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Business / View

Taking the fast lane with 'Open Innovation'

By Jitendra Kavathekar (China Daily) Updated: 2015-09-08 09:37

There is increased pressure on companies to use new technology to provide customers with better products and services. It is hardly surprising then that many large organizations are struggling to compete against a new league of agile digital innovators.

As new startups enter the market in increasing numbers, existing companies have to work even harder to retain customers and clients.

To illustrate the point, Airbnb was founded in 2008 and is based in California.

It is already one of the world's largest hoteliers.

In China, Xiaomi Corp, which was founded in 2010, has become the third-biggest distributor of smartphones.

So what is the answer for companies feeling the squeeze?

The term "Open Innovation" was first coined in 2003 by Henry Chesbrough, an organizational theorist from the Haas School of Business at Berkeley in the United States and has been evangelized ever since.

It is a model whereby enterprises use external technology, solutions and knowledge from startups, universities and other research organizations early in their innovation processes.

This concept allows companies to bring in new ideas quickly in order to enhance their operations. It can also save time and money.

Rather than using their own budget in research and development, enterprises can use venture capital investment.

Leading companies around the world are already using this approach.

They realize that bringing in new ideas from small businesses is much smarter than fighting them.

The value of collaboration exceeds the threat of sharing information.

Creators in California of the high-growth productivity application Evernote are working with independent office designer Eric Pfeiffer to produce popular stationery and tablet holders.

Grupo Globo, the largest media group in Latin America, is working with startups to bring in the latest technology as well as identifying new systems and market trends.

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