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Open-market innovation.

Darrell Rigby, Chris Zook

    Harvard Business Review
    |October 23, 2002
    PubMed
    Summary
    This summary is machine-generated.

    Open-market innovation leverages external ideas through licensing and partnerships to drive business growth. Companies benefit from diverse expertise and new revenue streams, but must structure deals carefully to retain value.

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    Area of Science:

    • Business Strategy
    • Innovation Management
    • Technology Transfer

    Background:

    • Companies face increasing pressure to innovate, even during economic downturns.
    • Internal R&D alone may not suffice for novel idea generation.
    • Open-market innovation emerges as a strategic approach to access external ideas.

    Purpose of the Study:

    • To explore the concept of open-market innovation.
    • To analyze its advantages and disadvantages for companies.
    • To provide insights on gaining competitive advantage through external innovation.

    Main Methods:

    • Case studies illustrating open-market innovation in practice (e.g., Pitney Bowes, Dow Chemical, Cargill).
    • Analysis of strategies like licensing, joint ventures, and strategic alliances.

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  • Discussion of benefits of importing and exporting ideas.

    • Main Results:

    • External collaboration allows access to a wider pool of expertise and novel concepts.
    • Open-market innovation can foster internal creativity and provide avenues for idea commercialization.
    • Exporting innovations allows for valuation and potential new markets.

    Conclusions:

    • Companies can gain a competitive edge by strategically importing and exporting ideas.
    • Proper deal structuring is crucial to prevent loss of innovation value, as exemplified by cautionary cases.
    • Open-market innovation offers a powerful mechanism for enhanced business development and growth.