Open Innovation: Critical Evaluation of Benefits and Limitations

This report provides a critical evaluation of open innovation, exploring its benefits and limitations through a detailed analysis of its implementation in various companies. The introduction defines open innovation and its increasing adoption by organizations, emphasizing the integration of internal and external practices to enhance efficiency. The main body employs a critical analysis approach, examining research papers and comparing trends to assess the adoption of open innovation by companies, particularly in the UK. Case studies of ASDA, General Electronics (GE), and Samsung are presented to illustrate the strategies, advantages, and disadvantages associated with open innovation. Positive aspects such as creating new products, innovating old services, building strong communities, keeping employees engaged, and staying ahead of competition are discussed. Negative aspects, including the potential for loss of control, theft of ideas, impact on profit margins, and reduced employee participation, are also evaluated. The report concludes with recommended solutions based on the critical evaluation, offering insights into the effective management of open innovation strategies and their impact on business development.

INNOVATION
MANAGEMENT
ASSESSMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................1

INTRODUCTION
The concept of open innovation has been a widely acclaimed as a source through which
production can be effectively increased but only through innovative mechanisms. The internal
activities or practices are integrated with the outward practices and models thus increasing the
chances at efficiency. This concept has increasingly been adopted by different companies in their
innovational technique management (Gehani, 2016). In this journal article, the concept of open
innovation has been critically evaluated and the different benefits or limitations that are
associated with it have been effectively discussed. The article further illustrates different
company examples that integrated open innovation in their operations and this is then used to
critically evaluate its implementation i.e. what were the advantages and what were the
disadvantages that occurred due to such implementation. Lastly, solution related to open
innovation have been presented in the journal based on the critical evaluation done in the prior
section and a conclusion has been developed accordingly.
MAIN BODY
Detailed Methodology
The topic that has been selected i.e. Benefits and limitations of open innovation is a very
wide area which entails or evaluates the implementation of open innovation practices by
organization and their advantages as well as disadvantages. A critical analysis approach has been
adopted under this where the research papers published by different authors have been collected
and the evaluated by comparing such research papers with different trends. This journal report
evaluates the adoption of open innovation by different companies and their success or rather
failure has been discussed (Bogers, Chesbrough and Moedas, 2018). Different companies,
majorly in UK that adopted the mechanism of open innovation have been taken and then the
strategies that the used for implementation of open innovation have been evaluated. The critical
evaluation strategy that will be adopted will basically be based on the secondary research where
the different research articles that have been previously published will be collected and
compared. Additionally, there is development of various themes that are associated with the open
innovation and on the basis of such themes, critical evaluation has been done on each of these
themes. The different positive and negative aspects associated with each theme will be discussed
and the based on such thematic analysis, an adequate conclusion will be presented along with
recommended solutions.

Open Innovation
Eckhardt, Ciuchta and Carpenter (2018), have discussed the concept of open innovations
as a paradigm based on the idea that skilled and intelligent people even if not part of a company,
can still contribute to the company's development and objectives, and that the mutual sharing of
knowledge and ideas is useful for both parties in many different ways, as the higher amounts of
information gained and available to use leads to better educated decision making.
Positive Aspects of Open Innovation
Von, Netland and Wörter (2018), have highlighted the benefits of open innovation stating
that open innovation is a joint venture of internal and external ones to boost innovation culture in
the company. For e.g.: Big companies like Google, Microsoft continuously tend to acquire new
ideas from start-ups, customers, student to consider for their open renovation ideas. It can also be
explained as a business model that encourages one to connect with outside sources by expanding
the pool of talent. There are many benefits of open innovation, that the authors have discussed
below in following sub categories:
Creating new products and services: When a new start up is invented, tremendous efforts are
applied in putting first product in the market. Investing energy and resources in inventing new
product as a start up is tough task as the budget is also low. Still, when one thinks to collaborate
with third party joining both resources and creating something new can increase both profit and
buzz of the organization in market.
Innovating old products and services: Not every time creation of new product is necessary.
The potential may even lie in the old products of the company to attract customers. All the firm
need is to get a creative team which could improve idea and continuously work on the
organization.
Building a strong community: A company must know an efficient way to engage its fans on
wide scale by using open innovation. Lego is a great example of it. No matter how big or small
the organization is, being in touch with fans and new talents can be of great benefit. Finding
some enthusiastic community members which re willing to give their time and ideas help firm to
create something better. This also helps company to build strong community dedicated project.
Keeping employees engaged: There may be existing talent in the team already but it may not be
comfortable enough in bringing them forward. Firm should make sure to cultivate the feeling of
ownership in employee for the project it works on. Finding involvement of self in bigger goals of

organization makes an individual more excited to come to workplace every morning and put its
heart and soul in the work.
Staying ahead of competition: When a team or community which is engaged in looking out for
new ideas it makes sure that respective firm stays helpful and relevant to the community. Using
open innovation can find unique and valuable slot of organization in the community.
Negative Aspect of Open Innovation
According to Cammarano and et al, (2017) there are many limitations of open innovation
in organization which can lead to inefficiency to survive in market. Open innovation looses the
control of organization on its resources as every person is welcome to use the resources to
generate ideas to increase efficiency of business firm. This also impact organizational structure
due to lack of proper communication and high flexibility leads to unity of command to manage
potential human resources of organization effectively. Theft of ideas and technology is also
increases in Open innovation which decreases the core competency of business in market and
increase more risk of new entrant in market. Open innovations also impact the profit margins of
company as external creative and innovative ideas has to be paid extra and this also discourages
permanent employees to work efficiently and also increase employees turnover gradually.
Implementation of open innovation in organization also impact the shared values of organization
as management are not focused to increase the skills and knowledge of their employees due to
high dependency on external source for innovation. Open innovation develop lack of
participation of employees in the organization and decreases the productivity of organization to
achieve its original objectives effectively. This increases the liability of organization to protect
the intellectual rights as any external source has access to ideas which can be used to increase
their benefits and impact the nature of business.
Implementation, benefits and limitations of Open Innovation of ASDA
As per the view of Levina and Fayard, (2018) is has been examined that open innovation
is ASDA has benefited the company positively to increase their potential to achieve market share
and improve sales of products. Through open innovation ASDA introduced led lights which
help to increase the growth of vegetables and in particular tomatoes. By this innovation business
increase their sales of vegetables and also attract more customers to increase profitability
effectively. ASDA uses innovation chef strategy to understand all the market trends in food
industry and increasing the efficiency of all their products and services effectively. Innovation

chef is a team which develops new food flavours to increase the customer satisfaction by inviting
new chef in the team to increase innovation of existing products. With the help of their
innovation team ASDA develops low calories milk products with better quality of nutrition
values for customers who are more health conscious. ASDA also increases the use of different
strategies which helps to maintain the quality of products. As open innovation help ASDA to
develop effective store infrastructure which helps customer to increase their experience and
become loyal to stores. Open innovation also provide better management structure of ASDA to
manage employees effective and make proper use of resources to attain objectives. With the use
of open innovation ASDA also reduces the cost of operation and introduces low cost delivery
system for their online stores which are more effective in providing their product to customers on
time. This increases their customer satisfaction and motivate the to become loyal to the company
effectively. Open innovation helps ASDA to be more competitive in market and gain better
profit margins. Company also uses management information system which is developed by an
external innovator to increase the information system of company.
Elucidated by Calof, Meissner and Razheva, (2018) open innovation has also negatively
impacted ASDA internally and externally. LED innovation is very effective to grow tomatoes
but it has decrease the nutritional values and reduce the quality. This impacts the brand image of
company in market and reduce the customer base and sales gradually. Due to open innovation
company also increases employees turnover and cost of operation. Innovation chef is also
effective in analysing the market trend to make company compete in market however this
increases threat of theft of ideas and increase the threat of competition of new entrant in the
market. The new entrant has the ability to innovate and this increases the dependency of ASDA
on this team. ASDA also reduced the efficiency of internal culture due to high dependency in the
market which reduced the skills and performance of employees. Open innovation also
discouraged employees to participate in the activities as the external sources are paid extra and
not them.
Implementation, benefits and limitations of Open Innovation in General Electronics (GE)
According to Chesbrough (2017), perspective General Electronics has become a leading
company in the implementing models of open innovation. The General Electronics open
innovation strives to address world problems by the implementation of crowdsourced
innovations. Their 'Open Innovation Manifesto' concentrates on the collaborations between

entrepreneurs and experts all over the world to come together and share ideas in order to solve
various problems. In order to address current environmental challenges humanity faces, GE has
spent a large portion of its revenues on their 'Innovation Ecomagination' project in the past
decade.
As per Zynga and et.al. (2018), views, open innovation was first adapted at GE to
primarily improve their Research And Development capabilities. But over time open innovation
projects have helped General Electronics reach out into diverse markets, while addressing key
current issues, and were able to make profits as well. Case in point the 'Innovation
Ecomagination' project of General Electronics started in 2005, has now managed to create
various effectively and efficient machines that produce much cleaner energy, water, while
reducing the omission of harmful greenhouse gases. The project has also managed to generate
more than $200 billion in profits since it began. General Electronics now has also expanded the
initial project with eight separate collaborations in order to solve even pressing environmental
issues in ways that prove be sustainable.
But, according to Kolk and et.al. (2018), this has led to a general rise in the cost of
General Electronics's machines and appliances as they now are equipped with far better
technology to combat the rising threat of carbon emissions, but are viewed as premium objects
by the middle and lower classes of economy, as they are simply too expensive for them to use
with cheaper alternatives available in the market, even at the cost of the environment.
Implementation, benefits and limitations of Open Innovation in Samsung
According to the views of Yun, Won and Park (2016), open innovation in Samsung
adopted through its 'Samsung Accelerator' program is an initiative taken up by the company to
analyse and advance their technology, innovation and infrastructure for the future. This initiative
was adopted to build a partnership or collaborations between Samsung's designers, thinkers and
innovators in order to better focus on providing better, simpler solutions to complex problems.
Currently the 'Samsung Accelerator' is adopted at Samsung's New York, San Francisco and Palo
Alto branches. Samsung's CEO has mentioned that the company adopted open innovation in
order to better its effectiveness and efficiency of planting innovation and with open innovation
they can innovate unique solutions in shorter time and fewer resources. Samsung is open and
active with regards to their efforts in creating external innovational capabilities.

According to the Yun and et.al. (2018), Samsung has proudly adopted open innovation
and engages in open innovation collaborations particularly with start-ups. Samsung has divided
its open innovation collaborations into four categories and describes them as being 'four legs of
the open innovation activities', with these categories being: partnerships, ventures, accelerators
and acquisitions. Open innovation has effectively increased Samsung's growth and market reach
through advancement and innovation of newer technologies and by providing alternative simpler
solutions to existing complex problems. But with Apple adopting closed innovation, any
revolutionary innovation if first invented by them would make it unusable for Samsung and start
eating into Samsung's available market share.
Implementation, benefits and limitations of Open Innovation in Coca-Cola
According to Miglietta, Battisti and Campanella (2017), perspective Coca-Cola adopted
the open innovation model with the aim of increasing its total business size, revive dwindling
sales of drinks and with the intention to innovate the stagnant beverage market by collaborating
various separate technologies including a micro-dosing technology, Microsoft's mobile
operating system and design tips from an auto designer based in Italy to create a self-serving
beverage dispenser. This resultant machine can serve up to 120 drinks while consuming 40% less
storage space than previously available six or eight tap dispensers. In addition to bringing diverse
components together by themselves to create the machine, Coca-Cola also consulted with
existing partners like McDonald's to guide and test the dispensers.
As per this Gehani (2016), views, it might prove difficult for Coca-Cola to recover the
investments made into the beverage dispensers as many restaurants and brands have exclusive
partnership with Coca-Cola's competitors (Pepsi), which Coca-Cola's needs to convert to their
side first, but also argues in favour of Coca-Cola's open innovation campaign saying the
beverage dispensers can help Coca-Cola's marketing strategy by exposing customers to new soft
drinks, and that implementing them with Coca-Cola's partners, which constitute more than 450
global brands, gives them time to analyse the dispensers and make further innovations.
Solution
In order to achieve the long term benefits of open innovation it is important for the
organization to explore various opportunities which encourages successful implementation of
open innovation. There are plenty of commercial solutions which can be used by businesses to
utilize open innovation. The first solution is to use partnerships or collaboration with other

leading brands. This way allows companies to assess the needs and existing drawbacks more
effectively and to provide a more efficient solution. Contrary to the research and development
teams, in this era of globalization open innovation can be made an essential practice via this kind
of knowledge sharing in partnership and collaboration approaches.
Another popular method which can be used for providing appropriate solution to open
innovation is to conduct talent or challenge hunt. The business service providers can conduct
innovation challenges in which attractive rewards can be given to the individuals who give good
open innovation ideas (Hosseini and et.al., 2017). This approach will encourage organization to
receive good quality and amount of ideas. At present with the expansion of globalization and
digitalization one of the most popular and effective solution for open innovation is co- creation
labs. These labs can be internal as well as can be external alongside customers, business partners
or employees. In these labs various stakeholders work together as team to explore innovative
methods and technologies using existing resources and technology.
One of the best method to produce innovation is to use community based ideas. The
service providers must focus on increasing their values so that their target customers or user are
motivated to share and participate in the business activities. This can be done by sharing business
ideas and strategies. The websites of companies must allow various community members to
share their requirements as well as suggestion in the form of business strategies, brand
promotions or designs.
The ideas received from the community members can be further used for achieving
business goals. It has been also one of the common challenge that despite having talent most of
the individuals do not take part in open innovation activities. This can be due to lack of
motivation of necessary support. Thus one of the necessary solution for eliminating this
challenge is to give individuals suitable encouragement in the form of scholarships, monetary
rewards and recognition (Kolls, 2017). These rewards can also be provided to communities so
that they consider the open innovation process as great opportunity to show their talent which is
also helpful for the organizations.
CONCLUSION
The criterial evaluation conducted in the journal article above helps in concluding that
despite different limitations or disadvantages of open innovation that were discussed, the benefits
of its implementation far outweigh the limitations. The implementation of open innovation by

different companies such as GE, Coco cola, Asda etc. was discussed and it was identified that on
every implementation of open innovation tactic, there were some resultant success factors who
contributed much more in the overall development of the company and other stakeholders.
Journal disadvantages such increased costs, harmful impacts on health etc. have affected the
implementation of open innovation tactics negatively. The journal article identified the various
pros and cons and based on the problems various solutions or recommendations were also
suggested where the idea to implement innovation with the purpose of serving communities was
found to be the most favourable aspect of the recommended solution. Therefore, the journal
identified and evaluated different concepts accordingly on open innovation and presented
conclusions accordingly.

REFERENCES
Books and journals
Kolls, H.B., 2017. Community Led Open Innovation. U.S. Patent Application 15/067,220.
Hosseini, S. and et.al., 2017. What does it take to implement open innovation? Towards an
integrated capability framework. Business Process Management Journal.
Bogers, M., Chesbrough, H. and Moedas, C., 2018. Open innovation: research, practices, and
policies. California management review. 60(2). pp.5-16.
Von Krogh, G., Netland, T. and Wörter, M., 2018. Winning with open process innovation. MIT
Sloan Management Review.59(2). pp.53-56.
Cammarano, A and et al., 2017. Open innovation and intellectual property: a knowledge-based
approach. Management Decision.
Calof, J., Meissner, D. and Razheva, A., 2018. Overcoming open innovation challenges: a
contribution from foresight and foresight networks. Technology Analysis &
Strategic Management. 30(6). pp.718-733.
Levina, N. and Fayard, A.L., 2018. Tapping into diversity through open innovation platforms:
The emergence of boundary-spanning practices. In Creating and capturing value
through crowdsourcing (pp. 204-235). Oxford University Press.
Chesbrough, H., 2017. The future of open innovation: The future of open innovation is more
extensive, more collaborative, and more engaged with a wider variety of participants.
Research-Technology Management. 60(1). pp.35-38.
Eckhardt, J.T., Ciuchta, M.P. and Carpenter, M., 2018. Open innovation, information, and
entrepreneurship within platform ecosystems. Strategic entrepreneurship journal.
12(3). pp.369-391.
Gehani, R.R., 2016. Corporate brand value shifting from identity to innovation capability: From
Coca-Cola to Apple. Journal of technology management & innovation. 11(3). pp.11-
20.
Kolk, M. and et.al., 2018. How hyper-collaboration accelerates ecosystem innovation. Strategy
& Leadership.
Miglietta, N., Battisti, E. and Campanella, F., 2017. Value maximization and open innovation in
food and beverage industry: evidence from US market. British Food Journal.
Yun, J.J. and et.al., 2018. Benefits and costs of closed innovation strategy: Analysis of
Samsung’s Galaxy Note 7 Explosion and withdrawal scandal. Journal of Open
Innovation: Technology, Market, and Complexity. 4(3). p.20.
Yun, J.J., Won, D. and Park, K., 2016. Dynamics from open innovation to evolutionary change.
Journal of Open Innovation: Technology, Market, and Complexity. 2(2). p.7.
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Zynga, A. and et.al., 2018. Making Open Innovation Stick: A Study of Open Innovation
Implementation in 756 Global Organizations: A large study of international
companies shows that distinct routines and organizational structures differentiate
organizations that succeed with open innovation. Research-Technology
Management. 61(4). pp.16-25.
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