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Porous Innovation: Innovating within amorphous organization boundaries

In today’s changing business environment, innovation has emerged as the only route for gaining and sustaining competitive edge. Over the years, businesses have embraced innovation as the Holy Grail for future development. Today, businesses face the challenge of constant change with evolving customer needs. To address this challenge, continuous innovation emerges as the new strategy in the constantly evolving business landscape. In order to undertake innovation as a systematic approach, companies are today being forced to re-think /re-draw the boundaries through which they generate ideas and bring products to market.

The reality of reduced innovation productivity is forcing companies to move beyond a closed model of innovation, which lays emphasis on control and self-reliance in R&D. Today a firm’s innovation value chain is becoming more dispersed with the focus no more on having/building all innovative competencies in-house. Firms are looking beyond their boundaries for innovating faster and are embracing an open innovation approach. Thus the boundaries between an individual company and its surroundings are becoming porous.

What is Open Innovation?

Today, firms have fundamentally changed the way they innovate. These firms have transformed their innovation strategies from a Closed Innovation model to an Open Innovation model. Also known as external or networked innovation, open innovation is a more distributed, more participatory, more decentralized approach to innovation.
The approach towards open innovation is based on the fact that today knowledge is widely distributed, and no firm whether small or big, can innovate effectively on its own. The focus of open innovation is on discovering new ideas, reducing risk, increasing speed and leveraging scarce resources as firms today have realized that they lack the ability to employ all the highly skilled employees in the world. Alternatively, it is “innovating with partners by sharing risk and sharing reward.The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward.

A majority of companies including big technology giants such as Google are opting for open innovation route. Open innovation is not just limited to partnering with firms or startups, it also involves entering research collaboration with universities to develop new innovative products. Recently, P&G and the University of Leeds entered a strategic relationship to harness academic research for developing new high-tech products.

It’s the age of Distributed Innovation!

The distribution of competences and activities across organizations and geographies plays a key role in managing the innovation process. A firm’s ability to divide innovative labor beyond their boundaries has historically been limited by several factors, including the absence of open standards. However, the diffusion of information and communication technologies (ICTs) has even made openness a more viable alternative to sustain innovation. ICTs make it feasible to divide innovation-related activities among independent entities aligned by mutual self-interest. Thus, resulting in emergence of a new model of distributed innovation.

Distributed innovation is an innovation process comprising activities divided into small activities that can be addressed effectively by independent specialized actors that can either be individuals or organization as per the knowledge needs of the company.

Innovation Drivers

Open-source Driving Innovation: Over the years, collaborative efforts have resulted in some of the world’s most ground-breaking innovations. Traditionally all collaborative efforts have been restricted due to geographical constraints. However open source projects, and the ones particularly focused on software, are no more confined to geographical boundaries.

Today open source initiatives are seeking to answer various unique innovation challenges as they aim to forever change how businesses think about technology and collaboration. Open- source software development methods, whose success stories include Linux, Firefox, WordPress, Drupal and OpenOffice are based on the simple idea that source code should be available for anyone to freely use, redistribute and modify.

Using Crowd as an Innovation Partner: Today, companies are realizing the power of collaboration with innovative partners outside the firm’s boundaries. Apple has turned to a large numbers of users and developers across the world to propel its growth by creating apps and podcasts that enhance its products. Crowdsourcing has emerged as the corporate innovation tool kit for a majority of the businesses! Over the last decade, a majority of companies have leveraged crowds for innovation projects in areas as diverse as genomics, engineering, operations research, predictive analytics, enterprise software development, video games, mobile apps, and marketing.

To make world a better place to live, it is essential to innovate and collaboration is one of the key ingredients to accomplish this goal. It has become essential for businesses to look beyond their boundaries to collaborate for innovating faster.

The writer is Mr Pari Natarajan, CEO, Zinnov, Management Consulting Firm.


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