Open Innovation VS Closed Innovation

Welcome to my blog, in this blog i discuss about innovation, management and business strategy.

Today topic is a discussion between a concept in innovation that is defined as type of innovation strategy.

Nowadays, innovation discussion is clearly a critical dimension in any dynamic approach to business, as it allows businesses to achieve and defend competitive advantage.

Closed innovation, is the more classical approach to innovation, and in such, it develop patents, (intellectual property, licenses and grants) through formal means, and closed corporations.

Open Innovations is more related to the development of technology through adiacent and common techniques, such as outsourcing, competition establishing, and game theory.

Open Innovation, as defined by Dr. Henry Chesbrough in his book, is: “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas ideas, and internal and external paths to market, as they look to advance their technology. (Chesbrough, Open Innovation, p.2).”

Here is a graph of the two distinct type of innovations as explained in his book.

Graph explaining the different type of innovation strategy.

In the past i had the privilege of working for a short time period in both type of organisations, closed ones and open ones. I wont say which organisation for reason of privacy. But they were large organisations.

In both organisations the important aspect was the development of work in which was happening. I noticed immediately that in the open innovative business communication was more open and the setting of collaboration was more direct, whereas, the type of collaboration in closed innovation was more secretive, as patents and new research and development techniques were happening.

Personally i preferred the open innovative business, which allowed to learn new skills such as Wiki development and learning Marketing first hand and people skills. Working in open innovative companies is like working for a new startup, in which capital is limited, but passion is everywhere, and there is will to improve even when there are limited resources, whereas working in closed innovative companies is challenging as resources are present, but competition drives the work.

Today topic is more of a self reflection and less of a guide, compared to previous topics.

However, I will post a second article about Edge Strategy soon, as I am reading a book about it, and will be related to Corporate Strategy.

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