Similarly, Motorola, Siemens and other industrial titans watched helplessly as Nokia catapulted itself to the forefront of wireless telephony in just 20 years, building on its industrial experience from earlier decades in the low-tech industries of wood pulp and rubber boots.
Pharmaceutical giants like Merck and Pfizer have also watched as a number of upstarts, including Genentech, Amgen and Genzyme, has parlayed the research discoveries of others to become major players in the biotechnology industry. From Closed to Open. Is innovation dead? Hardly, as punctuated by the recent advances in the life sciences, including revolutionary breakthroughs in genomics and cloning. The answer lies in a fundamental shift in how companies generate new ideas and bring them to market.
In the old model of closed innovation, firms adhered to the following philosophy: Successful innovation requires control. Thanks to such investments, they were able to discover the best and greatest number of ideas, which allowed them to get to market first. This, in turn, enabled them to reap most of the profits, which they protected by aggressively controlling their intellectual property IP to prevent competitors from exploiting it.
For most of the 20th century, the model worked — and it worked well. In the chemical industry, companies like DuPont established central research labs to identify and commercialize a stunning variety of new products, such as the synthetic fibers nylon, Kevlar and Lycra. Bell Labs researchers discovered amazing physical phenomena and harnessed those discoveries to create a host of revolutionary products, including transistors and lasers.
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Toward the end of the 20th century, though, a number of factors combined to erode the underpinnings of closed innovation in the United States. Perhaps chief among these factors was the dramatic rise in the number and mobility of knowledge workers, making it increasingly difficult for companies to control their proprietary ideas and expertise. Another important factor was the growing availability of private venture capital, which has helped to finance new firms and their efforts to commercialize ideas that have spilled outside the silos of corporate research labs.
Such factors have wreaked havoc with the virtuous cycle that sustained closed innovation. Now, when breakthroughs occur, the scientists and engineers who made them have an outside option that they previously lacked.
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If that fledgling firm were to become successful, it could gain additional financing through a stock offering or it could be acquired at an attractive price. In either case, the successful startup would generally not reinvest in new fundamental discoveries, but instead, like Cisco, it would look outside for another technology to commercialize.
Thus, the virtuous cycle of innovation was shattered: The company that originally funded a breakthrough did not profit from the investment, and the firm that did reap the benefits did not reinvest its proceeds to finance the next generation of discoveries. In this new model of open innovation, firms commercialize external as well as internal ideas by deploying outside as well as in-house pathways to the market. Specifically, companies can commercialize internal ideas through channels outside of their current businesses in order to generate value for the organization.
At its root, open innovation is based on a landscape of abundant knowledge, which must be used readily if it is to provide value for the company that created it. One major difference between closed and open innovation lies in how companies screen their ideas. This can be especially painful for corporations that have made substantial long-term investments in research, only to discover later that some of the projects they abandoned had tremendous commercial value.
Researchers there developed numerous computer hardware and software technologies — Ethernet and the graphical user interface GUI are two such examples. However, these inventions were not viewed as promising businesses for Xerox, which was focused on high-speed copiers and printers. In other words, the technologies were false negatives n1 and they languished inside Xerox, only to be commercialized by other companies that, in the process, reaped tremendous benefits.
Although clearly written for the academic community, this is a useful source of reference for many of those in multiple organisations seeking to take advantage of open innovation opportunities. Convert currency. Add to Basket. Compare all 10 new copies. Book Description Oxford University Press, Condition: New.
Open Innovation: Researching a New Paradigm
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Seller Inventory t. More information about this seller Contact this seller. Book Description Oxford University Press. Seller Inventory NEW Language: English. Brand new Book. Open Innovation describes an emergent model of innovation in which firms draw on research and development that may lie outside their own boundaries.
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In some cases, such as open source software, this research and development can take place in a non-proprietary manner. Henry Chesbrough and his collaborators investigate this phenomenon, linking the practice of innovation to the established body of innovation research, showing what's new and what's familiar in the process. Offering theoretical explanations for the use and limits of open innovation, the book examines the applicability of the concept, implications for the boundaries of firms, the potential of open innovation to prove successful, and implications for intellectual property policies and practices.
The book will be key reading for academics, researchers, and graduate students of innovation and technology management.
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