The past success of the Closed Innovation paradigm accounts for its persistence in the face of the changing landscape of knowledge. It is an approach that is fundamentally inwardly focused, which fit well with the knowledge environment of the early twentieth century. However, the paradigm is increasingly at odds with the knowledge landscape at the twenty-first century.
The people who were trained as scientists in this period were mastering the tremendous intellectual breakthroughs in understanding the physical world, but were largely uninterested in applying those insights to practical problems. Although the knowledge being created within universities seemed to hold great promise, your growing enterprise could not rely on this knowledge being put to use in your industry on its own.
The universities are full of professors with deep expertise. Better yet, these professors are surrounded by graduate students, who apprentice themselves to these professors and their graduate students are clearly eager to apply that science to business problems. The future research agendas of faculty members are coming to reflect important problems being confront in industry. In the world of the Internet, leading scholars from around the world contribute new papers to online archive, creating a global community of scholars.
The logic underlying the innovation process is now completely reversed. Even the expression not invented here (NIH) has an entirely different meaning. Today NIH means that companies need not reinvent the wheel, since they can rely on external sources to do the job effectively. The new logic turns the old assumptions of their head. Instead of making money by hoarding technology for your own use, you make money by leveraging multiple paths to market for your technology. Instead of restricting the research function exclusively to inventing new knowledge, good research practice also includes accessing and integrating external knowledge. Instead of managing intellectual property (IP) as a way to exclude anyone else from using your technology, you manage IP advance your own business model and to profit from your rivals’ use. You might even occasionally help fund a young start-up to explore an area of potential future interest.
Inserts based on Open Innovation by Henry Chesbrough.