Lecture 4 – Innovation and Entrepreneurship:
Open Innovation and Crowdsourcing
Closed Innovation
Closed innovation, more traditional, more classical form of innovation
Example, Apple:
- Coming up with new technology
- How must they be building this Innovation? Through R&D,
So closed innovation is illustrating by saying, let’s hire the best people possible, let’s
hire the best technology experts, let’s develop the best resources to develop the
best R&D labs in the world, let’s protect that technology because its ours and we
must make sure that no-one else knows how we built this technology because that’s
what sets us apart
The best technology companies, pharmacy companies, a lot of investment into
internal research and development, then the next idea is to clearly commercialise it
Observe the funnel in the diagram, so there is technology being built, and this is the
market that finally use these technology
Page 1
, Classical Innovators
Closed innovation is related to classical innovation
Internal R&D forms the central aspect of the rise of an organisation, the strategic
success of an organisation
This was the key idea by which many American corporations in the 20 th century
became what they are today
The above organisations functioned through a classical closed approach
Organising and Managing Classical Innovation
“What is important to capture value and gain competitive advantage is for you to be
able to build organisational structures that will allow you to tightly control what you
build” – Chandler
Your invention, your discovery and the process by which you come up with is
something that you tightly control and exclusively own your IP
The way they do that is by having a fairly bureaucratic hierarchy and a very vertically
integrated value chain
Page 2
Open Innovation and Crowdsourcing
Closed Innovation
Closed innovation, more traditional, more classical form of innovation
Example, Apple:
- Coming up with new technology
- How must they be building this Innovation? Through R&D,
So closed innovation is illustrating by saying, let’s hire the best people possible, let’s
hire the best technology experts, let’s develop the best resources to develop the
best R&D labs in the world, let’s protect that technology because its ours and we
must make sure that no-one else knows how we built this technology because that’s
what sets us apart
The best technology companies, pharmacy companies, a lot of investment into
internal research and development, then the next idea is to clearly commercialise it
Observe the funnel in the diagram, so there is technology being built, and this is the
market that finally use these technology
Page 1
, Classical Innovators
Closed innovation is related to classical innovation
Internal R&D forms the central aspect of the rise of an organisation, the strategic
success of an organisation
This was the key idea by which many American corporations in the 20 th century
became what they are today
The above organisations functioned through a classical closed approach
Organising and Managing Classical Innovation
“What is important to capture value and gain competitive advantage is for you to be
able to build organisational structures that will allow you to tightly control what you
build” – Chandler
Your invention, your discovery and the process by which you come up with is
something that you tightly control and exclusively own your IP
The way they do that is by having a fairly bureaucratic hierarchy and a very vertically
integrated value chain
Page 2
