Open Innovation

Henry William Chesbrough is an American organizational theorist at the University of California, Berkeley. He is known for coining the term open innovation.

Open innovation assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.

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The boundary between organisation’s internal R & D and knowledge available with sources outside organisation should disappear, and should work together to develop and market product and services.

I will take two examples, one from group I work for-Tatas, and other from a very famous toy company – LEGO.

Scientists in Tata Consultancy Services’ material sciences laboratory in Pune had discovered some time back that rice husk ash has properties that can purify water. The filter held back 85 per cent impurities but did not kill bacteria. The challenge was to make it remove all impurities. Then scientists in Tata Chemicals’ Innovation Centre, also in Pune, said if silver nanotechnology was used with rice husk ash, the filters could stop bacteria as well.

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The other group companies like Titan, TACO, Tata Tele services also pitched in. Titan Industries used its precision engineering skills to make the filter switch off on its own once it reaches the end of its life. Plastic needed was developed by auto component maker TACO, and after sales service backbone was created by Tata Business Support Solutions and Tata Teleservices. Thus was born Swach, the world’s cheapest water purifier.

Toy maker LEGO, in order to boost their sales came up with idea of collaborating with customers (esp. kids, teenagers), in designing toys.

For this they developed platform called as LEGO CUUSOO, which allows users to submit ideas for Lego products to be turned into potential sets available commercially, with the original designer receiving 1% of the royalties. By the way CUUSOO in Japanese means “wish”. One such game is LEGO Hayabusa, which was launched in Japan.

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