The principle of ‘Open Innovation’ as introduced by Chesbrough (2003) has become widely used in a range of industries. It is widely accepted that open innovation is concerned with combining internal and external ideas as well as internal and external paths to market to advance the development of new technologies, products and processes. From a broad perspective, this is also the aim of outsourcing.
A very well publicised example of where the open innovation approach has been put into practice by Procter and Gamble (P&G) as part of their overall technology management strategy (Huston and Sakkab, 2006). P&G created the ‘Connect and Develop’ model in response to traditional Research & Development and ‘invent-it-ourselves’ models which are obsolete or not capable of sustaining high levels of growth. This model is based on an open innovation strategy of exploiting new ideas from the external environment while minimising time-to-market and optimising strategic Intellectual Property (IP) management.
Innovations are successful commercial exploitations of new ideas or concepts, the sense of newness and novelty. They also imply step change, are longer term (linked to strategy) and involve the whole learning organization (Gregory, 1995). Gregory’s model of technology management (Identify-Select-Acquire-Exploit-Protect) addresses the effective identification, selection, acquisition, development, exploitation and protection of information (IP). It highlights the importance of establishing a) internal linkages between commercial and technological functions; and b) external linkages to various networks, customers, users, suppliers, in order to achieve the business objectives. Gregory’s model is technology agnostic and can be compared with Product Life-cycle Management (PLM) as a key enabling platform across the enterprise based on a specific sourcing strategy applied to New Product Introduction (NPI) and Product Development (PD):
- Engineering outsourcing is increasingly becoming the norm for PD and Manufacturing Engineering projects – in order to reduce cost, access new talents, benefits from new ideas and new ways of working.
- PLM enables outsourcing and collaboration with tools and processes to manage data created by PD Engineers, Manufacturing Engineers, Service Engineers, Sales and Marketing, etc. and used across the enterprise.
- PLM is a collaboration ecosystem, an information hub, a learning and knowledge management platform.
- A PLM model defines and structures the information concerning a product during its entire life-cycle and through the extended enterprise.
- The product data model is controlled by the PLM system, and also is the basic for collaborative data and related business processes.
- PLM systems hold and maintain the integrity of the product data produced throughout its entire life-cycle. There is, therefore, a need to build a safe and effective product data model to support PLM system.
- PLM system interfaces must be structured in a way that respect the product data model, providing an improved understanding of the whole product system, which will lead to better decision making.
What are your thoughts?
- Chesbrough HW (2003), The era of Open Innovation, MIT Sloan Management Review, 44(3), pp 35-41
- Gregory MJ (1995), Technology management – a process approach, Proc Instn Mech Engrs, 209, pp.347-356.
- Huston L, Sakkab N (2006), Connect and Develop, Harvard Business Review, 84(3), pp 58-66
This post was originally published on LinkedIn on 3 February 2015.