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Keeping knowledge to yourself has long been disregarded as not having any competitive advantage. Innovation behind closed doors is a thing of the past. Many global organisations who employ researchers, developers and professionals no longer work only within the company’s limits. Man-made geographical boundaries are diminishing further due to increasing and easy access to World Wide Web services. Businesses who strive to serve future markets must engage in gainful collaboration of stakeholders that is diverse and open.
Adjunct Professor and Faculty Director of Centre for Open Innovation at the Haas School of Business at the University of California, Henry Chesbrough promoted ‘Open Innovation’ where the term is used for the movement of knowledge, both inflow for developing and outward for further market expansion, thus leading to technological advancement. This concept leads to both risk and reward sharing between partners or associations. Stakeholders are enterprises, start-ups/entrepreneurs customers, competitors, academic institutions where collaboration is research driven. The way the intellectual property is deployed and managed is different from its original sense.
Clear benefits of open innovation bring cost-effective methods in R&D with scope for improving productivity. Since priorities change, companies will start to seek for accurate market research targeting the right customers bringing about immense potential of productive synergies between internal and external innovation. World over, various models for open innovation include companies who work for their clients to secure ideas and technologies from the best innovators across the globe.
Leading Asian economies in Open Innovation, like Japan and South Korea still lag behind the US and in India the idea is still in its nascent stage but is getting adopted at a faster rate. With many global organisations now focusing on India as their R&D centre where cutting edge work takes place have already introduced the concept years back. Even Indian companies like Future Group, Biocon among others are involving their suppliers, customers and employees to co-create with others following suit. Opportunities are on the rise for India’s innovators both at the domestic as well as global level. In addition, the ‘jugaad’ mind set of Indians has led to many small-scale innovations over centuries.
India, which is today undoubtedly the leading hot-bed for start-ups, where the entrepreneurs focus on single business idea, bringing about more innovation when compared to large corporations or enterprises. It makes more business sense for robust collaboration between start-ups and large companies where they can leverage each other’s strengths that are complimentary. Enterprises have resources and start-ups have ideas, thereby a combination of the two is no doubt a win-win situation for both stakeholders.
Not differing too much from open innovation, Co-creation is a collaborative working between a group of people with unique skill sets towards a desirable outcome. Many large companies have realised everything cannot be done in-house and are left with no choice but to take the expertise of different external partners and co-create products or services that suit customers’ requirements. This approach leads to focussing on quality and giving rise to solutions that are a result of innovation. Late C K Prahalad, the management guru, popularised the term ‘co-creation’. Both open innovation and co-creation are long-term solutions for enterprises and start-ups in India due to diverse demographics and cultural differences.
Some open-innovation models in India can cover competition for ideations, like hackathons, product platforming and collaboration by having a network of contributors to develop solutions and incentivise them. Risks and challenges are everywhere and that includes in open-innovation models also. There will be instances where classified information gets revealed with organisations losing its competitive advantage.
Organisations should develop sustainable models of continuous innovation and co-creation. Although organisations run the risk with entrepreneurs yet to gain confidence and enterprises not able to take complete credit for intellectual properties, this is the only effective solution in the long term. Work should be done around cultural barriers and other challenges, eventually leading to ecosystem innovation.
This article has been authored by Anup Sahoo. Anup is the founder of IDEAPOKE.