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The Changing Faces of Open Innovation

More Growth, New Definitions of Customers & The Continued IP Challenge

21Apr

With most big companies staking positions in Palo Alto storefronts, establishing robust internal programs, and funding CVCs, it’s a good time to check how these activities are changing the faces of open innovation.

Growth

There’s no question that open innovation has evolved from a promising, cutting-edge management principle, to a day-to-day business reality that delivers tangible results. According to the National Bureau of Economic Research, as early as 2009, half of US manufacturing firms reported that the ideas behind top new products had come from external sources. Most major brands manage some sort of crowdsourcing platform, especially for marketing ideas, and there are over 1,000 corporate venture funds making direct investments in tech startups (and related activities, like hackathons).

A challenge to the continued growth of open innovation could be the difficultly in dealing with the vast amounts of activities and data it makes available to companies, which need to embrace an agile approach to how they’re managed across (and beyond) the enterprise. Also, the tools to oversee innovation are themselves being innovated. Disruption tends to trigger more disruption.

It’s likely that there’ll be innovations to management processes (and corporate governance) as the faces touched by open innovation both grow and change. Innovation in this regard will fuel growth in new markets and areas, too.

Customers

While customer feedback has always been an important tool in product and services management (as well as in operational controls, such as VOC in Six Sigma), the proliferation of corporate engagement in open innovation is changing the very definition of “customer.” What was once a buying relationship is now often one of co-development, as well as ongoing partnership in two-way conversations and/or shared campaigns to effect change on public or special interest issues.

Some predictions see open innovation as key to maintaining customer loyalty, as buyers become evermore demanding of the brands with which they engage. This shift may already be evident in the shift in marketing spend by major brands; already, there’s evidence that customers give more money to businesses they feel emotionally connected to, and one of the key ways that outcome is accomplished is via redeployment of budgets from traditional, one-way communications, to platforms that enable engagement in the cloud.

Is it possible that open innovation will evolve to become the basic platform on which businesses engage with all stakeholders?

IP

The issues of intellectual property lurks behind every conversation with an outside resource, whether a customer or entrepreneur, as the definitions of ownership can run headlong into the processes of collaboration and sharing. It’s a vital tool for startup valuation, primarily because it can be the only quasi-tangible asset in an otherwise valueless entity. It’s also a major tool for restricting development, and much of the worth of the IP-related industry is based on the legal authority of “negative rights.” The continued growth in global litigation costs for IP-related issues, and such high-flying examples as the 40+ patent suits Apple and Samsung filed against one another over the past few years, suggests that IP practices could continue to be an impediment to open collaboration.

Perhaps that’s why there’s a growing trend in companies embracing proactive IP management platforms, which serve to define the parameters of any engagements before they start. Also, there’s proof that the real value of open innovation doesn’t derive from the particulars of any specific technology anyway, but rather from a company’s ability to identify and get innovative solutions to market…and then iterate. Awareness of this fact could change corporate approaches to IP.

The changing faces of open innovation represent new players, new ideas and risks, and new opportunities for collaborative engagement across and within any enterprise. The companies that see and address it are the ones that will succeed.

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