OPEN INNOVATION: beyond business boundaries

08 June 2017

In 1973, Ronald Coase stated that companies exist because they minimize transaction costs, that is all costs associated to the interaction with transactional and competitive environment that an organization sustains.

The existence of businesses is thus justified by their ability to minimize the production costs through the internalization of value creation processes. A specific mix of technical, organizational and financial resources organized to achieve a productive purpose is more efficient because it saves costs.

The costs height is function of the technological innovation degree of an enterprise, which in turn depends on the quality and quantity of innovation processes turned into processes that innovate the business model. Innovation is therefore a driver both of cost reduction and of increase of profits.

Innovation in the business field is a structured process that transforms an invention into a marketable solution. Was Schumpeter to clarify the difference between invention and innovation. When an invention becomes an integral part of economic activity, configures an innovation.


The new paradigms of innovation in the XX century

Transaction from industrial to knowledge-intensive economies has radically altered the logic of innovation and, consequently, levers of the competitive advantage.

Until the 70s and 80s, the prevailing model of efficient enterprise was the rigid and vertically integrated one, focused on internalizing processes and exploiting economies of scale. With the advent of technologies, design, communication and development costs become marginal, making no more sustainable this kind of organizational model.

With experimentation of collaborative business models, we are witnessing a costant change in the boundaries between businesses and the external environment. A two-way, continuous and circular contamination process that gradually is affecting all business functions. Not least the R&D function.

Opposed to closed innovation model is evolving the open innovation ones, a new way to speriment innovation characterized by the collaboration between companies and actors outside the business perimeter, that drives companies to develop innovative outputs by integrating external inputs as well.

Open Innovation paradigm is based on a precise assumption: enterprise to be competitive in the actual scenario cannot base the building of competitive advantage only on internal resources, naturallt limited. It is therefore an innovative approach that puts the company at the center of a fertile ecosystem of resources to integrate or acquire resourcers from just as much innovative organizations, such as startups, universities, research, creative talents and inventors.

Subscribe to receive all updates from Lascò

Our toolbox
Related content