What Is the Right Balance between Open and Closed Innovation?

Subject: Entrepreneurship
Pages: 4
Words: 1080
Reading time:
4 min
Study level: College


Regarding the state of corporate reality and the outcomes of such processes like the shortening of innovation cycles or the technological merging, the idea of open innovation remains to be a crucial point for discussions. The presentation developed by Professor Dr. Ellen Enkel aims at analyzing the main objectives of open innovation and providing a comparison between the peculiarities of open and closed types of innovation.

The author concludes that some companies can benefit from open innovation, and some companies fail to achieve the same results (Enkel 13). Therefore, such steps like the development of new potentials, the utilization of the already existing potentials, and the evaluation of barriers and risk factors should be taken properly to measure open innovation excellence and learn how to define costs for market research, identify a proper number of internal and external partners. In general, the work by Enkel helps to realize that close innovation and open innovation have their positive and negative aspects and promote business success. Managers and leaders should not neglect these concepts and find out the balance to make the right choice.

Key Learning Points

Several learning points can be identified in the presentation by Enkel:

  • Open innovation;
  • Closed innovation;
  • Efficiency orientation;
  • Innovation orientation;
  • Business models.

The reasons why companies choose open innovation or closed innovation may vary considerably. There are two main categories according to which open innovation targets can be divided: innovation orientation and efficiency orientation. As soon as the companies understand what motivates them and what outcomes to expect, they have to choose a business model with the help of which the required steps can be taken. In other words, companies should succeed in innovation management. In its turn, innovation management aims at analyzing corporate strategies and cultures and identifying the balance between open and closed innovation. Managers and leaders have to understand the importance of the evaluation process, consider the research gaps that are based on the changes in the organizational behavior, and identify cultural and organizational aspects that may affect a company’s innovation performance.

Relevant Statements to the Session

Several common issues have been identified during the unit and discussed in the article. First, many companies are eager to benefit from open innovation using less money and forcing the implementation process. Such conditions like the inability to conduct and improve research and promote developmental budgets, the presence of new business models, and the necessity to make the choices regarding the opportunities and risks (Enkel 2), may serve as reasonable explanations of why companies want to use innovation and identify the required balance between closed innovation and open innovation. The choice between closed and open innovation depends on the company’s intentions to share its knowledge and professionalism.

The ideas of how open innovation can be used in practice can be observed from the examples of such companies as P&G, Bayer, and Henkel (Enkel 4). IBM’s Innovation Jam shows how a 72-hour online brainstorming initiative involves more than 150,000 people and gathers more than 46,000 ideas that can help the company to improve the quality of its services, attract the attention of customers, and become competitive on a global market.

Critical Analysis

There are many problems an entrepreneur may face in the real world, as well as there are many solutions that can be offered to overcome the challenges and choose the most appropriate relations. The article under consideration helps to comprehend the essence of the problems many organizations should deal with regularly. The author also identifies solutions that can be given. For example, it is possible to observe the practices of other companies and evaluate the results that have been already achieved. The conclusions about the effectiveness of open innovation have several grounds like the possibility to increase productivity, reduce costs, exploit new markets, and enlarge product and service offerings (Enkel 6). The references to such concepts as project management, innovation management, and technological management prove that companies have to think about the ways of how they can organize their time, analyze the ideas, involve as many people as possible.

On the one hand, the identification of risks and barriers that can determine the quality of work helps to identify what companies should be ready for. For example, the balance between daily business and open activities may prevent the development of an innovation process (Enkel 16). Managers and their leaders may suffer from a lack of time and resources. Besides, there are several administrative barriers and unspecific challenges that cannot be identified in a short period. On the other hand, the identification of such factors without proper solutions is a weak contribution to managing the problems. People know what can challenge their work. Still, they do not know what can help them in case they fail while identifying the balance between open and closed innovation. In other words, the article does not contain the alternatives that can be successfully used in addition to the offered business model.

Practical Implementations

After reading the article, entrepreneurs can use one of the key principles to promote the success of their companies. The idea to perform the role of a dual-oriented analyzer as one of the extended strategy typologies towards innovation seems to be the best rationale. It provides the entrepreneur with a possibility to increase novelty, reduce risks, demonstrate a willingness to open collaboration and focus on internal and external contacts.

The article is a chance to comprehend how to begin the process of improving business relations and the work of a company. Open innovation should help to gather interesting ideas from different sources and use various experiences to change the current state of affairs.

Learning Reflections

Open innovation is a chance to cooperate with external partners, share knowledge, and find out new ideas. Closed innovation supports the idea of individualism in business and the necessity to hire and fire people regarding their attitudes to the work, the abilities to complete duties, and the skills to meet the expectations. The mobility of skilled workers and the impossibility to identify the reasons for such mobility remains to be the main challenge for closed innovation and opens new opportunities for open innovation business models (Enkel 2). Companies and their entrepreneurs should be ready to make fast decisions and evaluate the resources and ideas available to promote corporate growth and success. The balance between closed and open innovation is the symbolic answer to the question of how broad external ideas can be found to promote relations with internal and external partners.

Work Cited

Enkel, Ellen. “What is the Right Balance between Open and Closed Innovation?” Zeppelin University: Bridging Business Culture Politics. 2012. Presentation.