OPEN AND CLOSED INNOVATION PRACTICES & NEW PRODUCT INTRODUCTION FUNDAMENTALS

Tafara Makuni University of Cambridge, Engineering Department

This is a two-part report focussing on the following; (i) the fundamental challenges associated with product innovation (also known as New Product Introduction), as well as the management techniques used to help address these challenges, and (ii) the similarities and differences between open and closed innovation. Product Innovation is the most important aspect of innovation therefore it is given the greatest focus here. This report uses academic theory as well as industrial case studies.

1. Introduction

At the most basic level, closed innovation is when you work by yourself to source ideas and take them all the way to market. On the other hand, open innovation is when you work with others (to varying degrees) to take ideas to market (1). Regardless of whether the innovation is open or closed, the fundamental challenges are the same; since both look to do the same thing. These challenges are mainly concerned with: (i) understanding the customer and market, (ii) technological issues, (iii) capturing value, and (iv) strategy and process planning (2). The management of the implementation techniques used to take ideas to market is where the contrasts and comparisons between open and closed innovation start to occur. For this reason, comparisons and contrasts for open and closed innovation will focus mainly on the management of the implementation. The product innovation section (NPI) will focus on fundamental challenges and management techniques, which are common to both practices as mentioned above.

The remainder of this report is structured as follows. First, the conceptual background of innovation is discussed. Second, New Product Introduction (NPI) is discussed in two main themes: (a) challenges encountered, and (b) management techniques used to help address these challenges. Third, a comparison between open and closed innovation practices are made. And finally, the report concludes with a summary of the main findings.