The traditional way of thinking about innovation within an organization is one of secrecy and process. As innovation is one of the most valuable assets of a business, it makes sense that countless managers and business owners have gone to incredible lengths to protect the ideas which have been developed in their offices. However, despite a long history of secrecy when it comes to the development of new products and services, the concept of open innovation flies in the face of such thinking.
Rather than keeping everything in house, open innovation encourages organizations to look outside of themselves for ideas and inspiration. By opening up to the entire world around them, organizations may be able to access information which will help them more quickly complete the innovation process. It can be inefficient to innovate entirely from within, as the organization may be working to complete tasks which have already been completed by another party. There is no sense in ‘reinventing the wheel’, after all, so looking to the outside for help is a logical step.
As you might imagine, there are both pros and cons to this type of innovation. When deciding if your organization is going to opt for closed or open innovation, it is important to weigh the advantages and disadvantages of each. The content below should give you a place to start your thinking on this subject.
Advantages of Open Innovation
Right off the bat, one of the biggest advantages that you will find with open innovation is the cost savings that can be experienced. This comes back to the point above regarding doing work that has already been done by others. If you were going to undertake costly research and development work which has already been done by another firm, that money would essentially have been wasted. Instead, you can hold on to that budget and simply build upon the work that has been done by someone else.
Another advantage is the opportunity to take more products to market in a shorter period of time. Since you should be able to shrink the development cycle by collaborating with those outside of your organization, it may be possible to put more new products on the market than you would have otherwise. Obviously, a shortened development cycle will allow you to test more and more products on the market, so you can keep the winners and discard the losers.
When your products do find their way to the market sooner than they would have otherwise, you can involve customers in the development cycle through product testing of those early versions. The feedback you receive from actual customers can be invaluable in refining your product to the point where it lives up to everyone’s expectations. This means more market research, as well as an education on your ideal target market and what they are looking for in a product.
Disadvantages of Open Innovation
There are two sides to every coin, and it would be a mistake to look at open innovation without highlighting some of the potential downsides to this approach. The first possible downside is the one that most business owners would be worried about right away – the potential loss of proprietary information. If you have already invested in research and development within a certain market, you may lose some of that information in the collaboration process. You never want to give anything away to your competition, but you may do just that when you decide that open innovation is the path you are going to take. The intellectual property that you have created in your company could be your biggest advantage in the market – and that advantage could walk out the door when you engage in open innovation. To be sure, this is a disadvantage that is deserving of some serious consideration.
Another possible disadvantage of this method is the growing complexity of your projects as a whole. When everything is kept within your walls, it is relatively easy to track the process of a project from start to finish. There will be well-defined protocols in place, and you will be able to simply trace the way your products have developed within the organization. Such simplicity is harder to attain in open innovation, as you will not have a precise track of where the ideas are coming from as you go. It can be hard enough to manage a large organization without having to worry about which ideas are coming and going, so open innovation may be more of a headache than you are willing to take on.
As a last drawback to note, you will also have to spend time on the process of tracking down external sources of innovation which can be folded in to your projects. It’s not as if your competition is going to be standing out on the corner with a sign offering free ideas, so you are going to have to work hard to build relationships and find connections that can net you the information you need to move forward. This is a potential stumbling block that you might not be able to clear, despite your best efforts.
So, is open innovation right for your organization? That all depends on your situation. If you are running an organization which is rich with intellectual property, it may be better to metaphorically keep your doors closed. After all, giving away some of what it is that differentiates your company from the market as a whole would be a mistake. Even if you can protect some of your intellectual property during the process of open innovation, that which escapes may just be enough to allow your competition to catch up.
On the other hand, if you have little to protect in terms of intellectual property, you may have a lot to gain and little to lose by opening your business up to external sources of innovation. The possibility of shortening the development cycle is enticing for sure, and the cost savings in terms of R&D can be beneficial as well.
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