HR assignment essay help online: Concepts off innovation in companies
Introduction
The following report includes the discussion about the explanations of the concept of open innovation in the current competitive business period. The report also includes the analysis of the advantages of the open innovation concept. Open innovation provides the organizations with significant opportunities to leverage their intellectual resources from outside of the companies. Open innovation in simple terms can be said to be as the use of the external ideas as well the internal ideas in order to advance their technologies. The report also includes the factors that should be considered before the organizations or companies consider moving towards the open innovation model. Though there are several advantages to the companies moving towards the open innovation concept. The factors that are needed to be considered for moving towards the open innovation model have been discussed in the report. The consideration of the open innovation concept by the organizations has several advantages as the organization and its environment has become more and more permeable and there is a high need of the movement of the inward and outward innovation.
The main aide behind the use of the open innovation model or concept by the organization in this competitive era is that the knowledge is highly and widely distributed the organizations cannot only rely on the internal research done by their R&D team but they also have to buy licenses and patents from other organizations as well. It is also vital that the inventions done internally by any organization and which is not used internally must be taken outside of the company by the way of licensing or joint ventures and so on. The report also includes the examples of two companies who have attempted to apply open innovation approach in the organization. Finally a conclusion has been drawn related to the topic of research.
Open Innovation
Open innovation in simple terms can be said to be as the purposive inflow and outflow of knowledge which is mainly adopted to accelerate innovation within the organizations. As organizations cannot rely entirely on their internal knowledge and also the knowledge is widely distributed, so they can also hire or take licenses from outside organizations and intellectual properties from the outside organizations when they want to advance in their business model. The open innovation concept is used for the purposive inflow and outflow of knowledge in order to accelerate innovation internally and expand into the market by the use of the external innovation (So what is Open innovation 2012). This paradigm suggests that the organizations must use the external ideas along with the internal ideas in order to get advanced in their technology and business activities. Open innovation also provides the organizations with significant opportunities to leverage their intellectual resources from outside the organization (Pham-Gia 2011).
Even having large number of resources available internally to the organizations there is still a need persists within the organizations to adopt open innovation because the firms have the natural tendency to institutionalize the organization with the association with other large firms and entities in order to succeed in this competitive world. Open innovation help the organizations to innovate new sources of ideas and solutions in order to influence every aspect of the organization business activity. The adoption of the Open innovation requires organizations to change their policies and cultures in order to succeed. Open innovation requires integration of several organizational activities from the early stage of the product development extending towards the R&D and finally to the late stage of the sales and marketing (Fasnacht 2009).
This expansion calls for the development of the more and more strategic innovations of the networks within the organizations and knowing how they are build and performs actions and functions. Open innovation is one of the fields which are highly taking place within the modern business organizations. This is the concept which is highly advanced and makes the organizations to make use of the greater external ideas and use of the technologies under the business, and making other business activities to make use of the outside unused ideas. Propelled with the ever increasing competition and products differentiation, organizations and companies are striving for their growth and are highly eager to expand their innovations efforts, but they are not at all eager to expand the internal innovation capabilities and trying to make use of the external knowledge’s and talents (Blackwell and Fazzina 2008).
Why companies should consider moving towards open innovation business model
There are several factors that the organization must consider in order to move towards the open innovation model or concept. The companies have several advantages for moving towards the open innovation model. As organizations need to spend a large amount of time to reinvent the organizational business model. As the organization business model is highly important than the technology alone and also the sources of the innovation. Open innovation aids the firm or organization is analyzing the technology that may not have been developed under the organization internally. Open innovation model aids the organizations in analyzing the factors that are available outside the organization and are not available internally (Fasnacht 2009).
It can also be said that open innovation aids the organizations in developing their products and services to remain competitive. Companies must consider moving towards the open innovation because every business and model matures over the period of time, so the firms have to look for the new growth opportunities. Investing in products may be beneficial for the companies but organizations have to look for extending into new business opportunities and development of the technological areas. The organizations who are investing in the new technologies may face uncertainty of the future development of the organization (Program in Open Innovation 2012).
We can explain this by the use of an example suppose an organization is in the search of potential technology for innovation of the new products which can create customers value and can target potential customers. All these factors can only be clear after the expansive market research after the application of the investment in the technology and research. In this case the investment n the development of the new technology imposes risk on the organizations and this is also uncertain that the product so developed may succeed in this period of time. Under this kind of scenario the adoption of the open innovation model will be helpful. As with the use of the open innovation concept the organization can decrease its cost of expenditure on the research and also in the innovation of the product or technology. They can get this externally with the surety that the technology so developed is working and can be used in order to succeed in the market place (Blackwell and Fazzina 2008).
The companies must also move towards the open innovation model because under the closed innovation model success innovation of any technology or product requires high amount of control within the organization. Under the closed innovation the organizations need to control their own ideas, production, marketing, servicing, and distribution, supporting and financing functions. The main cause behind the application of the closed innovation is that the government and universities are not allowing of the commercial application of science, so the organization have to perform them on their own, so they created their own Research and development departments in order to control the development of the new products and services (Vanhaverbeke, Vrande and Chesbrough 2008).
All these requirements developed the need of the open innovation concept or model which aids the organizations to focus on their general business activities and grow the market for their products and services instead of investing large amount of funds on research and development activities. The use of the open innovation concept aids the organizations in taking advantage of licensing or patenting other developed products and technology and reduce the risk of technology failure. All these help the organization to concentrate on the product development instead of the technology development which can easily be procured from outside or externally (Advantages of Open Innovation 2007).
Organization must also move towards the open innovation business model as this helps in increasing the mobility of the skilled workers and the growth of the venture capital market, and increasing the capabilities of the external suppliers. Today is several of the industries the logic that aids the internally supported and centralized approach towards the research and development has been become obsolete after the introduction of the open innovation. The use of the knowledge and the widespread availability of ideas have been used by enthusiasm. These factors create an environment for the open innovations and embrace the use of the external ideas in combination with the internal research and development activities (Vanhaverbeke, Vrande and Chesbrough 2008).
However the organizations need to perform the hard work necessary for the conversion of the promising research into the products and services that satisfies the demand of the customers and their needs. There is a high need for the organizations in this competitive market place to integrate the innovators ideas, skills and expertise with those of others that are outside the organization to deliver the results to the market using the maximum means those are possible. These means that the organizations needs to harness ideas outside their scope in order to advance their own businesses while leveraging the ideas developed internally or outside their scope which the organization likes to thrive in this new business era related to the innovation and competitiveness (Vanhaverbeke, Vrande and Chesbrough 2008).
In the past period the internal strategic research and development activities were valuable assets even are treated as the formidable factors to the entry in many competitive market areas. Large corporations like IBM, AT&T and DuPont etc. completes the overall research activities by doing maximum of the research and developing activities in their respective market and industry. There is a high competition in this market place. But due to the entry of the open innovation concept other organizations has also entered the market, and are benefitting through the innovation of the other company researches. Even these market players are not that effective but are valuable for many small companies which cannot research on their own (Program in Open Innovation 2012).
Two companies attempted to apply open innovation approach
There are several companies and organizations all around the world who have applied the open innovation concept in their organizations in order to get the maximum benefit of the external knowledge factor. Analyzing at this factor it has been evaluated that large companies like star bucks, Dell, Proctor & Gamble have applied this concept in their organization in order to gain solutions to their long pertaining problems.
From the analysis it has been analyzed that star bucks have received more than ten thousand ideas from large number of their customers by using the Mystarbucksideaa.com. The company posts several issues and areas in which the company requires ideas. The company followed this concept after the success of Dell’s IdeaStrom. The company has used its sales force formidable software. The company sales of coffee are highly dwindling in the recent period so the company has launched the service which provided the customers to logon to the site and give new ideas related to how the company can improve their product, service and operations. The platform has been designed in a manner that aids the company from displaying the most rated ideas on the website home page (Program in Open Innovation 2012).
The power of the open innovation can be judged from the fact that the number of the groups and the workshops the company have to organize in order to generate this number of ideas. This shows that open innovation is the way to bring in a group of people together with similar or common goal. This also has helped the company in the manner that has helped all the members of the organization to take initiative and part in the process of innovation which may lead to different outcomes. This also aids the organization to make innovation by the help of the partners customers with the fresh perspective as compared to the only innovation factor.
In a recent open innovation contest organized by Starbucks related to the reduction of the paper cup usage, the company has awarded $10000 to an idea provided by Karma cup. The company uses more than 58 billion coffee cups per annum, in N. America alone. The company has sponsored the beta cup contest as an effort to use fewer cusps per annum. The reusable cups were highly workable but are less convenient so people were less motivated to use them. In an effort to gather ideas from people around the world this event has been organized. The consumers have played a vital role in the generation of creative ideas and have helped the company to make use of the reusable cups in their stores and have saved 1.2 million pounds of paper. The company has expected to make use of 100 % of the reusable cups by the end of 2015. This open innovation idea has helped the company to gather ideas from the external environment and develop ideas which may have not been generated internally (Program in Open Innovation 2012).
Procter &Gamble innovation program has lost its way in the year 1990. The successful product innovation was one of the main competitive strategies of the company which has been slipping day by day. The company has reviewed its strategy of R&D and has also increased its budget for five years in the year 1999, even after having the largest R&D budgets around the globe. The main problem which the company faced is that even the increase in the budget has not increased the company performance. Looking at this factor the company adopted the open innovation factor and initiated connect & develop program, basically designed to use the open innovation concept in order to improve the innovation outcomes at larger level. The company main aim is to generate innovation by the use of the external talents and ideas. Procter and Gamble main purpose behind this initiative is to improve more and more lives in all the parts of the world with a high and unrelated focus on innovation. The company main aim behind using this model is to partner with the best innovators all around the world and employ a number of approaches to connect with the number of best innovators who can provide ideas to the company related to the several innovations the company can plan to. This has been called as the open innovation concept i.e. connects + develops (Connect + Develop 2012).
The company is highly proud that the company more than half of the products initiatives are developed by the collaboration with outside innovators. The company uses the open innovation concept and has partnered with the multinationals, small companies, individual innovators, competitors in order to bring in game changing innovation to the market. The website has been developed by the company in order to help the external innovators and also the companies to learn how the company initiative Connect + Develop works. The company under this platform shows the innovators about the company past success factors, current needs and what the company is looking for the development of the innovative partnership. This aids the company and the innovators all around the world to post their innovative ideas for the company and help them to develop ideas which fulfill the needs of the customers (Connect + Develop 2012).
Conclusion
From the above analysis it can be concluded that open innovation business model is the requirement of this current competitive age. It can also be concluded that the open innovation is highly required by the modern organizations as organizations cannot solely rely on the internal knowledge for innovations. Organizations in the current periods have to hire innovations and take licensing from outside for several developments as this helps them to save several research and development costs and also save work hours that would have been incurred in the research and development activities by the organizations in the long run.
It is also vital for the organization to not only focus on the internal knowledge but also on the external knowledge factors which aids in the development of the organization in the competitive market place. It can also be concluded that there are several advantages of the open innovation systems these mainly includes reduction of the risk of innovation, reduction of the organization risk related to what the market actually wants, open innovation helps the company to know what the community exactly wants, it also aids in development of the innovation from any one from anywhere. It also has the advantage of supplementing the company R&D and providing the organization with the ideas from outside the organization. It can also be concluded that open innovation aids in the creating the brand evangelists out of the society or community. From the analysis it can also be concluded that there are several organizations that have adopted the open innovation business model and have developed several products that are required by the customers. The open innovation business models have aided the companies in development of the products that are highly required by the customers and those which are suggested by them.
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