Closed Versus Open Innovation
The paradigm of closed innovation says that successful innovation requires control. A company should control (the generating of) their own ideas, as well as production, marketing, distribution, servicing, financing, and supporting. The main cause behind this idea is that, in the beginning of the twentieth century, universities and government were not involved in the commercial application of science. Some companies therefore decided to do it all on their own. They created their own research and development departments to be able to control the whole new product development (NPD) cycle inside the company. There just was not the time to wait for the scientific community to become more involved in the practical application of science. There also was not enough time to wait for other companies to start producing some of the components that were required in their final product. These companies became relatively self-sufficient ‘castles’, with little communication directed outwards to other companies or universities.
Throughout the years several factors emerged that paved the way for open innovation paradigms:
- The increasing availability and mobility of skilled workers
- The growth of the venture capital market
- External options for ideas sitting on the shelf
- The increasing capability of external suppliers
These four factors have resulted in a new market of knowledge. Knowledge is not anymore proprietary to the company. It resides in employees, suppliers, customers, competitors and universities. If companies do not use the knowledge they have inside, someone else will. Innovation can be generated either by means of closed innovation or by open innovation paradigms. There is an ongoing debate on which paradigm will dominate in the future.
Read more about this topic: Open Innovation
Famous quotes containing the words closed, open and/or innovation:
“Don: Why are they closed? They’re all closed, every one of them.
Pawnbroker: Sure they are. It’s Yom Kippur.
Don: It’s what?
Pawnbroker: It’s Yom Kippur, a Jewish holiday.
Don: It is? So what about Kelly’s and Gallagher’s?
Pawnbroker: They’re closed, too. We’ve got an agreement. They keep closed on Yom Kippur and we don’t open on St. Patrick’s.”
—Billy Wilder (b. 1906)
“To have some account of my thoughts, manners, acquaintance and actions, when the hour arrives in which time is more nimble than memory, is the reason which induces me to keep a journal: a journal in which I must confess my every thought, must open my whole heart!”
—Frances Burney (1752–1840)
“Both cultures encourage innovation and experimentation, but are likely to reject the innovator if his innovation is not accepted by audiences. High culture experiments that are rejected by audiences in the creator’s lifetime may, however, become classics in another era, whereas popular culture experiments are forgotten if not immediately successful. Even so, in both cultures innovation is rare, although in high culture it is celebrated and in popular culture it is taken for granted.”
—Herbert J. Gans (b. 1927)