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Remain a frontrunner in a dynamic industry

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Remain a frontrunner in a dynamic industry

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In the fast-scaling fintech industry where new tech solutions pop up too quickly to develop all in-house, M&A is an improtant strategic growth lever to help big companies stay on top.

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Revealing to address people shortage - Enrico

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Revealing to address people shortage - Enrico

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Amazon founded its in-house Machine Learning University (MLU) and opened it to the external world. With this move Amazon has revealed for free a number of insights and internal knowledge and trainings on ML. In a very strong analogy with the aviation example provided upside of this approach to open innovation its that it helps meet demand that Amazon and the market in general has for ML specialists.

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In the interest of national security some innovations should not be shared openly if a country's goal is to have a competitive advantage compared to other countries (be it in defense, in sourcing natural resources, technologies, etc.).
- Francisca

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Mastering centennial innovations through revealing, countering classical economic arguments?

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Mastering centennial innovations through revealing, countering classical economic arguments?

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I always find the argument by economists hard to believe that securing IP rights is one of the greatest benefits of a society to drive innovation. While this reward might be true to help entrepreneurs and inventors cash in on innovations, it puts a toll on society as the inventor receives royalties and can basically create a monopoly for a certain time. How is that good for consumers? Yes it stimulates innovation in search of large profits, but hurts consumers afterwards.
I see a similar notion in the autonomous driving domain. If all experts across the globe would work together on solving this ambitious goal, sharing code and data, we’d be much further ahead on the development curve. Instead, companies are fighting each other to develop patents and steal talent away from each other. I have a hard time seeing how delaying technological development to reward the first inventor benefits society. I think more companies should reveal their IP and data and enter a form of profit sharing agreement or something similar.

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Also referring to my advantage posts - I think innovation becomes faster in general, and for those who aren't able to adapt fast enough to leverage new technologies, processes, etc., there is a high risk of loosing competitive advantage and getting lost in the process.

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Overall I think all the shown examples of open innovation have one thing in common - they are collaborative. Either by including the customers', competitors', other market incumbents' knowledge in the innovation process. This means to me, that the "knowledge pool" is increased significantly, which should end up in a faster innovation process overall. To me thats the main advantage. Even though for some individuals, it can become a disadvantage because they loose competitive leverage, but it also drives those individuals to be agile and improving all the time. And over time, I'd say we'll have better products / services in a shorter amount of time (overall wealth increases).

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Where you are working with the wider market openly generating and sharing ideas, you run the risk that you give up control of things that could become strategic assets and differentiators for your company.

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Particularly for acquiring and sourcing innovations, one of the advantages you have is the classic economics concept of comparative advantage. There are some companies in the market that have an advantage producing an innovation at a lower cost compared to other companies. You can really see this in the way that large organisations lose massive amounts on building innovations that they could have acquired much more cheaply from startup.

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Depending on the model of open innovation, the parts involved may have different interests and this discrepancy may kill the entire project. For example: a researcher funded by a company may pursuit an outcome for his/her research that is different from the expected from the company.

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Technology applications that were not expected by the innovators - Leandro

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Technology applications that were not expected by the innovators - Leandro

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A good thing about open innovation is that individuals or companies can use open source technology to solve problems that are completely different from the original purposes of that technology. This may open new markets in an organic way for the innovators

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Faster innovation and market development 

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Faster innovation and market development 

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R&D from scratch takes time and resources. Sharing allows to develop the market e.g. Tesla

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Sometimes there is a fine line, especially when corporates are working together, of how much information can/should actually be shared or are allowed to be shared. Consequently, during projects valuable infos/secrets could be shared with other stakeholders (unintentionally).

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Even though the network was already mentioned as a (key) asset of open innovation, I believe, open innovation, especially when various networks are activated, can in turn have a network effect: People getting to know each other and making new introductions or referring to other people from their networks etc. Consequently, through this new combination/network, other new innovations can evolve, improve or be realised.

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As mentioned by my colleagues, the example of open source software sharing illustrates the advantages of open innovation. Open Source gave the opportunity for developers to build their products faster, generate new ideas based on simple algorithms developed by others, and give back to the community by contributing to others’ codes

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The larger an open innovation project or network is, the greater is the risk of losing control. However, individual partners can always turn against the leading organization and pursue their own way. (Matthias)

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Time saving and the opportunity of a quick adaptation to a volatile market

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Time saving and the opportunity of a quick adaptation to a volatile market

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Open Innovation does not have to be self-created to benefit from it. Therefore a competitive advantage can be created by just purchasing someone else's intellectual property. (Matthias)

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difficult to capture (all the) value
Andreas

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faster process of innovation
Andreas

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Production of monopoly products by using openness.

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Open platform and global standard - JungJo Hyun

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Open platform and global standard - JungJo Hyun

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Not only the open software, but also open platform and global standard are also one of advantages for open innovation in the field of technology.

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By sharing research openly more people can contribute to the results and use it in further developments as a basis. This enhances contribution but also positively reflects on the original company images.

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With the open innovation, you need to make a trade off between holding a dominant position as provider of particular technology/ product/ raw material/ etc and cannibalisation of own sales of ready product.

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When Volvo invented the three-point seat belt in 1959, they made patent free for all competitors to use in order to save lives. Volvo prioritised industry and societal benefit vs profit. Thus, there is definitely a benefit of open innovation not all for industries, but society overall.

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A firm with certain capabilities and staff will not have as much diversity of thought and innovative ideas when compared with the R&D community as a whole. Firms that can bring in more diverse ideas that would not likely be thought of in their firms can benefit from a wider range of innovations.

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Loosing market for small companies - Amr H.

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Loosing market for small companies - Amr H.

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Bigger companies can benefit from openness as they have already a stable infrastructure and the ability to finance their R&D. Smaller companies will loose their targeted market if they share their ideas early before having a well-established products, that could compete with the larger well-known companies as they need more time to develop this product and do their R&D.

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Less R&D cost and time to market - Amr H.

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Less R&D cost and time to market - Amr H.

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With more openness comes more shared ideas. Those shared ideas help to speedup more developed products to the market with less R&D costs.

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While open innovation can push internal development faster, in some cases distrust and lack of motivation can evolve from in-house talent following successful innovation shifts by external innovation efforts.

An example in startups and acquisition. As smaller startup teams can quickly innovate and have the opportunity to test products are developed more fluidly, larger firms acquire these teams and innovation speeds conflict. In some cases the process speed overlap can cause silos and competition between teams (sometimes good, sometimes bad). The resulting disadvantage is that companies must shift internal processes to develop at a different pace or approval system to make use of the external innovation.

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One benefit of open innovation is the creation of community around innovation. While community may be difficult to manage and pull useful ideas, the collection of insight and integration with customers can excel products or services to match value offering benefits.

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While self-driving cars, trucks, and delivery robots continue to make headlines with funding and wider test deployments around the world, the road to autonomy isn't smooth for everyone. Local Motors Inc., which was developing the Olli autonomous shuttle, reportedly shut down today.

Founded in 2007, Local Motors had originally focused on autonomous vehicles for racing, with the Rally Fighter in 2009. It then pivoted to passenger transportation, with a crowdfunding campaign in 2013.

The Chandler, Ariz.-based company said it used a "microfactory" model to manufacture vehicles based on open-source designs. It had claimed to have built the world's first co-created vehicle; the world's first 3D-printed car; and Olli, the world's first co-created, electric autonomous vehicle.

Local Motors started scaling Olli production

Local Motors said that Olli was designed for low-speed applications and used 3D printing to reduce design and manufacturing costs. The company asserted that its digital production would be enable it to introduce new vehicles in months rather than years.

Local Motors had raised more than $15 million in funding in 2020, according to Crunchbase. It also signed a multi-year sales agreement with Velodyne Lidar Inc. and tested its autonomous shuttles in Toronto.

Last year, Local Motors collaborated on computer vision with alwaysAI and signed an orginal equipment manufacturer (OEM) agreement with Perrone Robotics Inc. In September 2021, it announced Vikrant Aggarwal, an industry veteran from Cummins, as its CEO.

"In 2021 alone, Olli vehicles have provided thousands of safe rides in low-speed environments around the globe," said Local Motors at the time. "The company is focused on scaling production to meet demand and delivered the most vehicles in company history in a single month in August 2021."

While Local Motors prepared Olli 2.0, a previous model was involved in an accident in December.

Breakdown on the ramp to AV success

As with any advanced technology, many startups will fail before some successfully reach commercialization. The race to fully autonomous vehicles has been expensive and slower than many expected. Other noteworthy shutdowns include lidar provider Quanergy Systems in 2018 and autonomous truck developer Starsky Robotics in 2020.

Also in 2020, Uber sold its Advanced Technologies Group (ATG) to Aurora Innovation, and Amazon acquired Zoox after it laid off 120 contractors.

Last year, Lyft sold its self-driving division to Toyota, and delivery robot firm Nuro acquired self-driving trucking firm Ike. Waymo, which is owned by Google parent Alphabet, and Cruise, which spun out of General Motors, have pumped billions of dollars into self-driving car research and development. Cruise acquired Voyage in March 2021.

Also this week, Magna International acquired the employees and assets of Boston-based Optimus Ride Inc.

Former Local Motors executives expressed optimism, however, about the industry's potential.

"As with most adventures, they must come to an end. Local Motors has closed its doors," wrote Jeff Hollowell, senior vice president of information technology at Local Motors, on LinkedIn. "It has been an exciting, challenging, and educational experience working with Olli and all the team at Local Motors."

"I am disheartened to announce that Local Motors will cease to exist as of January 14," said Chris Stoner, vice president of sales and customer success at Local Motors. "I was only there a few months, but loved every minute of it."

"The autonomous vehicle space is an exciting emerging market with plenty of opportunity," he added. "Experiencing first-hand the skill and dedication of the people I worked with, I have no doubt AVs (like Olli) are the future of transportation."

The global market for autonomous vehicles could experience a compound annual growth rate (CAGR) of 60.6%, growing from 6,100 units in 2020 to 110,100 units by 2026, predicted Research and Markets. Similarly, Market Resarch Guru projected that the market would have a 23.5% CAGR, growing from $35 billion in 2021 to $160.7 billion in 2027.

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Eugene Demaitre

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Local Motors, Developer of Olli Autonomous Shuttle, Shuts Down

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While self-driving cars, trucks, and delivery robots continue to make headlines with funding and wider test deployments around the world, the road to autonomy isn't smooth for everyone. Local Motors Inc., which was developing the Olli autonomous shuttle, reportedly shut down today.

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The success of open source SW development showcases the advantage of open innovation (revealing). It encourages collaborations, brings in diverse skills/knowledge/domains and increases innovation potential. The debate on COVID vaccine formulae being patented by pharma companies, brings into question commercial benefits vs larger good.

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Potential disadvantages of Open Innovation

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Potential disadvantages of Open Innovation

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- Missed commercial opportunities
- Too focused on external network = lose touch with inner workings of firm
- Competitors gain valuable information and can leverage it to compete better
- Requires lots of time and resources to sift through large volume of information/ideas
- Kelly

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Open innovation can push entire industries (and societies) forward. -Kelly

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Open innovation can push entire industries (and societies) forward. -Kelly

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The access to some key technologies or data could be abused for unethical purposes. Wenting

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Open innovation may in some cases be more time-consuming than in-house innovation as it involves more external stakeholders.

Lack of regulation or framework that governs the commercialisation of the innovation as regulators tend to be a step behind the innovators and early adopters. For example Bitcoin and blockchain.

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Open innovation can lead to transformative projects that have a global impact rather than  just commercial projects for individual companies. For example the development of the WWW and Internet.

Thorunn

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if the open innovation is done in an unstructured way or non-value added way, it will actually slow down the innovation of a firm and has potential impact on the current value creation.

Li

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Open new opportunities. Open innovation bring in new resource and capabilities, which could create new products or services otherwise cannot be created.

Li

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The culture of the company can limit its innovation aspirations.

Valia Meletiou

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+Open Innovation will likely create an innovation landscape which is likely more competitive - holding tightly and protecting tightly your technological competitive advantage can be a way to stifle upstarts from eating your lunch

Andrew Murphy

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+ New platforms which can form which create markets in themselves can explode rapidly
+Rapid Innovation for global challenges can move faster

Andrew Murphy

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- Cannibalization of own market position by giving away ideas
- Reducing the barriers to entry for the competition
- Outcomes not always certain and difficult to measure

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+New ideas that are more close to the needs of the customer can be generated
+Companies can benefit of the different innovation approaches by other entities like universities etc.
+Certain weaknesses can be compensated by getting knowledge from others

Lukas