Business: Open Innovation Essay

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Open innovation (OI) is a newly emerging paradigm, where a company is no longer relies on a solo approach, which is based on the secrecy of research and development. In other words, the valuable information is not contained within the isolated environment generated by a company, but rather the cumulative efforts of the external R&D are utilized. Therefore, one should be aware that managers cannot merely rely on their managerial or technical competencies only, which means that they need to have hybrid ones. To navigate the OI landscape to maximize value capture, managers should avoid the major pitfalls of such an approach.

Although OI assumes that the key information is shared, there are some elements, which still require a certain level of secrecy. These are the ones, which provide a competitive advantage to a company, and thus, a manager with no technical expertise might not be able to sort the specified elements. In addition, they need to possess hybrid competencies because it is critical to identify the value-generating pieces of information. The main reason is that OI generates more data than a closed version, and therefore, managers should be efficient by being able to quickly adopt the most plausible results. Managers can achieve it by consulting technical experts on the target information, which they should look out for during the collective efforts. They can constantly monitor the arena for breakthroughs or improvements and be willing to integrate them as soon as possible.

Service-dominant innovation is a central aspect of modern economics, where frameworks such as service-dominant logic lead to the generation of more value. The given concept essentially argues that services lie at the core of all exchanges, where all businesses and other entities are service providers. In other words, the main goal is to understand that all interactions are manifested in the idea of service-for-service exchange, where reciprocal interdependence or value co-creation takes place. Such dynamics provide an invaluable approach within the marketing process, where innovation is enhanced and made more viable. Therefore, goods and money should be viewed as distribution channels and mediums of exchange, respectively. Although a manufacturer of a certain product might not consider itself a service provider, it needs to understand that its product is a mere element of the service. Thus, goods should also be regarded as services, which means service improvement notions should be applied alongside the traditional innovative processes.

Business models provide a vital insight into the intended approaches of companies, which want to generate value and gain profitability. Although a business model prototyping process involves a wide range of complex procedural steps and extensive assessment of various key components of a business, it is critical to combine the innovation process and core functions. It can be achieved by designing a business model around the innovative function, which are derived from the product or services provided by a company. An organization needs to fully understand its core value provision process and set the improvement channels, which will stimulate and aid the enhancement of a product or service. Innovative practices should not be considered as an add-on to the business model but rather a central component of a business’s success and profitability. In other words, the given approach should be prioritized similarly to business operations, without which a company is not capable of surviving and thriving.

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IvyPanda. (2022, May 24). Business: Open Innovation. https://ivypanda.com/essays/business-open-innovation/

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IvyPanda. 2022. "Business: Open Innovation." May 24, 2022. https://ivypanda.com/essays/business-open-innovation/.

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