From Closed to Open Innovation: The Evolving Nature of Teams and the Use of Information Technology - Information Technology and Product Development - page 132

When firms embrace shared goals and a shared world outlook regarding prac-
tices and procedures, information is more easily transformed into knowledge that
can now be processed and integrated into an innovation. Without engagement in
the co-development of knowledge creation, firms may miss important customer
needs. In more closed models of innovation, lack of technological, market, and/or
customer knowledge may inhibit an individual firm from obtaining sufficient knowl-
edge to develop a more customer-centered innovation. Furthermore, a firm may
be trapped by its own way of doing things. Previous success may have engrained
firm-specific processes and procedures in its organizational memory and may now
limit an expanded interpretation and application of knowledge to current business
projects.
An architecture of participation overrides previously held firms-specific views
and assumptions by detailing avenues for communication and coordination of
project roles, responsibilities, and tasks. More importantly, co-developers synchro-
nize key resources, determine the extent of open innovation participation, and define
how members will be rewarded. Thus, the guiding principles of shared goals, shared
world views, knowledge creation, and architecture of participation work in tandem
for successful open innovation.
Dell Computers represent a case in point. Although the firm has begun to exper-
iment with more new products, Dell's failure to incorporate new business models
early on may have contributed to its lack of success. It seems the firm relied on cur-
rent business models to implement new strategies, making the shift to more open
business models difficult and unsuccessful. Thus this limited world view and closed
approach have cost the firm dearly. However, Dell is now rebounding by testing new
methods and processes which capture more openness during the innovation process
(Nambisan & Sawhney, 2007).
On the other hand, when faced with falling sales, Kraft adopted a more open inno-
vation policy by soliciting new product ideas from visitors to its web site. Previously,
this practice was shunned by company managers and the firm operated in a more
closed knowledge creation environment, shut off potential new ideas, and missed
important customer-centered input. By embracing a more expanded form of knowl-
edge creation, Kraft now enjoys many outlets from which new ideas emanate and is
ready to move on those that seem to be most promising.
Both Dell and Kraft recognize that within open innovation models, knowledge
may exist across functions, hierarchies, and organizations. The unique character-
istics of open innovation (see Table 7.4) enable firms to tap into a new reservoir
of knowledge and collectively share, integrate, and apply new applications in the
development of a new product.
In open innovation models, firms may also form alliances to pursue new
businesses, expand into new geographic regions, or enter new market segments.
Strategic research alliances in particular, enable two or more firms to pursue joint
research by pooling complementary resources and capabilities. Such alliances help
firms share resources, share risks, and may even facilitate competitive reposition-
ing. Many such alliances result in new product design and development, improved
production methods, innovative marketing, and distribution systems.