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How Open Is Innovation In China?

With one of the biggest consumer markets in the world, Chinese companies need to find a way of innovating in complex conditions

3Oct

Disruptive entry in the market is like an apocalypse - everyone can feel that it's coming, but unaware when, and how drastic the consequences will be. Opportunities for disruptors are usually created through an existing gap in the market, where a new product jumps in and creates a completely new niche. Well-established players have their strengths, including maturity, knowledge of the industry, and a certain influence on the business world. However, what they often lack is agility and a fast reaction to potentially fatal changes in the market.

In today's environment, businesses have access to both digital and emerging technologies to use for their benefit, meaning that chances to succeed in innovation are now equal - whether it's a company with decades of experience or a lean startup. Surviving in disruptive conditions has become a philosophy, where scholars try to apply theoretical and practical knowledge of how companies should act in the state of turbulence.

Larry Downes, the Internet Industry Analyst and Paul Nunes, the Global Managing Director at Accenture Institute of High Performance, for example, expressed their visions on the matter in their book 'Big Bang Disruption', expanding on how companies should act when changes are inevitable. They discussed chances of surviving during/after disruption, as well as outlining options for retaining assets, how to pivot an innovation strategy or exit the market with minimal costs. The focus falls on a collaboration with external sources and experimentation - two elements that shape an open innovation concept.

Even though R&D departments have proven to be effective in acting as a life jacket with problems in product development - open innovation is a radical alternative, which allows a faster strategy execution and product delivery. For incumbents impacted by disruption, it's a cost effective solution which is capable of reducing market risks, and is generally a good choice if a company's IP management is strong.

Open innovation is unlikely to disappoint if it's applied in a highly saturated market, where little can surprise customers and the number of offered products is rapidly growing. One such market is in China, where large companies are increasingly exposed to the competitive threats from emerging products and the country shapes the second biggest consumer market in the world, according to the United Nations Statistics Division.

Open innovation wise, China still has some work to do, though. The approach itself is quite new, firstly introduced by the American organizational scholar Henry W. Chesbrough in 2003, so in China, the practice currently exists as an exception. Lenovo already stands out as the number one computer maker in the world, but as its slogan says 'innovation never stands still', the company has tried an open innovation approach too. Lenovo's New Business Development online platform is welcoming submissions from external industry professionals on product development solutions and for proposing new product ideas. By using the platform, Lenovo has achieved several breakthroughs in smart devices and deployed new glasses, an air cleaner, and a router. Lenovo still knows how to innovate, despite the stereotypes saying large companies can't innovate like startups. An open mindedness and a willingness to experiment is the key to success.

Rather than spending a lot of time trying to forecast possible disruption, open innovation encourages a more positive but at the same time challenging vision - learn how to deliver transformative products instead of constantly guessing if there is a life after disruption.

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