“Open Innovation” isn’t Open
Do you think Open Innovation is a misleading term?
(The following posts are portions of emails I have sent recently. I will combine my thoughts over the next day or so to write a proper post, but this will start the discussion).
The more I have read, the more disillusioned I have become with what the term is and what it is supposed to define. The definition from Wikipedia being : “The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (i.e. patents) from other companies. In addition, internal inventions not being used in a firm’s business should be taken outside the company (e.g., through licensing, joint ventures, spin-offs).”
When you look at Google or other tech companies, their information is not so much secured by a patent as it is the trust from the user, the first mover advantage, the viral dissemination, and the revenue streams created off that advantage. Facebook isn’t secured by a patent, yet many social networks have come out and are unable to de-thrown them. Doesn’t a patent-less situation force true innovation and business-sense to emerge? See Lawrence Lessig for further information in this area.
Today patents are only valuable in the US; drugs will be copied abroad and IP (music, art, trade secrets) will be copied if the opportunity presents itself. So the idea that a patent provides incentive for a company, will only go so far. My thoughts are that if you have patent-less system, there is more turnover, openness, and price competition.
Information will instantly spur a new discovery; it would force a company to find discoveries, innovate at a much greater pace. Companies would also be forced to be more open to the public being in terms of knowledge and in their actions. I cannot think of a person who would say one of the greatest companies is a drug company. The pharmaceutical companies would be forced to disclose all information and be honest with their customers in terms of what the drugs are, the quality which they are producing, and the price points. Instead a discovery being priced to make billions, competition would drive the price down very quickly.
What do you think?
Keep it knowble,
Emile
Philippe said
am September 3 2007 @ 4:48 pm
Emile, you are raising some interesting points here. However, do you think pharmaceutical companies could survive if there was no patent protection at all? I agree that current patenting is excessive, but I have doubts regarding the sustainability of a completely patent-less system. Both examples - Google and Facebook - concern online B2C applications. I doubt that the same logic can be applied to industrial B2B companies for example. Open Innovation as defined by Henry Chesbrough is not ‘open’ in the sense of open source. In contrast with the closed innovation approach, the innovation process is ‘open’ to cooperation with suppliers, competitors, universities, research institutes…and costumers. As such, I see it as a first step in opening up traditional innovation processes in large, established companies. At this moment, only few companies really succeed in successfully adopting such an approach. Those leading innovators will probably start exploring next steps, moving towards a more open model as you describe it. The reality is however that most companies are still struggling with the first step.
In the coming weeks, I hope to have a chat with Wim Vanhaverbeke, co-author of the 2006 book on Open Innovation. I will certainly address these issues during the interview.
emile said
am September 3 2007 @ 6:26 pm
Every other industry is able to do fine without patent/copyright protection.
Lets take the film industry, which arguably is just as IP related as a pharma company. They had their biggest summer in history, because they are not looking at the film so much as IP content but as an experience with improved film quality, sound systems, and stadium seating. Wal-Mart, the largest employer in the US, is a B2B & B2C company that thrives without patent protection. The airline industry also doesn’t have patent protection. No other industry has so much protection as drugs and content. Mickey Mouse is the reason the patent has been drawn out in the first place. Longevity postpones change and innovation.
So what would happen to the drug companies? Instead of drug companies doing the R&D, that would fall more to university labs and small startups. The big guys would become drug producers because of their infrastructure and use licensing deals for the drug recipes.
Opponents of true Open Innovation argue that the patent system protects a costly process which is essential. Those are the same people that would rather us take a drug now, rather than try to innovate towards the better drugs/content of the future.
Emile
Philippe said
am September 3 2007 @ 6:41 pm
Who will pay the small start-ups if their drug recipe is available for free to everyone? I’m just raising some questions to clear everything out. I guess that would be the government?
Edit: I’ve found an interesting read about alternatives to pharmaceutical patents.
emile said
am September 4 2007 @ 1:39 pm
Think of it like music…artists & music labels…researchers & pharma
E
emile said
am September 4 2007 @ 2:30 pm
Better yet, like iTunes & musicians/ Lulu & writers
Josh Milane said
am September 9 2007 @ 1:45 am
Who will pay for it all?
J
http://mittechnical.com/BOSTON-SEO-WORDPRESS/
Thomas said
am September 24 2007 @ 11:12 pm
I think the question of “who will pay” is an interesting one, but it’s a question which seems less intractable if we rethink the business model. Say for instance, that innovation, driven by consumer need, pushed pharma companies to develop vaccines rather than drug treatments? This seems like the kind of innovation that would have to come from outside the industry, but one which consumers would happily pay for. The financing for the R&D would still come from the pharma company, but the innovation would come in the form of the brand directives as well as the user research.
Carl said
am December 15 2007 @ 2:32 pm
It’s been a while since the last reply but the issue is still relevant right:
I don’t think patents are wrong at all. I think they are used wrongly. In the words of Charles Leedbeater (watch him on TED.com):
“Corporations use patents to keep innovation from happening”
This is illustrated by Chesbrough’s (inventor “open innovation”) example that 80% of patents within companies remain unused!
I think his book (indeed called Open Innovation) comes up with some quite good solutions to the problems you are discussing here.
Most promising solution in my eyes: licensing of patents. What the creative commons license does for content could be done with better licenses for patents. That could allow more people to use patents and inventors/innovators to earn back their investments.
Carl said
am December 15 2007 @ 2:38 pm
ps: I agree with Philippe that “pure open innovation” as emile defines it is not Chesbrough’s definition.
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