The road to open innovation
Value creation, innovation and management
Innovation is a broad term with different meanings. For some, an innovation is synonymous with an invention. For others it is about a new technology. Yet others only speak of an innovation when there is a proven and successful application in the market. What everyone does agree on is that innovation is about change.
Joseph Schumpeter, one of the first authors of innovation, talks about “new combinations”. He distinguishes between new or improved products, new production methods, new markets and new ways of organizing companies. Since then, many models have been developed to classify the various types of innovation.
One model is the WIN model by Van der Voort & Ormondt (2011). That model describes different types of innovation and organizational aspects that are important in that process.
The (management) literature on innovation offers many definitions, models and action recommendations. How do people generally think about the following statements? In theory or in practice; you can choose the perspective:
Forms of innovation
Click on the hotspots in the image below to learn more about the various different forms of innovation.
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Types of innovation
Innovation can also be represented through another categorization. There are 4 types of innovations that can occur (again) within a company or between companies:
Incremental innovation
Small changes in both the product and/or process. An example of an incremental process innovation is improving the use of Internet banking. Internet banking was already there, but now it is possible, for example, to ask questions directly to employees or to open an account online.
Modular innovation
An entirely new component of a product service that requires the process to be revised as well.
When a component is changed, without changing the operation of the system as a whole (like a new seat on a bicycle).
Entirely new process in a product/service, which requires the related different product components to be improved as well. Consider:
- Line-up machines vs. inline machines
- Fossil fuel car vs. electric car
Radical innovation
Radical innovation is usually a result of a technological breakthrough and results in an entirely new product and process. The flatscreen is an example. LCD technology has replaced CRT technology and the picture tubes have been incorporated into many products in many markets (TV, machines, telephone, ..etc).
History of Open Innovation
Open innovation has emerged gradually. The 3 models that started innovative thinking are:
- Ansoff’s strategic planning.
- BCG portfolio management.
- Porter competitor strategy.
The evolution towards open innovation
The difference between then and now is that we live in a network society. The types and forms of innovation mentioned above are still relevant, only you can no longer achieve them as an organization alone. That is also the difference between closed and open innovation. Collaboration with other parties is necessary in these dynamic times to be efficient and effective
The images above visualize the main differences between closed and open innovation. In the case of closed innovation, external parties are hardly or not at all involved in the development process. When this is unavoidable, it is usually ‘formalized’ through strict agreements and legal contracts. As a rule this is a client-subcontractor construction. The intellectual property usually belongs to the client.
Open innovation involves collaboration during various phases of the innovation process. Both in the phase of ideation and conceptualization (entrance of the funnel, left in the picture) and in development and marketing, use is made of the expertise, facilities and contacts of other companies, experts and stakeholders. This results in a higher efficiency of the innovation process.