Open Innovation

Front 1

Changing landscape

Back 1

The innovation landscape of the world is changing. It is no longer enough to solely rely on the in-house R&D invention model of innovation. Organisations must open up to the potential innovations that can be achieved by connecting with the outside world and developing new initiatives through internal capabilities.

Front 2

Chesbrough and Bogers definition of open innovation.

Back 2

Open innovation is founded on a distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with the Organisations business model.

Front 3

Semi-permeable organisations

Back 3

This approach to innovation portrays the company as having a semi-permeable membrane by which information can flow seamlessly in and out of an organization.

Front 4

Innovation ecosystem

Back 4

An innovation ecosystem comprises all the constituent parts required to enable an innovation and entrepreneur-based economy. It is characterized by the interactions that take place between the key actors in the ecosystem to facilitate innovation. The company needs to be placed at the Centre of the ecosystem, while much of the activity is going on at the periphery of the distributed network.

Front 5

Closed Innovation company principles

Back 5

- believe all the smart people in the field work for them already and do not realize the benefits to be derived from external interactions.

- argue that to profit from R&D it must be discovered and developed in-house.

Front 6

P&G argument

Back 6

P&G employed the closed invention model for decades and state this approach to innovation does not ensure long-term growth, especially in markets where competitors pursue open innovation.

Front 7

Open Principles

Back 7

-realize not all the smart people work for them and thus, it should be their objective to find and tap into the knowledge and expertise of bright individuals outside of the company.

Front 8

P&G and external scientists

Back 8

P&G discovered that for every one of their scientists, there were 200 scientists outside of the company with the same capabilities. This equates to a total of 1.5 million external scientists (for P&Gs 7,500 scientists) outside of the company that P&G can interact with as a source of ideas.

Front 9

Open principles- external R&D

Back 9

Open companies believe external R&D can create significant value while internal R&D is needed to claim a portion of that value. P&G mine the external environment for potential innovations and use their own internal capabilities in R&D to enhance the initiatives.

Hint 9

Open companies believe external R&D can create significant value while internal R&D is needed to claim a portion of that value. P&G mine the external environment for potential innovations and use their own internal capabilities in R&D to enhance the initiatives.

Front 10

P&Gs magic eraser

Back 10

Company’s magic eraser already existed on the Japanese market, was brought internally and enhanced to deliver more value to customer.

Front 11

P&G attitude.

Back 11

Company realised that in an increasingly competitive world, a company doesn’t have to originate the idea to profit from it. This required a seismic change in attitude from ‘not invented here’ to ‘proudly found elsewhere’

Front 12

Model/Framework differences

Back 12

One of the major contradictions between open and closed innovation is regards being first to market. The more competitive open companies focus on building a better business model as opposed to being a first-mover.

Front 13

Model/Framework differences

Back 13

The model is a framework in which a company creates and delivers value to the customer and captures value from the customer. Products/services have a clear value proposition as a result and this is often more effective than being first to market. E.g diamond rio vs the IPod.

Front 14

Making the best use of internal and external ideas.

Back 14

P&Gs success after implementation of open innovation is a testament to this statement. The company’s R&D productivity increased by 60%, its share price almost doubled and it experienced an improved innovation success rate.