More time has elapsed since I first blogged on the subject of Open Innovation and how Co-Innovation fits within its context then I wanted before taking the discussion further, but as I dug into things more deeply, it became apparent that it would take time to develop useful content worth sharing with others. It didn’t help having my thesis research on co-innovation enablement consume most of the time I could apply to researching this topic without too much distraction. For those who prefer to dive right into the details you can stop reading here and go right to the article.
To summarize, the article begins with a brief, targeted examination of the extant literature on the subject; specifically from the various books and articles penned by Dr. Henry Chesbrough. Where I chose to focus the article was to emphasize the importance of business model and IP strategy is to Open Innovation and then how a Introducing the Global SAP Co-Innovation Lab Network and its underlying processes can aid a firm to ensure that the right business model is selected and applied to the background and foreground IP representing a co-innovation project between alliance partners. The SAP Co-Innovation Lab and its CEP is designed to facilitate collaboration with partners and customers and to make outside-in innovation possible. The use of external innovations then augments a firm’s existing knowledge and core competencies becomes successful when correctly applied to the right business model. The CEP governance processes are designed to support the mapping and alignment of known business models to the IP applied to or derived from the co-innovation project; particularly in instances in which the IP represents existing technologies that are being cross licensed beween the firms.
Where the CEP processes add value is when the project outcome offers new results and it is not readily understood which business models existing between the partnering firms, is best suited to drive commerical success of the innovation bringing optimal economic benefit to each firm participating in the project. There is no question that the firm hosting a CEP can and will leverage such capability and resources to pursue projects designed to augment existing alliance business strategy to sell or cross-sell application licenses. Extending beyond such traditional alliance practices, ecosystem partners can explore opportunities to place IP a firm has developed but has yet to identify an internal business model for, with one (or more) partners in possesion of a business model ideally suited to productize and monetize IP that might otherwise persist as under-utilized shelfware. Equally, the CEP can be leveraged to explore the use of ideas generated outside of the firm can be applied to a firm’s known business model(s) and augment existing technologies supported by this business model.
There are certainly challenges to successful implementation of an Open Innovation strategy and from some of the research I did, it is clear that some firms apply Open Innovation more tactically in response to some immediate reaction or business need versus any attempt to weave it into a longer term business strategy. It has for instance become commonplace for firms to prioritize alliance relationships to drive existing technologies and solutions to obtain a broader reach and to penetrate more industries where the emphasis becomes how to drive revenue growth quarter by quarter from existing innovation or customized configurations that can produce sufficient interoperability for a given landscape. While such exploitation is funadamental, it becomes more ideal for a firm and its ecosystem when exploration and exploitation can be organized and managed to drive more innovation. This in fact becomes a much coveted dynamic capability useful to drive greater levels of business performance and growth. I view a well-implemented CEP as supplying such dynamic capability.
Enjoy the article and I am most interested in the reactions and thoughts of the community and will look forward to all comments and participating in any subsequent follow on discussions.