Open Innovation Strategy, Phillips: A Case Study

This case study explores the Open Innovation Strategy of Phillips, a company that focuses on lighting and healthcare. It discusses the concept of disruptive innovation and provides recommendations for improving the strategy of the business.

OPEN INNOVATION IN ICT
OPEN INNOVATION IN ICT
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Executive Summary
Open Innovation is defined as shift from traditional controlled and closed innovation environment
for flexible and open models. Strategy for open innovation aims in redefining boundaries between
organization and its environment. Furthermore, Open Innovation’s concept is related with model
for open business, as the connection between models for new business and technology is
strengthened with Open Innovation’s intensive use. Phillips service consists of several products.
Customer satisfaction is essential for the services of Phillips. It is considered to be disruptive
innovation as a great value is created in economy by beating other similar service industries. How
Phillips is disruptive is discussed in this study and some recommendations are provided for
improving the strategy of the business.

OPEN INNOVATION IN ICT
Table of Contents
1. Open Innovation Strategy, Phillips:.........................................................................................1
1.1 Introduction..................................................................................................................................1
1.2 Exploration of Adoption Categories....................................................................................1
2. Retrospective Analysis of Phillips...............................................................................................4
2.1 Evaluation of their Design:.....................................................................................................4
2.2 Evaluation of original Entrepreneurship and Start-Up Potential:..........................4
2.3 Evaluation of their Application of Business Analytics:................................................5
Conclusion.................................................................................................................................................5
Bibliography...............................................................................................................................................
Appendix 1...................................................................................................................................................
Infographic Representation:..................................................................................................................

OPEN INNOVATION IN ICT
1. Open Innovation Strategy, Phillips:
Open Innovation Strategy looks in redefining boundaries between organization and its
environment, which makes firm more embedded and porous in networks of loosely-coupled for
different actors, individually and collectively working towards commercializing and collecting new
knowledge (Brunswicker & Vanhaverbeke, 2015). For this case study, as Open Innovation Strategy
Phillips is chosen that falls under the category of open innovation. Its innovation strategy focuses in
area of lighting and healthcare.
1.1 Introduction
Open Innovation paradigm is known as shift from closed innovation and R&D environment
for flexible models. At most elementary level, Open Innovation’s concept is embedded for the notion
which the knowledge sources in innovation are shared widely in economy (West & Bogers, 2014).
Phillips have two essential divisions such as Phillips Professional Healthcare and Phillips Consumer
Health and Well-being. Phillips was one of the largest producer of lighting with respect to
applicable revenues in the world.
As per Clayton Christensen’s theory, disruptive innovation is termed as a method in which a
service or a product that have minimum application at beginning stage and is at the bottom position
in market. Later, being able to compete with the competitors due to enhancement in service or
product (Vecchiato, 2017). Phillips is one of the most successful companies in disrupting the
business of lighting by providing numerous technologies. Phillips reveals recognition of integration
and access of healthcare products and systems and selection of technology of connected care for
determining how the world can meet new needs of healthcare.
1.2 Exploration of Adoption Categories
There are five adopter categories which are found in research: innovators, early adopters,
early majority, late majority and laggards. As per the research of Roger, innovators will adopt
innovation, taking risk even having intelligibility with respect to finance and still new in market (Oh
et al, 2016).
Innovators: People who adopt anything as it is latest. They love to explore and are happy taking
risks, even if this can lead to failure.
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Relative Advantage: According to 5 innovation of Roger, this category’s relative advantage
is an innovation is the improvement of the technology. Numerous technologies and products
has made this business a great value throughout the whole world.
Compatible: The innovation of technology used by Phillips is quite compatible, as the
customer requirements are met for which customers are buying more Phillips product and
trusting their service.
Observability: This characteristics appears when the results of this innovation can be easily
accessed by the customers and it is found to be an effortless innovation. Phillips have
attracted several customers and customers are quite happy with the services or products
provided by Phillips.
Innovators look for something new always, they believe in the concept of modification. First
they need to examine how the innovation can be advantageous and then check if customers are
comfortable or happy with the service provided to them.
Early Adopters: Early adopters are people who are opinion heads. They are same as innovators
about how rapidly they adopt, however they are interested more to maintain their reputations
(Skog, Wimelius & Sandberg, 2018).
Trialability: The primary feature of Phillips is it provides customers products with high
quality and new technologies. The price of these products is also not very high ranged.
Availability: Phillips products are always available in the market. No matter what type of
technology is used by Phillips, its products are always available for the customers. Different
types of ranges for the same item are manufactured by Phillips which gives customers more
options to select from. These several options attract customers for adopting this innovation.
Complexity: Phillips has taken its effectiveness to another level by making its products
available at all times. Phillips products can also be purchased from online websites. People
can look for Phillips products in many websites and retail apps and can compare and choose
the best item as required.
People who are from this category believes in creating opinions and in innovation.
Hence, the above sequence of characteristics are needed for creating opinions.
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Early Majority: Early majority searches for practical benefits and productivity more than
reputation or coolness (King & Baatartogtokh, 2015).
Relative Advantage: They adopt the change if they can be influenced by this innovation for
using it. Though early majority loos for easy and new platforms. Phillips has always provided
improved and high quality service to the customers.
Trialability: Early majority people always are ready in trying, so there are no barriers for
the business as per people of early majority.
Observability: After using Phillips products and services, customers recommend other as
well to use products of Phillips, which is a huge advantage for the company in expanding
their products more.
Early majority people are quite similar to innovators, however they analyse the advantages
first then they try and observe the results of the innovation.
Late Majority: People who are in late majority category, are quite same as early adopters.
However they are really cautious and test if the innovation is of great support and help or not. They
expect lot of support and help before trying to commit. They are not too young, but are younger in
age than senior citizen (King & Baatartogtokh, 2015).
Relative advantage: The adopters find it to be profitable and very easy if the prices of the
products are not too high and reasonable.
Observability: People of the category of late majority observes maximum people whether
this innovation is adapted by others or not. They observe how customers are seeing and
reviewing about the new products of Phillips.
Complexity: The change is adopted by late majority people if it is observed that maximum
customers are able to get high quality services and products. The variety in products of
Phillips is really successful to make early adopters and innovators in using it. Hence, there
lies a chance that people of late majority would also accept this change.
For analysing the service provided by Phillips, people of late majority focuses on how
profitable it can be to the people and on its complexity. Customer feedback, innovation’s buying
rate are essential for people of late majority adopters. After evaluation of price, late majority people
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proceed towards process of decision making. Hence, late majority people would give importance to
the above mentioned characteristics.
Laggards: People falling under this category are slow in adopting any kind of new technologies
and system. They are most resistant in changing and change only when forced in adopting as
everybody else has changed (Skog, Wimelius & Sandberg, 2018).
Trialability: Phillips products come with proper guide of manuals in using them. Therefore,
customers can decide if it is easy to use or not.
Observability: They are ready in adoption if there is an emergency.
Complexity: They find it difficult in using products with new technologies.
As per laggards, innovation business might be low if difficulty is found in adopting this innovation.
2. Retrospective Analysis of Phillips
2.1 Evaluation of their Design:
Phillips is evaluating its service by introducing new technologies to its products. New
products with latest technologies are launched by Phillips, that too, within a reasonable price and
high quality products.
Phase 1: Evaluation of ex ante is the strategic information with respect to choices at the
beginning stage that made business in making a good approach (Christensen, Raynor &
McDonald, 2015). As the number of customers as rapidly increased, products remain out of
stock whenever many customers try to buy the same item.
Method 1: Production of products can be increased for providing customers better
service, so that products are always available for the customers.
Method 2: Price of products should be reasonable so that every customer can have the
opportunity to buy the products.
Phase 2: Evaluation of ex post focuses on survey and helps in improving strategy for gaining
more customers and economic benefits (Williams, Platt & Lee, 2015). Phillips is launching
new products regularly.
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Method 1: Discounts on several products can attract more customers to Phillips
products.
Method 2: Old products can be modified with new technologies. Products can be re-
launched with new updated versions.
2.2 Evaluation of original Entrepreneurship and Start-Up Potential:
The strategies that are used by companies are:
Referral system is the most important factor. Customers get more satisfied with any
products or services if they are recommended by someone. Info-graphics representation, videos
help customers to know about innovative start-ups (Spithoven, Vanhaverbeke, & Roijakkers, 2013).
Marketing in social media requires creating pages in Facebook, Instagram, so customers get to
know about the details of the products.
The strategies can be used by Phillips, as designer it is recommended in doing referral
system for exploring the business. People get more influenced if they are suggested by someone
and it is observed that they are getting benefitted as well. Publications through news in social
media and newspapers can help in increasing the business (Cunningham, 2015). Phillips focuses on
the ratings and reviews given to their products through online websites and apps which helps in
improving their service.
2.3 Evaluation of their Application of Business Analytics:
Phillips is one such company which provides customers with high quality products.
Customers can easily see the ratings and reviews before purchasing any product (Hilty &
Aebischer, 2015).
Although as per the reviews, this innovation helps in going to have high value in market as
compared to other companies.
It is recommended in having a good relationship with customers by analysing the reviews
and ratings given by the customers (Garriga, Von Krogh & Spaeth, 2013).
Conclusion
This innovation is easy to use and affordable, the features of the products are useful and is
available instantly. Customers will be having many benefits if this innovation is adopted. Several
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customers are attracted to the products of Phillips as it is one of the most reputable companies in
the world. However, there are no partnerships between Phillips and other complementary
companies as risk of losing priorities is very high.
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Bibliography
Brunswicker, S., & Vanhaverbeke, W. (2015). Open innovation in small and
medium‐sized enterprises (SMEs): External knowledge sourcing strategies
and internal organizational facilitators. Journal of Small Business
Management, 53(4), 1241-1263.
Christensen, C. M., Raynor, M. E., & McDonald, R. (2015). What is disruptive
innovation. Harvard Business Review, 93(12), 44-53.
Cunningham, P. (2015, November). Insights into open innovation and ICT
entrepreneurship in Africa. In 2015 IEEE International Symposium on
Technology and Society (ISTAS) (pp. 1-8). IEEE.
Garriga, H., Von Krogh, G., & Spaeth, S. (2013). How constraints and knowledge
impact open innovation. Strategic Management Journal, 34(9), 1134-1144.
Hilty, L. M., & Aebischer, B. (Eds.). (2015). ICT innovations for sustainability (Vol.
310). Springer International Publishing.
King, A. A., & Baatartogtokh, B. (2015). How useful is the theory of disruptive
innovation?. MIT Sloan Management Review, 57(1), 77.
Oh, D. S., Phillips, F., Park, S., & Lee, E. (2016). Innovation ecosystems: A critical
examination. Technovation, 54, 1-6.
Rea, M. S. (2013). Value metrics for better lighting. Bellingham, WA: SPIE Press.
Skog, D. A., Wimelius, H., & Sandberg, J. (2018). Digital disruption. Business &
Information Systems Engineering, 60(5), 431-437.
Spithoven, A., Vanhaverbeke, W., & Roijakkers, N. (2013). Open innovation
practices in SMEs and large enterprises. Small Business Economics, 41(3),
537-562.

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Vecchiato, R. (2017). Disruptive innovation, managerial cognition, and technology
competition outcomes. Technological Forecasting and Social Change, 116,
116-128.
West, J., & Bogers, M. (2014). Leveraging external sources of innovation: a review
of research on open innovation. Journal of Product Innovation Management,
31(4), 814-831. //
Williams, J. C., Platt, A., & Lee, J. (2015). Disruptive innovation: New models of
legal practice. Hastings LJ, 67, 1.

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Appendix 1
Infographic Representation:
Figure 1: Phillips Infographics
(Source: Rea, 2013)