Open Innovation firms utilize VC internally to catalyze their own innovation process (E.g. Chp 7 – Lucent; invests corporate VC to create new technology companies out of its underutilized technology within Bell Labs, creation of spin-offs affect Lucent’s internal R&D: 1. Provides an outside path for buffer technologies – additional money, creates additional options for research staff and frees up resources to hire new researchers 2. Forces technology to move faster out of the lab 3. Provides an experimental setting for the observation of Bell Lab’s technologies in different uses in different market → acquire feedback Customer’s experiments yield new features or requirements for what was built. Open Innovation companies invite customer into the innovation process as a partner and co-producer.
Open Innovation and Managing Intellectual Property Open Innovation companies use licensing extensively to create and extend markets for their technology. Costs of delaying the use of new technology are much greater than that of premature cannibalization. Internal costs – delaying the use of technology would discourage researches for future projects Subjecting the internal path to market to some competition from other paths (licensing to another company or taking equity in a new start-up to pursue the technology) helps increase one’s metabolism of new knowledge . Setting and Advancing the Architecture with Internal R&D Mapping out interactions between the components in the system and then creating architectures to bind these interactions are best done through an internal R&D process. The use of architecture to reduce interdependencies and limit complexity by internal R&D prevents outside companies from holding up the development of the overall system to ensure control over a key part of the system. The architecture also creates opportunities for others to contribute their expertise to the system being built. The need for effective connections between technologies require firms to collaborate and compete with others in the ecosystem. As technology matures and interdependencies become clearer and more manageable, the vertical character of technological competition in the immature phase gives way to a more horizontal phase of technological competition, in which external technologies compete within the partitions of an established architecture. In a well-established architecture, thousands of firms can innovate better component technologies without worrying about the possible impact of their improvements on other parts of the system. Open Innovation firms must open themselves horizontally by participating in intermediate markets within the architecture. CHAPTER 4 The Business Model Value Proposition – E.g. Canon and Ricoh began making small, desktop-sized copiers in 1976, they offered a different value proposition from Xerox – making copies at your own convenience Market Segment – need to define a set of customers to decide the technological attributes to target in
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- Fall '15