In the 20th century, the company gained a competitive advantage by funding their own research laboratories. Many carried out fundamental research (often undirected), to develop new technologies that spun out new products – even new industries. This proprietary, even monopolistic, products generate large profit margins to fund more research.
This is known as “closed” model of innovation. Research and development were vertically integrated in this model of innovation, and access to the market was huge. In the early development of this model, market played a small part.
The concept of closed innovation
only partially completed research resulted in patents, and only a fraction of these patents were taken in the development stage – no marketable products were identified or funding was lacking. There were no experts whose job it was to look at technology and fancy goods. IBM famously carved their initials on the slice of silicon on the atomic level, but at the time few, if any, realized where it would lead.
In many cases, companies have developed ground-breaking technology, but have failed to take advantage of them. How about Xerox – they do photocopiers, do not they? Yes, but they did more – “GUI” user interface concept was first developed in Palo Alto Labs of Xerox. It was Apple that made it marketable concept of ‘Lisa’ computer. Then Microsoft ‘Windows’ followed on the heels of Apple and the rest is history -. including lawsuits
Although Apple was Steve Jobs, who was a true product visionary, the company can not count on having one. Keep technology within the boundaries of a firm limits the opportunities to harness external knowledge, generated visions utilizing cross chance industry sector.
Other companies that could have taken advantage of technology by leasing it would have created a win-win situation for both. Similarly, the company itself could be licensed technology created by other companies.
As the 20th Century opened many mistakes means to exploit technology opportunities were raising questions about the closed innovation model, the business landscape was changing, with:
- Increased options for unused technology.
- Increased availability of risk capital.
- Increased mobility of skilled and knowledge workers.
- Increased availability of outsourcing partners who are very capable.
- Enhanced strategic market research in the social, technological and lifestyle trends.
- This led to the concept of open innovation.
In this concept, the company’s goals are porous. Un-used technology in the enterprise are now licensed to other companies, saving time and income. It is important for companies (technology owner) is able to take advantage of market opportunities. Internal focus is on the technology that used its core business – the effort and resources is not diluted
The Innovation Business Model
In business, technology is only useful if it is commercialized .. Ways to Make this is:
- Use technology in the current operation.
- license the technology to other companies.
- Launch a new project using the technology.
This innovation business options close pair entrepreneurial input and economic output.
rather than seeing entrepreneurs and venture capitalists threats, technology owners can use them to test-market new products. Optionally, they can then bring the goods back in private business
Many large companies take the Open innovative way by acquiring start-ups or form alliances. others have set up their own internal groups project their own power innovation process of
Features an open model are .:
- monetization of non-core technology.
- shorter time-to-market for promising technologies.
- Multi-market potential is explored and utilized.
- Testing alternative business model for new ideas, products / services.
Clearly flexibility Open innovation model that makes it so powerful, and it works well in negating cons closed model.