Open Versus Closed Innovation Essay Example for Free

Open Versus Closed Innovation Essay Open Versus Closed Innovation BY celestel 979 A Critical Look at the Effects of In the Innovative Firms of the Twenty-first Century June 17, 2010 Abstract In todays fast paced business world, which innovation method should companies adopt, open or closed innovation? In this paper we will explore the methods of closed and open innovation. Then we will explore the pros and cons of both innovation methods and discuss which method works better in the business world of the twenty-first century. After reviewing the results this paper explores the particle implications that innovative firms should be aware of regarding Open and Closed nnovation and recommendations will be made for future research in this area. Introduction Background Looking back even a few decades companies viewed innovation strategies very differently then they do today. It was believed that successful innovation needed internal control and secrecy from others in the market. Large corporations used to dominate the field of innovation because they were the only ones who could afford to invest it large scale RD. Any company that tried to enter the market would have to find large amounts of resources to be able to even attempt to compete with the RD f the large corporations (Chesbrough, 2003; Herzog , 2008; Aylen, 2010; Kodama, 2005; Trott Hartmann, 2009). In the current economy start-up companies have found ways to bypass the large RD investments of the past. Instead of doing their own research these new entrance are getting their knowledge and technology from outside their company by either investing in relevant startup companies, or partnering with other companies up, down or horizontally on the value chain (Chesbrough, 2003). With the expanding options on how to obtain innovative ideas, processes, and products the big question remains should companies used a closed or open pproach to innovation? And does the open and closed methods work for all companies? (Almirall Casadesus-Masanell, 2010) In this paper we take a critical look at what closed and open innovation is, what the pros and cons are to both options, and try to determine if one method is better then Closed Innovation The main theory behind Closed Innovation is the belief that successful innovation requires control (Chesbrough, 2003). Companies that follow the Closed Innovation (C) model (see Figure 1) believe in self-reliance and that they should follow these rules to succeed: A firm should hire the best and smartest people ? Profiting from innovative efforts requires a firm to discover, develop, and market everything itself Being first to market requires that research discoveries originate within the firm Being first to market also ensures that the firm will win the Leading the industry in RD investments results in coming up with competition the best and most ideas and eventually in winning the competition Restrictive IP management must prevent other firms from profiting from the firms ideas and technologies (Herzog, 2008) Cl companies attempt to do everything on their own from innovative ideas, evelopment, manufacturing, advertising, promotion, distribution, service and even financing. If the innovative ideas or projects are not pursued or are discarded part way they are stored internally and will not be profit able to the company or useful to the rest of the world unless they are used internally at a later date. This creates a great loss of many potentially great innovative ideas, products, services, and processes. If a company chooses Cl it can be expect that many innovations will be lost as companies do not have the ability or resources to turn every idea or technology nto a successful innovation the market can use. The main reason a company would choose Cl would be because they are scared of having their intellectual investments stolen by their competitors (Herzog , 2008; Chesbrough, 2003). [pic] Open Innovation Companies have reached the understanding that not all innovations have to originate internally and that if they do have an internal innovation and do not have the ability to act upon it they can still profit from it by partnering, Joint ventures, licensing or selling the innovation to another company. In Open Innovation (01) companies must ind a balance between keeping important internal secrets and still working with other companies to gain and produce valuable ideas, processes, resources, finances and support (Herzog , 2008). Companies that follow the 01 model (see Figure 2) believe in the following principals: Not all of the smart people work for us, so we must find and tap into the knowledge and expertise of bright individuals outside our company External RD value We dont have to originate the research in order to profit from it Building a better business model is better than getting to market first If we make he best use of internal and external ideas, we will win We should profit from others use of our intellectual property, and we should buy others intellectual property whenever it advances our own business model (Chesbrough, 2003) 01 encourages the Joining of resources from firms across all aspects of the value chain. Companies now realize that innovations they cant use or can be used further by other companies can lead to additional profits that they could have never obtained on their own (Almirall, Casadesus-Masanell, 2010). Kodama, (2005) expands 01 even further to talk about creating strategic communities See Appendix 1), a convenient process of speeding up a firms innovation. To be able to quickly acquire a variety of knowledge of great use, managers from different areas, from inside and outside the firm, can make a strategic community with internal and external members, which could involve customers. A huge benefit is that strategic communities are not bound by the same limitations as the official organization. Now that we have explored what Cl and 01 is we will now go on to look at why one of the methods might be better then the other for companies competing in the twenty- irst century and why companies decide to choose one either Cl or 01. Open versus Closed Innovation 01 involves risk such as knowledge and sensitive information leakage and the risks must be weighed against the benefits that would be gained from participating in 01. One more trouble with 01 is that well some areas open up to help the flow of knowledge it has been found that to keep sensitive information secure there has actually been a reduction in the amount of information being share between internal departments which could effect the companies internal innovation (Trott Hartmann, 2009). It has been found that 01 is especially needed in fields such as knowledge-intensive industries where competition is strong and companies need to work together to be able to gain a competitive advantage in the field (Trott Hartmann, 2009). Almirall Casadesus-Masanell, (2010) study showed that 01 works better then Cl for partnerships that are fixed and have low to medium complexity levels but they also found that when there is high complexity involved that Cl is the best method to follow. Another discovery was that the benefits can be greater in flexible partnerships over fixed partnerships. The model of flexible partnerships effectively says, If you cant fgure out how to put the pieces together internally (confgure two subsystems optimally), it is critical to have lots of different pieces (complementary subsystems) to choose from and know how to put them together externally. (Almirall Casadesus- Masanell, 2010) Chesbrough and Crowther (2006; as sited in Aylen, 2010) said that 01 traditional and mature industries. A big contrast between 01 and Cl is how they go through their idea lists. Cl managers go through and proceed with the ideas they see as beneficial to their company and iscard what they see as bad ideas or ideas they know their firm does not have the resources to accomplish. Whereas a 01 manager would go through their idea list and sort them into three categories, innovations their company can pursue internally, ideas they can approach other companies about, and ideas that will not work at all. Therefore the 01 model gets to profit from the ideas that the Cl model would have otherwise discarded or stored for a later date (Chesbrough, 2003). Even though 01 has been adapted by many organizations as the best way to be successfully innovative the theory is not perfect. Trott ; Hartmann, (2009) point out that 01 is very linear and does not suggest any feedback or feed-forward mechanisms unlike the newer innovation models such as the Cyclic Innovation Model (Berkhout, A], Patrick van der Duin, Dap Hartmann ; Roland Ortt,(2007), cited in Trott ; Hartmann, 2009). This newer model suggest feedback and feed-forward techniques and also that the innovation process is cyclic, meaning new innovations grow from older innovations. Cl has been very successful for some companies such as Apple they swept the market with the iPod and this strategy and product put them back into the playing ield after have been struggling for years to catch up with the innovations of other major players. Another example of Cl is the Wii by Nintendo which was extremely innovative with their new product features (Almirall ; Casadesus-Masanell, 2010). Some very large companies have tried Cl techniques and had some devastating effects as a result, such as IBM and Xerox but both these examples were able to overcome these problems with the help of 01 techniques. Procter and Gamble and Philips have successfully adapted 01 and have gone so far as to hold conferences on he topic and even published their own reports on the subject. Trott ; Hartmann, (2009) provide a list of companies and the reasons they choose to become part of a strategic alliance (See Appendix 2). It has been noted by Chesbrough, (2003) that near the end of the 20th century a number of things happened that caused Cl to be taken into question by many firms.

Rockets and Space Travel Essay -- Space Exploration Essays

Flying into orbit, at times, seems just an ordinary event. We have been launching objects into orbit for several decades now. Over time, it seems that the knowledge of the first attempt to send an object into the atmosphere was lost. One lone American was very absorbed into the science of this very thing. He had an obsession about him. John Goddard spent endless hours trying to perfect a small rocket launch. Though it sounds simple, lighting a fire underneath a small projectile, and make go in a straight line toward the heavens, is very detailed orientated. In a book written by Arthur C. Clark, he talks about early work that was done in the world of rocketry, but at the time it was only for entertainment. It happened hundreds of years ago. One of the first experiences with rockets came from â€Å"thirteenth century Chinese† (Clarke 71). Today, the technology is so advanced; flights of hundreds of miles are not uncommon. In the beginning of rocket experimentation, there were many trial and errors. They would fire up the engine of a projectile in hopes of a spectacular launch into the atmosphere. Many times it would only result in some kind of explosion. Catastrophe, if anything, is the nature of launching any projectile. Mans attempt to send objects toward the clouds has sparked interests in going further than ever before. The moon and the outer planets of our solar system have now become an obsession with not only the science community, but with a lot of ordinary folks as well. In order to satisfy this obsession, ways had to be found in order to get to these distant objects. The world we live on is small compared to the surrounding planets and universe but it is large compared to the complexities of ways to leave its ... ..., the commander will create a steeper angle of descent to minus 20 degrees (almost seven times steeper than the descent of a commercial airliner) (http://science.howstuffworks.com)†. This is only a small glimpse of what goes on before and after the lift off of the space shuttle. Details of micro gravity during the orbital maneuver and the interaction of the crew during its mission can add volumes to this report alone. In the end, the space shuttle is a very versatile instrument. From experiments in human research to inserting the Hubble space telescope into orbit. What would it be like in another 200 years when man has established colonies on mars or the moon? What an interesting life our future children will have. Works Cited: Arthur C. Clark http://science.howstuffworks.com http://science.howstuffworks.com Physics, a worldview, Kirkpatrick and Wheeler,

Cliptomania Web Store Essay

It is the American Dream: own your own business, and make loads of money. Well, that’s the dream part, then reality sets in: business licenses, put-up money, taxes, etc. In the case study of the Cliptomania Web Store, in 1999, John and Candy Santo discovered a marketing niche that they could tap into; selling clip-on earrings, over the internet, throughout the United States, Canada, Ireland, Australia, and New Zealand (Brown, DeHayes, Hoffer, Martin, & Perkins, 2012). This type of marketing is called Business to Commerce or (B2C) e-commerce, which is way of purchasing, or selling goods and services over the internet. As with any new business venture, it started out of the home with a low-level of overhead. In 1999, John and Christy Santo started an online web store, Cliptomania.com, out of their home, using $10,000 of their savings as start-up capital. At the time, selling only clip-on earrings was a market that not many had tapped into, since most people who wear earrings have pierced ears. Cliptomania.com sells nothing but clip-on earrings, and offered its customers hundreds of different styles. With research done by John Santo, he decided to contract with the vendor Yahoo! Store in 1999. The Yahoo! Store uses a ratings system for customers to rate their service, and by 2003, due to their rating by customers, they became one of the top 5 selling jewelry stores on Yahoo!, in gross sales because of having a quality product and excellent customer service. One of the challenges the Santo’s faced was the technology aspect of the business, or the how to start up the web store. No one in the family was familiar with web design and they did not have the money to pay a service provider for the site design. By doing their own research They found that by hiring a vendor to host their website, the computer resources, as well as the software and templates, for a price, would allow a company to tailor the web pages to suit their needs. The second challenge was management of their web store. In 2006, for whatever reason, customers started having problems with the Yahoo! Store website. Customers were having trouble placing orders, and the Santo’s were being charged for some transactions that weren’t valid. So, when they tried  to fix the issue, and could not, they decided to change web servers, and went from a .com to a .net website. They ran both sites, but it confused the search engines. The reason for the confusion, could have been due to the issue of the difference between domain names extensions. The difference of the domain name extensions could be defined as: â€Å".COM is for commercial websites, and .NET was hosting networks. (Gil, n.d.) The Santo’s tried to work out the bugs, but eventually had to move back to a .com domain address. The third strategic challenge was marketing on the web. Marketing on the web is primarily getting customers to visit your web store. The best way to be found was by being picked up by one of the major search engines, Yahoo! Search, Google, or Microsoft’s Bing. At the time Cliptomaniaâ„ ¢ was using the search engines on the internet were still listing sites by significance or how close the words being used matched in the search box. If you are not listed on the first page of the search results, than you probably would not be found by customers. So, it was important for them to learn about how search engines determine their rankings, so a company can be found the first time around. (Martin, 2010) Using the SWOT Analysis to analyze the future of John and Candy Santo’s web store, a strength is their offering of a quality product and excellent customer service. They will have a loyalty base of customers who appreciate dealing with a company that treats them well, and can obtain new business from word-of-mouth recommendations. A weakness is the ever-changing technology and the economy. As long as the Santo’s stay current with new developments in web retailing, and adjust to a downturn in the economy, they will stay afloat. An opportunity for the web store is to ever improve on the relevance rankings on the web search engines. Trying techniques, such as having other companies advertise on their site, and maybe advertise on social media blogs and sites, can help boost exposure of the web store. A threat can be competition from others selling on other sites such as EBay, that sell their personal items or store items, and Etsy which sells homemade items; keeping an eye on the competition and looking at the trends of how customers are purchasing can help them stay in business for the long-haul. The Cliptomania web store, all in all, is in good shape to stay successful. When John and Candy Santo began their business, it was out of their home, with a low startup cost, and hardly any competition in the clip-on earring market. They have had their trials and tribulations with the boom and bust of the dot-com industry, how to learn about their market, and their competitors, and how retailing on the internet is done. Although nothing is certain in today’s economy, the Santo’s will be able to weather the storm by still offering top-notch products, and one of a kind customer service. After all, customers keep going back to whom they receive a good deal and good service.

Sports Illustrated Or Tobacco Campaign - 1189 Words

Sports Illustrated or Tobacco Campaign? Businesses today rely on advertisements to help get the product they are selling more known, convince consumers to purchase the product, and to gain money. Whether you are watching T.V., listening to the radio, scrolling through on the internet, or reading a magazine, there will be advertisements. Businesses have started using ads in different ways, to add certain appeals and ideas. Most enterprises will add an emotional, logical, and ethical appeal to their ads to lure people in. A 2016 Sport Illustrated magazine, had included several different types of advertisements, tobacco being one. Tobacco Unfiltered, a campaign for tobacco free kids, uploaded the pictures and story. Why would Sports†¦show more content†¦By making smoking and chewing tobacco fun in their ads, teens and young adults may be more persuaded to try tobacco. Although, the advertisements do not use any well-known or famous people, the creators know the advertisements will get seen. Sports Illustrated does, however, feature famous athletes, which people are fans of. People will buy the magazine to view the pictures or read about their favorite sports team. The advertisements in this magazine, were in the swimsuit edition. People all over read this magazine. It was known that these advertisements were going to be seen by millions of people. The advertisements are not reaching to anyone of a specific status. All the ads reach out to people of all groups. The ads do however target men more than women. Teenagers and young adults are being targeted more than men over the age of 35. The creators of the advertisements are trying to reach out to young people by using teenagers and young adults in the ads, making the people in the advertisements look like they are having fun, playing at the beach, and sitting around a bon fire with friends. 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