Tuesday, 18 May 2010

Open Innovation. What is it?

Lots has been said about innovation here already. That it is about the effect, not the "thing", that it is a value-system game, not a sales game, etc.

In that light, actually nothing new can be said about Open Innovation. It is with us now for a couple of years and has quickly become the "A New Kid on The Block Tzunami". In the last 24 hours only, 9.840 new pages with the combi "open innovation" appeared in the GoogleDB. The top 2 are very instructive:
  1. The Apple exception: where open innovation theory breaks down
  2. Using open innovation to meet ambitious carbon emission targets

The 1st is about the closedness of Apple that seems to rebunk succesfully what the Open Innovation Mantra demands companies to do. The 2nd is about "Green ICT" and tells us that without opening up and collaboration it can't be done.

These two examples IMHO illustrate how broad interpretation of terms leads to confusion between "imparative" and "use wisely".

Last weekend I came accross Hermann Simons' book Hidden Champions again and realized that whereas Apple itself is surely not hidden anymore (it never has BTW), it is still a Champion in Hiding. But what does it hide? The products itself, not the underlying technologies. Lots of small bits and pieces leak (are leaked?) in the months before every product introduction. Quite often these are about cooperations, designs, technology-sourced, etc. In fact Apple buys most of its components on the open market and only keeps private what they consider core. That seems to be very much in line with what the Hidden Champions do. Herman notes that the attitude to outsourcing R&D is (quote p 181, table 8.1)

Negative, with in-house R&D seen as critical for protection of core competencies

And for outsourcing noncore activities

Positive, owing to variability of cost and quality, continuing relationships with supplies

That is exactly what Apple does. Their core is product development & marketing. That is why they source their hardware components and develop their own architectures and sofware frameworks.

Looking at the Open Innovation phenomenon in this way explains most of its popularity. Every organisation can be good (read: can declare something to be core) at a few things only. All the rest must be sourced otherwise.

IMHO opinion that large volume of sourcing of hardware and sharing of ideas - which is today too easily called cooperation - is what comprises the bulk of the Open Innovation Tzunami. It also explains most of the activities described in the 2nd story on meeting Carbon emissions.

One thing however keeps on nagging me: how many product-based companies are making some of the lethal errors, f.e. by confusing technology leadership and product leadership. Or by confusing collaboration with total openess. How many hidden or public Champions will become extinct as a result of the IO Tzunami?