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Is open innovation a prerogative of the high tech industry? Chesbrough replies

A global, interconnected, evolving market that changes faster more than we have ever can imagine, has completely shaken companies’ innovation function traditional approach. The foundational book “Open Innovation” by Chesbrough marks the starting point of a new dialogue on the new and sustainable ways to drive companies' innovation.

At the heart of this model is the awareness that today, competitive advantage comes both from inbound and outbound open innovation activities. That is, is not needed anymore to rely only on the company R&D function. Companies can observe and integrate discoveries from others, look out of the window to partner with other organizations with a business model better suited to commercialize a given technology.

A practice is defined inbound when it tends to incorporate external stimuli into business processes; the outbound practices, on the other hand, lead companies to a greater "exposure", through the outsourcing of internal ideas that can be used in initiatives implemented outside the company boundaries.

Initially, this radical change interested some sectors more than others. And this for a specific reason. The high tech industry is becoming more and more integrated, both in the production and the consumption side. So, differently, from traditional sectors, the more flexibility of the technologies, the growing need to have systems more and more integrated, able to dialogue among themselves, is the reason why open innovation seems to be a prerogative of the high tech industries.

As a matter of fact, is really in this way? Only in the industries devoted to the high tech is possible to speak about open innovation? We agree with Chesbrough, absolutely not.   

 

As demonstrated by Chesbrough in a recent interview-based research, many companies even if operating in sectors considered traditional, have begun effectively to experiment different new approaches inscribable to the open innovation paradigma.

Evidence shows that also in sectors more mature open innovation is not understood as a mere strategy for the cost reduction or to outsourcing the R&D function. Using more technology from outside is seen by companies as a way to increase products margins, their impact on the market, or to monitor “disruptive technologies” coming also from not complementary businesses, that may threaten existing business.

The difference between in the use of a different innovating approach between high tech and more tradition sectors could be found looking at the practices. On the contrary of the high tech industry, inbound open innovation is more recurring in traditional sectors. Companies try to extend or defend the core business scanning the external scenario, in order to understand which is the best way to capture commercial value of innovation opportunities already went under the development. Is the physiological path toward a new business model, considering that outbound flows are more relevant when compared to the overall business. In a certain way, the first steps in the open innovation are made by inbound activities, that are felt substitutive to internal R&D activities. The further step is the complementarity, achieved incrementing the outbound practices.

 

Like other companies in the other sectors, also in the case of these company the challenges to face and overcome regard the alignment of these new practices with the overall business objectives. Companies have started to explain themselves how internal efforts seems to be insufficient. The further step is to build cultural and behavioral approach to the overall organizational levels to an open innovation approach. This profound change in the business attitude requires time to change how success could be achieved and considered when is not “produced” inside, but in some ways is related to the external network. Innovation champions and cultural adaptation seems to be, one more time, the best arms to follow the innovation flows.

 

This article is based on “Beyond high tech: early adopters of open innovation in other industries” by Henry Chesbrough and Adrienne Kardon Crowther.