OPEN INNOVATION

Takeaway; Module 1

Module 1 Graphics
The graphics from this module are provided below for your reference.

CLOSED VS. OPEN INNOVATION FUNNELS

The first funnel represents the closed innovation process.

The second funnel represents the open innovation process.

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THE VALUE OF OPEN INNOVATION

This graph plots the value of an idea against the probability of a participant
having that idea. The curves represent the difference between traditional
experts versus nontraditional participants.

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THE INNOVATION PROCESS

Idealized Process

The idealized process has ideas coming from a single source and traveling
through selection gates until a final idea is chosen for implementation.

Actual Process

In reality, ideas come from many sources and go through a series of iterations
before a final idea is chosen.

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INNOVATION METHODS

This 2x2 shows generation versus selection of ideas for different methods of
innovation. The method depends on the number of ideas generated and the
number of people selecting from those ideas.

Graphics by Rachel D'Erminio

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INNOVATION METHODS COMPARISON

Traditional R&D Contests Communities Labor Markets

Purpose ● Solve problems ● Generate high value ● Aggregate a large ● Efficiently and
known to your solutions to number of diverse flexibly match
organization using complex or novel contributions into a talent to discrete
internal capabilities problems through value-creating tasks
large-scale and whole
diverse
independent
experimentation

Challenges ● Limited resources ● Problem must be ● Crowd lacks the ● May be difficult to
● Narrower scope generalized and shared culture and identify which
● High cost stripped of cohesiveness of a problems to farm
● Narrow set of company specific company, making it out and who in the
solutions details harder to control firm will manage
● IP protection the labor pool

Why Use ● Have ● Diversity of ● Cumulative ● Contingent access

resources/expertise solutions knowledge to specialists
in house ● Faster and cheaper production ● Access to global
● Don’t need a than internal ● Leverage other labor/open up labor
variety of solutions approaches people’s particular market

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knowledge ● Cost

Best Use ● For highly ● Highly challenging ● Customer support ● Well-established

proprietary, defined technical, analytical communities categories of work
narrow problems and scientific ● Wikis, open- that can be clearly
problems collaboration described and
● Design, creative or projects for evaluated
aesthetic problems information and ● Human
software products computation
with ● Repeated tasks
complementary
assets inside the
firm

Examples ● Pharmaceutical ● Netflix algorithm ● Linux ● Freelancer

development development ● Mozilla ● Upwork
● Logo design ● Wikipedia ● Uber
● Github ● Doordash

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