How Open Innovation Helps

| - Lecture: “Managing Innovation and Fostering Corporate Entrepreneurship” (con’t)- Presentation & Annual Report follow up.

Open innovation can lead to many conflicts on what to include in innovated products and what to exclude

The places that innovative ideas come from can vary. The innovation process involves creativity of the mind. The ideas that surround innovation come from employees, customers, competitors and even your suppliers. Anything that deals with innovation is challenging. The purpose of this report is to identify the sources of innovation, how it affects industries and to evaluate disruptive innovation.

However, RLK’s competitors are downsizing and outsourcing R&D and exploiting on the cost advantages. If RLK decides to invest more money into R&D and should the new product stall on launch,

This course for juniors and seniors explores firm strategies related to innovation and technological change. We focus on how the success of technological innovations—new products, processes, and services—depends on the firm’s business model. Other key topics include intellectual property rights and the management of technological uncertainty through organizational arrangements such as corporate venturing, spinoffs, and alliances.

Not only innovation lead to change inside organizations, but also some changes in side organizations can lead to innovation. Moreover, managing innovation and change is not an absolute easy process as it seems, as it requires lots of human interaction with different backgrounds, contexts, cultures that require aligning all your human resources to respond to new innovations, and related changes and this will only be done via good and efficient leadership. Generally, innovations and related changes may include change in organization structure workforce planning, marketing strategy, geographical distribution , culture, …ect which directly impact human resources in any organization , therefore the role of the leader is so crucial to manage tensions, conflicts, resistances, uneasiness and development areas that usually appear with new changes and innovations. Leading Innovation and change being part of managing human and organization behaviors is kind of a complex processes that include several factors, stages, models, perceptions and definitely outcomes. In this paper I will get a deep dive and close up view stating the various definitions, different related models, how they work in practical life and what kind of failures such models face in real life implementation; along with a self reflection to the applied experiences of such study and what will be the development plan leading to more successful practices in future.

In the MIT article, Carroll and Mui reviewed and consolidated a pattern of innovation they summarize as “Think big, start small, fail quickly, scale fast.” This approach is consistent with Lean Startup™ approaches as well as the classic Lean Manufacturing approaches widely understood in manufacturing. We modified the original mantra to “Think Big. Start Small. Learn Quick. Scale Fast/Move On.”

Openness to experience is related to the Individual characteristics such as imagination, curiosity, originality and open mindedness (Wehrli, 2008). Barrick & Mount, (2001) defined openness to experience as the extent to which an individual is intellect, creative, conventional and broad minded. According to Costa & McCrae (1995), openness to experience consists of six factors which are fantasy, aesthetics, feelings, actions, ideas and values. Individuals who are strong in openness show a preference for variety, and are intellectually more curious and imaginative. McCrae (1996) suggested that openness to experience may have the strongest influence on social and interpersonal phenomena among all five traits under comparison. Previous studies about internet technologies which examined the role of openness to experience show that users high in this trait are adopters and users of various communication tools available through this medium. The research results from both Heinström (2003) and Wyatt and Phillips (2005) shows that people high in openness undertake information from internet. Marcus et al., (2006) found that individuals high in openness to experience are likely to have a personal website. Similar results obtained from Guadagno et al. (2008), they found that people high in openness to be more likely to have a blog and communicate with others over internet. Since the individuals described as high

These R&D labs usually concentrated on bringing out new technologies for self-commercialisation. This process can be viewed in the form of a funnel, where a large number of varied ideas and concepts can be trimmed down to few of those concepts and ideas that best meet the requirements of the company. (OECD, 2008) In recent times, companies have become more open with their innovation process, leading to revolution described as “Open Innovation” by Chesbrough (2003). This ‘open innovation’ model is a more dynamic model when compared the traditional model as there is much more interaction between knowledge assets outside the company as well as inside. Henry Chesbrough (2003) in his book “Open Innovation: New Imperative for creating and profiting from technology” defines open innovation as a concept in which companies must use ideas from inside as well as outside sources and find internal and external ways to reach the market in order to advance their technological capabilities. Open innovation combines these 3

Tidd and Bessant (2009) argued that “Unless an organization is able to move into further innovation, it risks being left behind as others take the lead in changing their offerings, their operational processes or the underlying models that drive their business”.

In a world of intense global competition, demand for specialised skills to match increasing product complexity as well as the speed of technological advances and innovations; open innovation is becoming increasingly important for firms’ competitive advantage (Ranft & Lord, 2002 and Lawson & Samson, 2001 and Howells et al., 2003). These external pressures are becoming too demanding for a firm’s internal capabilities and there has been a shift from internal research and development, to acquiring external capabilities in a bid for open innovation. (Howells et al., 2008). These acquisitions can be sourced through joint ventures, collaborations or licensing (Howells et al., 2008).

Investing in research and development to create new product line or enhance current products adds considerable expenses. Development costs will need to be re-cooped. This will keep competitors in check, but will be challenging to keep pricing competitive.

2) Chesbrough, H., W., (2003). The era of open innovation. MIT Sloan Management Review 44 (3): 35–41.

The era of ‘know it all’ management in creating solutions to problems affecting different sectors of the economy is long gone. Most innovative firms are turning to challenge driven innovation to churn out new technologies to the market. These sectors range from the energy, agriculture, reduction of carbon gas emissions to Information Technology among others. Firms have realised that there is a better pool of innovative ideas out there that is cheaper, effective and workable than internal product development procedures. In fact, the internal process may take so long and involve many product and market tests. Unfortunately, a significant number of these ideas fail to solve

Innovation offers the companies a competitive advantage. Presently and within the future, more than any time in history, the key to competitive advantage is innovation. However innovation will facilitate businesses meet all of their strategic challenges, not simply competition; to illustrate, in confronting accelerating rates of change, globalization, apace advancing technology, a additional numerous workforce, associated a modification from an industrial to a knowledge-based economy. Meeting all of those challenges helps the firm attain competitiveness, and meeting these challenges suitably depends on innovation. Innovation allows a firm to workout its challenges in distinctive ways in which build competitive advantage either through relative differentiation, a relative low-priced position, or few acceptable level of each. Innovation cannot assure success, however success cannot be achieved within the end of the day without it.