83
One consequence of the above-described conundrum is that even for large, multinational companies, the problem to solve is so large that it becomes untenable to
maintain in-house all the expertise, infrastructure, and human talent needed to cover
the continuum of activities ranging from fundamental research to those development activities leading to commercial launch inside the organization. Moreover, as
described in Frans Johansson’s fascinating book The Medici Effect, true innovation
has the stubborn habit of coming from beyond your realm of expertise and from
what he refers to as the “intersection of ideas.”
In today’s environment, regardless of their size, firms are quickly evolving from
a closed into an open innovation mindset to remain competitive, since the previously successful closed mindset has become a factor stifling progress and reducing
the likelihood of innovation success.
Henry Chesbrough from the University of California at Berkeley, who first
coined the term open innovation (referred to thereafter as “OI” through this chapter), defines it as “a distributed innovation process based on purposively managed
knowledge flows across organizational boundaries, using pecuniary and nonpecuniary mechanisms in line with the organization’s business model” (Chesbrough
and Bogers 2014). The main tenet of OI is that, in order to thrive in an increasingly
competitive market and in a more complex society, firms should open up their
boundaries and leverage inflows and outflows of knowledge and technology. In
other words, companies should not only establish outside-in channels to source
external knowledge but also develop inside-out processes to leverage external paths
to novel markets which would otherwise remain off-limits. Figure 3.1 provides a
current working model of open innovation. One of the major departures from a
closed model is that companies practicing OI explicitly feed their innovations funnels with both, in-house and external developments. This allows them to evolve
from the previous “not invented here” syndrome to a “proudly invented elsewhere”
framework. In addition, OI enables not only the exploitation of current, known markets but also the exploration of novel ones, which brings about accelerated benefits
for society at large, since under a closed model such developments and value creation activities would either never occur, or would take place several years later.
Another benefit of OI, when it is linked with corporate entrepreneurship, is that OI
efforts can create encouragement, opportunities, and incentives for staff development.
One of the underpinnings of OI is the realization that the knowledge needed to
innovate is becoming more widely distributed in the economy and that there is an
increased scattering of the sources and providers of such knowledge. Under these
premises, the two main working models of OI, namely, outside-in and inside-out
innovation, where firms are open to adopting all kinds of external inputs and contributions, while simultaneously allowing some of their technological assets to be
used by others, makes sense. In coupled modes of open innovation, outside-in and
inside-out modes are combined.
OI can be implemented through several approaches such as in- and out-licensing,
spin-ins (or acquisitions) and spin-outs, co-conception and co-development,
3 Open Innovation and Value Creation in Crop Genetics
One consequence of the above-described conundrum is that even for large, multinational companies, the problem to solve is so large that it becomes untenable to
maintain in-house all the expertise, infrastructure, and human talent needed to cover
the continuum of activities ranging from fundamental research to those development activities leading to commercial launch inside the organization. Moreover, as
described in Frans Johansson’s fascinating book The Medici Effect, true innovation
has the stubborn habit of coming from beyond your realm of expertise and from
what he refers to as the “intersection of ideas.”
In today’s environment, regardless of their size, firms are quickly evolving from
a closed into an open innovation mindset to remain competitive, since the previously successful closed mindset has become a factor stifling progress and reducing
the likelihood of innovation success.
Henry Chesbrough from the University of California at Berkeley, who first
coined the term open innovation (referred to thereafter as “OI” through this chapter), defines it as “a distributed innovation process based on purposively managed
knowledge flows across organizational boundaries, using pecuniary and nonpecuniary mechanisms in line with the organization’s business model” (Chesbrough
and Bogers 2014). The main tenet of OI is that, in order to thrive in an increasingly
competitive market and in a more complex society, firms should open up their
boundaries and leverage inflows and outflows of knowledge and technology. In
other words, companies should not only establish outside-in channels to source
external knowledge but also develop inside-out processes to leverage external paths
to novel markets which would otherwise remain off-limits. Figure 3.1 provides a
current working model of open innovation. One of the major departures from a
closed model is that companies practicing OI explicitly feed their innovations funnels with both, in-house and external developments. This allows them to evolve
from the previous “not invented here” syndrome to a “proudly invented elsewhere”
framework. In addition, OI enables not only the exploitation of current, known markets but also the exploration of novel ones, which brings about accelerated benefits
for society at large, since under a closed model such developments and value creation activities would either never occur, or would take place several years later.
Another benefit of OI, when it is linked with corporate entrepreneurship, is that OI
efforts can create encouragement, opportunities, and incentives for staff development.
One of the underpinnings of OI is the realization that the knowledge needed to
innovate is becoming more widely distributed in the economy and that there is an
increased scattering of the sources and providers of such knowledge. Under these
premises, the two main working models of OI, namely, outside-in and inside-out
innovation, where firms are open to adopting all kinds of external inputs and contributions, while simultaneously allowing some of their technological assets to be
used by others, makes sense. In coupled modes of open innovation, outside-in and
inside-out modes are combined.
OI can be implemented through several approaches such as in- and out-licensing,
spin-ins (or acquisitions) and spin-outs, co-conception and co-development,
3 Open Innovation and Value Creation in Crop Genetics