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Article author:  Tetiana Budzynska


Innovation:
chance or strategy?

How do companies and brands create breakthrough innovative products and solutions?

And is it possible to plan ... an idea?

Of course. Creating Innovations in the 21st century has become almost a religion. CIM devotes an entire module within the graduate education to the study of innovation management strategies in marketing.

Closed and open innovation are two key approaches to development and implementation of new ideas and technologies. These approaches differ in the way innovations are developed, used and interacted with different stakeholders.

Each of the approaches has its advantages and disadvantages, and is determined by the overall strategy of the company.

Closed innovations:

Closed innovation means that a company develops new ideas and products using its own resources and experts within the organization.

  • Confidentiality: Closed innovation ensures confidentiality and control over development. The company protects its intellectual property and keeps its technologies secret.

  • Small external influence:  Closed innovations have less external influence, limited to the use of own knowledge, resources and competences.

  • Market entry: By developing a high-quality and great idea in the business's own industry, a company can be first to market and gain a big advantage.

Open innovations:

Open innovation involves collaboration with external sources such as other companies, universities, startups, and community organizations, etc. This allows business to get new ideas and resources outside the company.

  • Co-development: Open innovation involves the co-development of products and technologies with partners. This can accelerate the development of innovation.

  • More external influence: This approach allows influencing external factors and receiving external influence, and can lead to more effective innovations.

  • Rapid development: Adopting an open innovation strategy can lead to rapid development of new products and technologies thanks to access to external resources and expertise.

Some companies combine both approaches, seeking a balance between internal resources and external expertise to succeed in innovation.
 

Let's look at examples:

Closed innovations:

  1. Apple: Apple has a reputation as a company that keeps its developments in deep secrecy until an official announcement. This controlled innovation management allows Apple to maintain the "WOW" effect when introducing a new product. Example: The development of the iPhone was surrounded by an aura of mystery until its official announcement in 2007.
     

  2. Coca-Cola: Coca-Cola focuses on internal research and development to improve its products and production technologies. Example: The recipe for "Coca-Cola" remains one of the most guarded secrets in the world.

In both companies, the strategy of closed innovations is fully used in the communication strategy.

Open innovations:

  1. Google: Google not only develops products internally, but also actively engages external developers using open source platforms such as Android. Example: Google Summer of Code is an initiative program within the framework of which student projects with open source code are annually selected, and monetary grants are paid to the winners. In this way, the company creates conditions for the emergence of innovative solutions.
     

  2. IBM: IBM actively cooperates with academic institutions, research laboratories and other companies. Example: IBM Q Experience - As a part of the Quantum Experience project, free, open and ready access to the quantum computer (QC) of the IBM concern is provided to anyone who registers on the concern's website. Any user from any place in the world with access to the Internet is given the opportunity to freely connect to the IBM's quantum processor using their regular computer, laptop or smartphone.
     

  3. Procter & Gamble (P&G): P&G created the "Connect + Develop" platform, which aims to identify external ideas for new products and technologies. Example: Many of P&G's products have been improved or adapted through collaboration on this platform.

These companies demonstrate how internal and external innovation strategies can be effectively combined to achieve commercial success and market leadership.

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