CLOSED AND OPEN

INNOVATION

Venkata Swamynath channa

 WHAT IS INNOVATION

It may refer to incremental and radical and revolutionary

changes in thinking, products, processes, or
organizations.
MY BMW WITH iDRIVE
 CLOSED INNOVATION

No new Technologies and Ideas outside

of firm
Competitors Could not take benefits
More beneficial to company
 Traditional Innovation Model
• Inputs at front end; innovation ‘protected’ from external leakage
• Funnel used to downselect to best ideas and launch them
• Partners (when used) selected to advance internal idea

Fuzzy Front-End Development Commercialization

X
Inputs

X
Inputs
X Launch

Source: Clorox, Andy Gilinkski, Director Innovation

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 EROSION OF CLOSED
INNOVATION
 Increased Mobility of skilled workers

 Expansion for venture capital

 Increased availability of Highly-Capable

Outsourcing Partners
 Why Change?

Can companies always employ best people ?

Obvious No !!!!!

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 The Kraft View ~ An Example
2,000 Researchers

90,000 Employees

8 1MM External Solution Providers

 What is Open Innovation
 If…
 Innovation is the process of doing new
things that delver value
 Then…
 Open Innovation is the process of doing
new things with outsiders that deliver
value

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 OPEN INNOVATION

 Combining internal and external ideas

 Open Innovation is a term promoted by Henry

Chesbrough

 Permeable boundaries
 Open Innovation Model
• Porous-walled funnel builds ideas with external partnerships
• Goal in funnel is to build, not just downselect
• Partners can influence, change, revise the idea

Fuzzy Front-End Development Commercialization

Ideas/Patents Line extension

X Out-licensed Product In-licensed

Inputs

X
Inputs
X Launch

X
Technology External
In-licensed endorsement/
relationships
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 An Example: Boeing 787

 Innovation Partner: Innovia Technology

 Innovation Need: passenger comfort on long
flights
 Result: advanced LED lighting that made
cabin more spacious and emotionally
comforting.
 Who is practicing it?
Rank Company Name Rank Company Name
1 APPLE  26 MOTOROLA 
2 GOOGLE  27 SOUTHWEST
The World’s Most 3
4
TOYOTA MOTOR 
GENERAL ELECTRIC  28
AIRLINES 
IDEO 

Innovative 5
6
7
MICROSOFT 
PROCTER & GAMBLE 
3M 
28
30
31
IKEA 
DAIMLERCHRYSLER 
HEWLETT-PACKARD 
Companies - 8
9
WALT DISNEY CO. 
IBM 
32
33
NIKE 
BP 

2007
10 SONY  34 RESEARCH IN
11 WAL-MART  MOTION 
12 HONDA MOTOR  35 AT&T 
http://bwnt.businessweek.com/ 13 NOKIA  36 CITIGROUP 
interactive_reports/ 14 STARBUCKS  37 VERIZON 
15 TARGET  38 ROYAL PHILIPS
most_innovative/index.asp 16 BMW  ELECTR. 
17 SAMSUNG 39 NINTENDO 
ELECTRONICS  40 COSTCO WHOLESALE 
•Particularly strong in 18
19
VIRGIN GROUP 
INTEL 
41
42
VOLKSWAGEN 
PFIZER 
Consumer Package 20
21
AMAZON.COM 
BOEING 
43
44
BEST BUY 
JOHNSON &
Goods, Electronics 22
23
DELL 
GENENTECH  45
JOHNSON 
AMGEN 
24 EBAY  46 MERCK 
25 CISCO SYSTEMS  47 NEWS CORPORATION 
48 MCDONALD'S 
49 LG ELECTRONICS 
50 EXXONMOBIL 
 What makes gives open
innovation an outer edge??
Closed innovation Open innovation

Our employees is World is our

our world employees
Harness the wave energy of
knowledge abundance
 Conclusion: work in progress…

 Open innovation vs. Innovation open

 Chesbrough defines a weak form of open innovation
Co-evolution of open innovation and corporate
innovation
 Open sphere central to innovation
 Creativity needs openness (Lessig, Christensen)
 Open as an efficient management mode
 Strength? Weaknesses?
 The patent issue: threat? Part of the solution?
 Open science vs. Science open
 University patent