Open Innovation Strategy

The concept of the open innovation strategy acknowledges the strategic approach that goes opposite to the silo mentality in any organization. The paper will describe two organizations which employed the open innovation strategy in their operations and how they restructured their business with the introduction of the mentioned open innovation strategy.

Running head: OPEN INNOVATION STRATEGY
Open Innovation Strategy
Name of the Student
Name of the University
Author Note

1OPEN INNOVATION STRATEGY
The concept of the open innovation strategy acknowledges the strategic approach that
goes opposite to the silo mentality in any organization (King & Lakhani, 2013). The modern
organizations are widely observed to follow higher level secrecy with their projects and the
business approaches. The organizations are forced to do so in order to make sure that the
product and the services that they offer to their customers do not get exposed to their
competitors (Schjelderup, 2016). In that case the competitor organization will get the benefit
of introducing an excellent concept in their products which they never invented. The concept
of the open innovation strategy breaks both the top level secrecy and the silo mentality of the
management (Chesbrough & Brunswicker, 2013). The paper will describe two organizations
which employed the open innovation strategy in their operations and how they restructured
their business with the introduction of the mentioned open innovation strategy.
The chosen organization for the paper will be Coca Cola and the National Aeronautics
and Space Administrations (NASA). The Coca Cola Company is an American organization
which is known for manufacturing, retailing and marketing the non-alcoholic beverage along
with the syrups ("Coca-Cola Global", 2018). The organization has it’s headquarter in Atlanta,
Georgia, United States and is currently managed by Muhtar Kent (Chairman), James Quincey
(CEO and President) ("Coca-Cola Global", 2018). The organization was founded by John
Pemberton as Coca-Cola and later it was founded by Asa Griggs Candler as The Coca-Cola
Company. The organization is currently having its stocks listed on the New York Stock
Exchange (NYSE), S&P 500 Index, The Russell 1000 Index and in the Dow Jones Industrial
Average (DJIA) ("The New York Stock Exchange | NYSE", 2018). The organization being a
multinational organization, is currently experiencing the expertise of 61800 employees and
enjoying an operating income of 7.501 billion US dollars in the financial year 2017. In the
same financial year, the organization expressed the statistics of their revenue reaching 35.410
billion US dollars ("2017 Integrated Annual Report", 2018). The organization is significantly

2OPEN INNOVATION STRATEGY
focusing on extending their product chain with the introduction of the products like green tea,
vitamin drinks and many more. Along with this the organization focused on the mergers and
acquisitions over the years in order to find the scope to enter new market in order to expand
their business. Glaceau or Huiyuan Juice are those organizations which enabled the
concerned organization in entering a new market along with the access into a new product as
well (Company et al., 2018). The organization largely focuses on the digital selling methods
along with the presence of the in-store in order to provide the customers with the added
relaxation in finding their refreshments.
NASA is the second organization which inherited the open innovation strategy. The
concerned organization is an independent part of the Federal Government of the United
States which is responsible for the aerospace and aeronautics research and civilian space
program ("Branches of the U.S. Government | USAGov", 2018). The organization was
established by the American President Dwight D. Eisenhower in the year 1958 ("National
Aeronautics and Space Administration", 2018). The organization is currently having its
headquarters in the Washington D.C., United States with a number of employees exceeding
17381. The organization is currently managed by the Administrator of NASA, James
Frederick Bridenstine and the Chief Financial Officer, Jeffrey DeWit ("National Aeronautics
and Space Administration", 2018). The organization is one of the premier agency in the
concerned field and is currently having a budget of 20.7 billion US dollars in 2018 ("2017
Annual Report", 2018). The organization from the initiation is having several manned
programs starting from X-15 rocket plane (1959-1968), Project Mercury (1958-1963), Project
Gemini (1961-1966), Apollo Program (1961-1972), Skylab (1965-1979), Apollo-Soyuz Test
Project (1972-1975), Space Shuttle Program (1972-2011), International Space Station (1993-
present) to Beyond Low Earth Orbit Program (2010-2017) ("NASA Missions A-Z", 2018).
Apart from the manned programs the organization is able to conduct several unmanned

3OPEN INNOVATION STRATEGY
programs as well in order to explore the atmosphere and geography of the earth and solar
system. Along with the exploration the organization is able to launch several communication
satellites. The organization is having clear motive of extending the human activities around
the solar system, creation of the new inventive space technologies along with the
advancement in the aeronautics research. The organization is also having several field centres
in Florida, California, Maryland, Texas, Alabama and Mississippi ("NASA Centers and
Facilities", 2018).
The Coco-Cola Company was observed to implement two open innovation strategy in
their organization. The concept of open innovation and the strategic innovation theory states
the ignorance of the silo mentality in the process. The innovative framework of the strategy is
believed to confirm that the association of the internal and external sources in the formation
of the strategy or the processes will strengthen the base of the strategy. The organization is a
significantly important name in the beverage industry and in order to cope up with the market
pressure, the organization needs to make sure that the strategy goes well with the customers.
The concerned organization constructed two open innovation strategies in the selling and
processing part respectively. The first one was the Coca-Cola Accelerator Program which
generally helped start-ups of eight cities like San Francisco, Bangalore, Sydney, Buenos
Aires, Berlin, Istanbul, Rio de Janeiro and Singapore ("The Bridge by Coca-Cola", 2018).
The organization had the aim to build a happiness brand and with the formation with the
start-up, the organization was sufficiently capable in converting the start up into scale up.
This was instrumental in spreading their business and that too be in very small segments. The
next open innovation strategy that was implemented by the organization was the Freestyle
Dispenser Machine. This was a unique strategy to involve the customers in the processing of
the product and that was a significantly crucial idea in order to create the brand loyalty
among the customers of the organization. The organization in their strategy was able to

4OPEN INNOVATION STRATEGY
provide the customers with the chance of mixing their own flavours and creating a new one
for the organization ("Home Page", 2018). The new flavour was recorded by the organization
in order to implement that in their freestyle machines which are located in the several parts of
the world. This was crucial for the organization in order to assess the favoured flavour by
their customers and the customers seemed to enjoy their participation in the process of
production as well.
The organization NASA was significantly planning to incorporate the open innovation
strategy in their operations for some time but they adopted the mentioned form of strategy in
order to build the mathematical algorithm which will be able to determine the optimal content
of the medical kits for the manned programs that will be initiated by the concerned
organization in future. The importance of the product was significant for the concerned
organization as the attention from the part of the organization regarding the healthcare of the
employees was of immense priority. The organization made sure that the solution be highly
cost effective and the quality of the solution never get compromised and in doing so they
collaborated with the nominated agencies like TopCoder, Harvard Business School and the
London Business School ("Design & Build High-Quality Software with Crowdsourcing |
Topcoder", 2018). This enabled the organization to incorporate professionals of different
fields like coders or software enthusiasts in providing the innovative software. With the
mentioned innovation the organization was able to obtain the advantages of the theoretical
framework of the open innovation strategy.
It will be controversial to acknowledge the success of the open innovation strategy
only in terms of the financial perspectives as the concept that were introduced by the
concerned organization Coca Cola was capable of getting rated by the customer
acknowledgement as well. The background of the organization before initiating the strategy
was bit vulnerable with the limited amount of products and the increasing amount market

5OPEN INNOVATION STRATEGY
competitors. The organization was not going well financially. The strategy enabled the
organization to reduce the huge amount of expenses for the research and the concerned
organization was observed to utilize their available freestyle dispenser machine. The annual
report of the organization in the financial year 2008 claimed the organization had a revenue
of 31.94 billion US dollars from the previous year’s 28.86 billion US dollars (Company et al.,
2018). But in the following year the organization observed a sharp decrease in the revenue
which came down to 30.99 billion US dollars (Company et al., 2018). This was the financial
situation of the organization when the considered the plan of introducing the freestyle
dispenser machines into the market. Initially the organization felt some issues with the
presence of technology in the innovation as the operation of the machines was bit confusing
for the customers who were trying it for the first time but the innovation went well for the
company and that was visible with the annual report of the financial year 2010. The
organization claimed a rise in their revenue and they recorded the revenue of the financial
year 2010 to be 35.12 billion US dollars (dollars), 2018). The organization went on with the
plan of the freestyle dispenser machine plan and in the following year the organization
claimed an increment in their revenue which for the financial year 2011 reached to 46.54
billion US dollars (dollars), 2018). Thus the organization was able to generate increased
amount of revenue with the new strategy along with the customer satisfaction.
Topic 2009 2010 2011 2012 20113 2014 2015 2016 2017
Net
Operatin
g
Revenue
30.99 35.119 46.542 48.017 46.85
4
45.99
8
44.294 41.86
3
35.41
Operatin
g
8.231 8.431 10.173 10.779 10.22 9.708 8.728 8.626 7.501

6OPEN INNOVATION STRATEGY
Income 8
Basic
Net
Income
Per
Share
0.0029 0.0051 0.0037 0.002 0.001
9
0.001
6
0.0016 0.001
5
0.000
2
Diluted
Net
Income
Per
Share
0.0029
3
0.0050
6
0.0036
9
0.0019
7
0.001
9
0.001
6
0.0016
7
0.001
4
0.000
2
(Information Courtesy: Annual Report of The Coca Cola Company)
(All Figures are in Billion US Dollars)
The organization NASA is not a completely profit making organization and their
strategy was not meant to increase the amount of revenue for the organization rather the
organization used their strategy to increase the amount of the comfort and the quality related
with the medical kits of the concerned organization. The assessment of the success of the new
strategy for the concerned organization was to be carried out by the internal study of the
responses of the employees who used the product. The organization in their report was
observed to acknowledge the impact of the software in assessing the optimal content of the
medical kits for their future manned missions ("National Aeronautics and Space
Administration", 2018). The amount of safety that the medical kits inherited with the
introduction of the new product was appreciated by the members of the organization in their
general meeting which itself clarifies the success of the new strategy for the concerned
organization.
Topics Coca-Cola Company NASA
Cost Effective The organization had the The solution for the

7OPEN INNOVATION STRATEGY
responsibility to spread their
product with the new shops
and supply chains but with
the support to the start-ups,
the organization was able to
reduce the operating and
initialization cost. Along
with that the organization
was significantly reducing
the amount of money that
were to be associated with
the research regarding the
new products and flavours.
organization was
significantly important and
the organization was able to
cut down the amount of
money that were related
with the research by sharing
the responsibility among
many well decorated
researchers.
Improved Productivity and
Product
The organization was able to
provide a customer designed
product to the customers of
the organization and as the
product was composed
according to the wish of
customers, the organization
was able to align their
product according to the
market trends.
The concept of closed
thinking or the innovation,
generating from the thoughts
of a limited amount of
people had the possibility of
making the quality of the
product limited. The
organization justifiably
employed several agencies
in providing an improved
solution and the
organization observed

8OPEN INNOVATION STRATEGY
quality works from the
countries like UK, Japan and
Indonesia.
Customer Involvement and
Market Targeting
The concerned organization
was significantly smart in
involving their customers as
the organization enabled the
customers to form the
appropriate mixture of their
preferred flavours and create
a new one. The organization
was instrumental in aligning
their product according to
the market trends and in
doing so the organization
was not in need to do any
sort of intense market
research as the customers
with their preferred mixture
of flavours were meeting the
need of the market research.
In this case the incorporation
of the customers were not
visible in such an extent
rather the association of the
different agencies in
providing a quality solution
was observed. The
cooperation from the
different responsible
organizations was visible in
making the product of
optimum quality.

9OPEN INNOVATION STRATEGY
On a concluding note it can be said that the finding of the impact that the freestyle
dispenser machine had on the company’s financial status is described in the previous section
with the increment in the generated revenue. The implementation of the plan also
acknowledged the importance of association with the customers. The organization was
incredibly good at involving the customers with the production by the concept of customer
designed flavours and it increased the brand association of the concerned organization. The
strategy by the NASA was found to be a precautionary step for the betterment of the medical
kits of the concerned organization and the organization was significantly impressive in
considering the scope of involvement of more than one agency for the better quality of the
solution. This also made sure that the preliminary research cost of the product does not affect
the concerned organization.

10OPEN INNOVATION STRATEGY
References:
2017 Annual Report. (2018). Retrieved from https://www.nasa.gov/langley/overview/2017-
annual-report
2017 Integrated Annual Report. (2018). Retrieved from
https://coca-colahellenic.com/en/investors/reports/2017-integrated-annual-report/
Branches of the U.S. Government | USAGov. (2018). Retrieved from
https://www.usa.gov/branches-of-government
Chesbrough, H., & Brunswicker, S. (2013). Managing open innovation in large firms.
Stuttgart: Fraunhofer Institute for Industrial Engineering.
Coca-Cola Global. (2018). Retrieved from http://www.coca-cola.com/global/
Company, O., Main, O., Journey, A., Mission, V., Inclusion, D., & Rights, H. et al. (2018).
Glacéau Vitaminwater. Retrieved from
https://www.coca-colacompany.com/brands/glaceau-vitaminwater
Company, O., Main, O., Journey, A., Mission, V., Inclusion, D., & Rights, H. et al. (2018).
2008 Annual Review. Retrieved from
https://www.coca-colacompany.com/investors/2008-annual-review
Company, O., Main, O., Journey, A., Mission, V., Inclusion, D., & Rights, H. et al. (2018).
2009 Annual Review - The Coca-Cola Company. Retrieved from https://www.coca-
colacompany.com/investors/2009-annual-review
Design & Build High-Quality Software with Crowdsourcing | Topcoder. (2018). Retrieved
from https://www.topcoder.com/

11OPEN INNOVATION STRATEGY
dollars, T. (2018). Coca-Cola's net operating revenues worldwide, 2017 | Statistic. Retrieved
from https://www.statista.com/statistics/233371/net-operating-revenues-of-the-coca-
cola-company-worldwide/
Home Page. (2018). Retrieved from https://www.coca-colafreestyle.com/
King, A., & Lakhani, K. R. (2013). Using open innovation to identify the best ideas. MIT
Sloan management review, 55(1), 41.
NASA Centers and Facilities. (2018). Retrieved from
https://www.nasa.gov/about/sites/index.html
NASA Missions A-Z. (2018). Retrieved from https://www.nasa.gov/missions/
National Aeronautics and Space Administration. (2018). Retrieved from
https://www.nasa.gov/
Schjelderup, G. (2016). Secrecy jurisdictions. International Tax and Public Finance, 23(1),
168-189.
The Bridge by Coca-Cola. (2018). Retrieved from http://thebridgebycocacola.com/
The New York Stock Exchange | NYSE. (2018). Retrieved from https://www.nyse.com/index

12OPEN INNOVATION STRATEGY
Bibliography:
FTSE Russell. (2018). Retrieved from https://www.ftserussell.com/
Harvard Business School. (2018). Retrieved from https://www.hbs.edu/Pages/default.aspx
Home | London Business School. (2018). Retrieved from https://www.london.edu/
Standard & Poor's | Americas. (2018). Retrieved from
https://www.standardandpoors.com/en_US/web/guest/home