The Open Innovation model has brought about fundamental changes in conventional management principles and values and has thus established a specific spirit of collaboration between actors. Some of those changes include relinquishing the “not invented here” syndrome and loosening the strict proprietary control over the firms’ “crown jewels”. Firstly, firms become more “open” and trustful to external solutions. They form networks of cooperation with a multitude of actors, such as investors, suppliers, start-up companies, competitors, and even end-users, creating whole “innovation ecosystems”. Secondly, businesses start to seek alternative ways for capturing the strategic and financial value of their most-central and fruitful “crown jewel” technology by out-licensing it to other companies, including competitors. This firm behavior called by some “strategic licensing” comes to prove that sometimes the loss of control over firm-essential IP so that others could make use of it too will be more than offset by the long-term financial and strategic benefits from this sacrifice. An example is Motorola, which announced in July 2001 its plan to sell its most valuable handset micro-chip technology alongside the accompanying software to any interested buyers. They promised that potential purchasers of the technology will be able to greatly reduce the cost and design time for bringing their own phones to market. Although facing loss of some of its market share by letting go of its exclusionary IP asset, Motorola managed to benefit both financially and strategically from the actions undertaken. The chip business of the company welcomed billions of dollars in fresh revenue from the licensing, while the technology became a common industry standard, thus boosting the growth of the whole sector and the size of the market.
Nonetheless, this example shows that strategic licensing and collaboration in general should always be accompanied by a careful assessment of the potential risks and hazards of overexposing the firms’ core assets, which might be fatal for the company’s successful business model. Henkel (2006) describes this as “selective revealing”, aiming to strike the right balance between sharing on the one hand and control and protection on the other, as a necessary skill for firms in order to benefit from Open innovation.
Motives for Participation in the Open Innovation model
Firms participate in Open Innovation initiatives, since they have come to realize that no organization, regardless of its size, can develop all the useful technology in a specific field of business. Turning a blind eye on the sea of useful information, available in the local environment, hinders the company from harnessing its full potential. As noted in answer 3.c for commercial entities participation in OI initiatives can be driven by a large variety of motives, i.e. cost-cutting, decreasing time to market, capturing value from products, which fall out of the scope of the company’s main line of business etc. However, all the motives share a common characteristic – value capture. On the other side of the spectrum, individuals might be driven by motives of non-financial character, for instance: ideology; enthusiasm; direct utility; personal agendas, such as knowledge and skill acquisition or content from one’s work; recognition, etc.
In general, aligning the disparate motives of participators and finding the appropriate strategies to motivate contribution remain one of the key managerial challenges for firms, adopting the OI approach.