Benefits and Limitations of Open Innovation in Modern Organisations

Assignment Brief

UGB269 Innovation Management Assessment for 2019

Choose ONE of the themes below and prepare an academic report in the form of a JOURNAL PAPER of 3000 words in length, excluding appendices.

1. A Management Framework for Looking at Innovation Sources
2. Benefits and Limitations of Open Innovation
3. Choosing the Innovation Management Business Model
4. Creating Value Through Innovation Management
5. Managing & Measuring Innovation Performance
6. Managing Components of Innovation Management

The submitted paper must critically debate a current theme and be supported with company examples.

LINK THE CHOOSEN THEME TO AN ORGANISATION AND THEN COMPARE THE CORE ORGANISATION (BY GIVING EXAMPLES) WITH OTHER ORGANISATIONS.

The assignment is intended to give you an opportunity to show that you are capable of applying your knowledge of managing innovation and technology transfer, not only in describing the issue faced by the commercial sector, but also in explaining it and justifying your proposed actions for improvement.

GUIDANCE

Students are asked to reflect on their personal network of tutors, family members, relatives and professional / social networks to thoroughly consider if it is possible to source a live organisation. Students must familiarise themselves (i.e. reading and reflecting on current journal articles) with a current theme from the module scheme of work. Student will then be required to write an academic report in the format of a journal paper. It will be suggested that students watch the video clip via the link below to aid them to write the academic report. https://www.youtube.com/watch?v=1O_Go1KzAyE

For your guidance, the report must consist of:

1. An introduction in which you introduce the theme that you are investigating, clearly emphasising its importance.
2. A detailed methodology of the analytical approach you are taking, demonstrating a critical understanding of managing innovation and technology transfer theme.
3. A section on your findings includes a critical evaluation, detailing the theme selected its implications and company examples.
4. Conclusions and commercially viable solutions.
5. Throughout the report, you must integrate theory with practice, critically evaluating your findings.
6. All sources must be cited correctly in accordance with the Harvard system of referencing.

Sample Answer

Benefits and Limitations of Open Innovation in Modern Organisations

Introduction

Innovation is now considered the lifeblood of organisational survival and competitiveness. Traditional models of innovation, which rely on closed systems of internal research and development, have been challenged by the growing practice of open innovation. The concept, developed by Henry Chesbrough (2003), suggests that firms can create and capture value by sharing knowledge, collaborating with external partners, and leveraging outside ideas alongside internal ones. Open innovation has become particularly important in industries characterised by rapid technological change and global competition.

This paper examines the benefits and limitations of open innovation, with a focus on Tesla as the core organisation. Tesla has famously adopted a distinctive open innovation approach by releasing its patents to the public in 2014. The paper critically evaluates how this approach has shaped Tesla’s innovation performance, comparing it with companies such as Apple, which follows a closed innovation model, and Toyota, which employs a hybrid system.

Methodology

The paper uses a comparative case study approach. Tesla is taken as the primary case due to its strong commitment to open innovation practices, particularly in the electric vehicle (EV) industry. Secondary data has been collected from journal articles, company reports, and credible industry analyses. The findings are analysed using Chesbrough’s open innovation framework, considering benefits, risks, and long-term implications.

Benefits of Open Innovation

Accelerated Knowledge Sharing

Tesla’s decision to open its patents on EV technology has encouraged other firms to enter the EV market more easily. This aligns with Chesbrough and Bogers’ (2014) argument that open innovation reduces duplication of effort, enabling industry-wide growth. By lowering barriers to entry, Tesla indirectly accelerates the transition towards sustainable transport, which supports its mission beyond immediate profit.

Creation of Industry Standards

Open innovation can create de facto standards, strengthening the market position of the firm initiating them. By releasing patents, Tesla set its technology as a benchmark for EV infrastructure, ensuring compatibility and encouraging widespread adoption. Toyota has followed a similar path by licensing its hybrid vehicle patents, showing how open innovation can influence an entire industry’s ecosystem.

Cost Efficiency and Risk Reduction

Through open innovation, firms share development risks with partners, universities, and start-ups. Tesla collaborates with Panasonic for battery development, reducing its internal R&D costs. Similarly, Procter & Gamble’s “Connect + Develop” initiative demonstrates how external partnerships provide cost-effective solutions to innovation challenges (Huston & Sakkab, 2006).

Continued...