When I first heard the term "open innovation" I searched around for for some good definitions and read a few white papers on the topic. As ever, these days, the article on wikipedia is an excellent introduction and got me thinking about open innovation and its potential links to disruptive technologies within specific applications and markets.
One of the principle tenets of open innovation is recognising that great ideas may come from outside of an organisation. This is an important shift in thinking, and a real response to the threat posed to any company by disruptive technologies, as documented in Christensen's "The Innovator's Dilemma: When New Technologies cause great firms to fail". This is one of those thought provoking books that has brought the words "disruptive technology" into every day usage, but sadly the term has lost some impact as it often used out of its original context to describe any incremental innovation.
The essence of Christensen's observations were that new technologies that were less capable than existing technologies in a particular market or application, could erode the established market if they were capable of supplying the needs of the the low end commodity user. So, when the only feature a user bases a purchase decision on is cost, the cheapest always wins the order. The established players with more expensive and more capable solutions congratulate themselves for having higher margins serve the needs of high end users. However, over time they see their market eroded away to nothing as the disruptive technology improves incrementally to dominate the established market from the low end upwards.
The only strategy for an organisation to fight this threat is to adopt the potentially disruptive technology for themselves and develop it, even though that may mean a fundamental change in business approach. So the question is: How does one spot a disruptive technology soon enough to be able to respond to the business threat and turn that threat into an opportunity by adopting it under the open innovation paradigm?
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Information Systems experts call this phemenon emergence: users employing products in unanticipated, disruptive ways. Examples include people buying the original iPod mini and cracking it open to get at the (more valuable) hard drive inside, fliers using the sensors on a missile to enhance the information reaching the cockpit... and some people eating laundry starch!
The text messaging craze caught the mobile communications industry off-guard, too. Manufacturers thought text messaging was going to be a very minor, gimmick feature.
The emergence of unanticipated ways to use or combine products or product/service bundles could well leave a business in difficulties, because the customer is bending or breaking the 'rules', at least according to the vendor's business plan.
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