A clear trend emerged in business over the last decade: the rise of “open innovation.” Forerunners in the practice of utilizing third parties in creating, developing, and disseminating innovative business practices and products include Dell, having introduced and successfully integrated their IdeaStorm platform to drive new product development, and Starbucks, which followed suit with My Starbucks Idea, garnering yet more feedback from customers looking to enhance their personal experience with the company. But far and away the greatest example of a Fortune 500 company embracing open innovation over the past decade to drive everything from product development to revenue growth has been Procter & Gamble with its Connect & Develop initiative. P&G was successful in leveraging third parties alongside their core internal capabilities to reduce R&D costs by nearly 60% while simultaneously increasing the amount of new products it sent to market. All this was done in a cost-efficient, time-saving manner that has resulted in Connect & Develop being hailed as one of the most successful open innovation initiatives ever.
But in a global service economy, what does open innovation look like?
Henry Chesbrough wrote an interesting article this week in the Harvard Business Review posing this very question, alongside investigating collaboration as an increasing source of innovation.
As we move towards a reliance on services to drive our economy, the service companies that can master the art of open innovation will be able to enjoy the fruits of their labors and realize a compelling competitive advantage.
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