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Open Innovation and Strategy <br />Group 2b<br />
Open innovation<br />open innovation is creating new empirical phenomena that exist uneasily with well-established theories of business strategy.<br />Forcing firms to reassess their leadership positions which reflect the performance outcomes of their business strategies.<br />To take benefit from collective intelligence and consumer participation.<br />
Open strategy<br />Balances the tenets of traditional business strategy. <br />Embraces the benefits of openness as a means of expanding value creation for organizations.<br />Places certain limits on traditional business models when those limits are necessary to foster greater adoption of an innovation approach.<br />Introduces new business models based on invention and coordination undertaken within a community of innovators.<br />Effective open strategy will balance value capture and value creation. <br />Open strategy is an important approach for those who wish to lead through innovation.<br />
Different kinds of open business<br />The article indentifies four different kinds of open business models: <br />Deployment - users are willing to pay for it, due to high user experience, even if the initial technology is free. <br />Hybridization - multiple versions offered, for example both public free and private commercial ones. <br />Complements - free software, but device that costs. <br />Self-service - users create software for its own needs.<br />Indeed, these models can occur simulaneosly within a company.<br />
Business areas<br />Most common within information technology, but does occure within other areas as well, for example:<br /> <br /><ul><li>life sciences: Public Library of Science, development ofdrugs without commercial interest.</li></ul> <br /><ul><li>snowboarding, windsurfing and skateboardning industries.</li></ul>There is a belief that open initiatives will expand in to more industries around the world. <br />
Challenges with open initiatives <br />Most challenges within open initiatives concern how to sustain participation over time. <br />Participation and contribution might decrease if<br />- Agendas are hijacked. <br /> <br />or <br />- A community becomes dominated by users working for corporations.<br />It is also suggested that it is important to profit from at least one of the four business models.<br />
Traditional Strategy and Open Initiatives<br />Ironically, we believe that the best chance for open initiatives to sustain themselves will come from returning to the perspectives of traditional business strategy. (Chesbrough et al)<br />For starters, traditional business strategy has spotlighted settings in which cooperation would likely break down.<br /> <br />Traditional strategy also provides two guideposts for value capture. The first points to IP ownership and the second points to creative management of the value chain.<br />Finally, open initiatives may allow for the creation of whole new complementary links in a value chain.<br />(Chesbrough et al)<br />
Real world example: Apps for California<br />Web application development contest, use Open innovation and crowdsourcingtechniques, sought the best ideas to improve government transparency and services.<br /> Strategy: <br />Bring brain storm. lead to increased productivity, improved efficiency and accuracy and better decision making.<br />Allows employees to decide what information and functionality they need (on a web page for example) so they can complete their tasks efficiently and effectively.<br />Cost effective and do not require a great deal of investment.<br />Can be used to explore new opportunities and solve problems in new ways.<br />Use a shorter research & development cycle.<br />Existing data sets can be used to create new applications and therefore new income streams. As the data already exists there is faster time to marker at lower cost.<br />