American Competitiveness – an Open Innovation Perspective

Observations about a blog post by Henry Chesbrough in Forbes about “Open Innovation

Open Innovation is an interesting idea, linked to the role innovation can play in solving America’s current economic woes. Yet, by advancing Open Innovation as some sort of panacea, its proponents risk overpromising and underdelivering.
(Caveat 1: I have not yet read the author’s book, so I am going on the ideas advanced in other literature-sources only)
(Caveat 2: It is a pet peeve of mine when someone introduces a “new” approach or methodology in the creative sciences, no matter how similar to the existing prior art, and then Captializes Its Name® before marketing it as being somehow foundational to everything else out there – a fact missed by everyone but the discoverer – when said discovery is at best one element in a more complex creative process)

The author seems to be an academic with a very vested interest in making the point that innovation cannot be done purely in-house, that good ideas and the people with them must be sourced from outside the organization as well as from inside.

What is of value here is hardly new. No one would ever argue that reducing exposure to new or different ideas and points of vue has ever helped the ideation process in particular or the Creative Process as a whole. Suppliers, distribution channels, end-use customers, competitors, all can contribute – and historically, many have. And no one would ever argue that ideas must come in from the outside, but cannot ever be allowed to go back out “into the wild” – idea flows must be shared both ways, or idea flows by definition will stop.

But while Open Innovation is a way of getting more people to contribute ideas, hence increase the likelyhood of getting a winning idea, it forces you to do a few things you may not want to do. Amongst the things you may find yourself forced to do:

  • Expose your challenge to a wider world, essentially, to the public. For many organizations, change is a difficult activity at the best of times – politics and the dreaded “Not-Invented-Here” syndrome are just two reasons for failure. If internaly-driven change is difficult, how prepared are many organizations to honestly ask for and accept externally-prompted change? This would be an even worse approach if tipping off competitors, suppliers, or the market as to your challenge is an issue.
  • Engage an organization to manage the Open Innovation exchange for you. This organization will have to bring in the networking environment (software, ability to find participants, etc.) to bear on your challenge. This can be expensive, and depending on this organization’s approach or effectiveness, may bring unintended limitations to the ideation inputs you are liable to get. Do you want to be tethered to a vendor for innovative thinking for your organization? Also, research shows that the creative process can be unintentionally undermined by ineffective electronic networking or facilitation, so how can you guarantee you are getting your full money’s worth?
  • Require creativity-aware (or innovation-aware) people to vet the responses to glean out the best answers. Not all answers will be expressed in useful forms right away, and it takes awareness to see potential answers hidden within. Why not save yourself the time and hassle and simply train such skilled people within your organization to better use the creative process?

Sadly, the blog’s example of the Taiwan Semiconductor Manufacturing Company (TSMC) is flawed. (Note: TSMC is not called the Taiwan Semiconductor Corporation as the author Henry Chesbrough claimed it was). TSMC is a company that makes computer chips for many American firms. As Henry states: unlike the vertically-integrated Japanese firms, many American chip-design firms have not invested in chip foundaries (manufacturing plants). TSMC is their manufacturing operation. This has freed them from capital intensive plants and all the related issues of running these chip foundaries, allowing them to focus on innovation, which they achieve via Open Innovation.

But the successes here are a function of the knowledge and capital-intensive elements of their respective activities. Chip design and fabrication are very specialized fields, requiring expensive equipment and hard to find expertise. Capital costs will work to keep the designers out of manufacturing, and the intellectual know-how and trade secrets will keep manufacturers out of design for all but the simplest of chips – even if that were not the case, TSMC would never risk its reputation by going into competition with current or potential clients. Unless there is a technological breakthrought that drops manufactuting costs dramatically or one that drastically simplifies chip design, the demands of Moore’s law will continue to push both manufacturers and designers to invest more and more within their specialized areas. Few industries experience such a stark separation of design and manufacturing as does computer chips, so can the Open Innovation lessons here be considered universal? No.

Most organizations need to become more proficient at capturing ideas they already have and generating new ideas from the resources and information already around them. Using Open Innovation approaches as a way to “prime the idea pump” may work; while vendors and clients sharing ideas with each other is hardly a new concept, what is new is the idea of opening up challenges to an even larger audience, increasing the ideation inputs.

But the entire effort could be many times more effective with appropriate training in the creative process. If you have access to a remotely diverse pool of ideators, you can run your own creative problem solving effort and get better results, faster, and with more control over who gets access to your valuable information and ideas.

There are no shortcuts to getting good ideas – the effort cannot be outsourced! Open Innovation has its uses and its place, but any promise to deliver ideas by short-circuiting the growth and development process required to use the everyday creativity found amongst all of us is an illusion.

Your best innovations experts are already available, in-house. Contact Synergetic Management today for ways in which we can help you and your team innovate successfully!

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