Open Innovation up to now
Many of the critics of Open Innovation cite the lack of novelty of the notion, as the most important weakness of the idea itself. This is because co-creation, corporate incubation, Joint-Ventures and alliances, even crowdsourcing, are all activities which developed independently – and in some cases much earlier than open innovation – yet converged under its umbrella; even more, they are often considered as main activities of this approach to innovation, and they do not seem to have a own reason for being beyond Open Innovation.
Nevertheless OI (Open Innovation) is novel because of the introduction of two ideas, which are presented in a more structured approach. First of all, the understanding that knowledge – which is now more than ever widespread, global and available on line – can be generated, manipulated, purchased and sold among organizations, firms, institutions and freelancers. The knowledge boundaries of a firm become porous, and knowledge does not represent an exclusive opportunity for the organization where it originated. Moreover knowledge is the combination of Intellectual Property and Innovation Capability: the first core to R&D, the second dependent on the ability of R&D working with other functions, in translating inventions into real businesses.
The second OI novelty resides in the splitting on R&D into sub groups: Internal and External, with the latter responsible for the scouting of external knowledge or the spinning of internal IP for exploitation beyond the boundaries of the firm.
Co-innovation: a boundary-less firm
To the extremes of the frontier of Open Innovation is located the notion of co-innovation [1]; this concept relies on the definition of a firm which is open, beyond the openness of OI, almost in an “open source” meaning of the term. The firm is posited as a platform, whereby customer, suppliers, outsider and partner organization can converge for co-innovation, or collaborate for co-innovation, or co-create for co-innovation.
Convergence is the concept, which explains the relationship between actors, building synergies to develop value for each other’s customers. This is what, in the service dominant logic, is referred to as co-creation of value. Think of your phone and your tablet: would they create the same value for you if they did not have an app store? Convergence is the process through which you as a customer and consumer, your phone manufacturer, and the app builders on your phone, create value for each other.
Collaboration is intended in a dual form: on one end, it translates into the wide sense of sharing knowledge in an open-source meaning of the term; it’s how the company stays true to its purpose by generating social value. Moreover, collaboration is also an organizational form, which relies on agile and scalable structures, which are better suited to deal with unknown unknowns and turbulent times.
Finally co-creation is meant both at co-creation level with customers and consumers (e.g., in the co-design sense, working with lead-users or not), as well as in the sense of crowdsourcing of technical solutions through partners, suppliers, and third party institutions.
What does this mean from a marketing point of view?
First and foremost we need to explain a bit in more detail the large transformation of marketing in the past 15 years: we moved from a product-centric marketing model, to a service dominant one [2]. This transformation underlines a change of perspective – partially driven by digital transformation and its inbound Servitization of offering – and its impact on how it changed the way we consume products, services and brands.
We often hear the slogan “mobile first” which exemplifies an increasingly wider phenomenon: we discover new products and new brands on social media through our phones/ tablets. This means that other actors, in the consumption eco-system (e.g., my friends on Facebook, your Twitter followers), play a role on how we learn about new brands. They are resource integrators, as much as the developers of the apps (e.g., Facebook, Twitter), the producer of the smartphone and the various retailers, carriers and so on. Literally it means that a brand relies on a network of actors to create its first impression on consumers. It also means, that we have effectively moved from a dyad manufacturer/consumer to an ecosystem of multiple networks, where the value is not “created and appropriated”, but it is co-created for each other.
How does that change the marketing job – also within a co-innovation context?
Traditional marketers have been positioning their brands and then translated the positioning into a series of activation platforms, which were then derived in promotional and communication activities. These of course included the whole value chain, not only at shopper and consumer level, but at customer and prescriptor level (i.e.: think of the role of bartenders in the beer, wine and spirits supply chain). In this sense the brand serves a dual purpose: it is an inspiration but also a filter for the platforms and the activities. In the new context, where brand ambassadors, lead users, certified professionals and developers or just brand enthusiast, happen to play a critical role in co-creating the brand’s value, marketers cannot only think in terms of positioning. They need to work to set-up a brand core, which is true in longer term, untouchable and non-negotiable with stakeholders; and a brand periphery, where stakeholders co-participate in the development of the platform and in its execution [3]. While this is easier said than done, a key to the functioning of this system of co-creation is the mutual respect for each other’s cultural identity. When they respect each other, a positive self-reinforcing cycle occurs: it strengthens the brand core and it allows for development of a seamlessly integrated periphery. When this mutual respect is missing, the circle becomes vicious and the damages on the brand are immeasurable.
From an organizational point view, the marketing function might also change: currently it is common practice to split global and regional marketers, which are responsible for the global positioning and its translation into a set of marketing assets (e.g., TV campaigns, promotional aspects), from local teams focused in executing those positioning according to the local nuances. A brand with a core and a periphery will likely have global teams focusing on the core, a regional group for coordination and best practices among markets, and a local team dealing with the stakeholders, with the brand periphery. Similar to the internal vs. external R&D dichotomy of Open Innovation, the brand marketers at the brand’s periphery will be a marketing team working with external stakeholders, by – for example – providing context and distribution to user generated content.
In conclusion
With the firm’s knowledge boundaries becoming more permeable, and external stakeholders playing a role in the co-creation of brand value, marketing needs to adapt and re-organize, to make space for role of ambassadors, lead users and other types of stakeholders, while encountering a form to straightening the core of a brand.
[1] Sang M. Lee, David L. Olson, and Silvana Trimi, “Co‐innovation: Convergenomics, Collaboration, and Co‐creation for Organizational Values,” Management Decision 50, no. 5 (May 25, 2012): 817–31, doi:10.1108/00251741211227528.
[2] Stephen L. Vargo and Robert F. Lusch, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing 68, no. 1 (2004): 1–17.
[3] Richard I. Gyrd-Jones and Niels Kornum, “Managing the Co-Created Brand: Value and Cultural Complementarity in Online and Offline Multi‐stakeholder Ecosystems,” Journal of Business Research 66, no. 9 (September 2013): 1484–93, doi:10.1016/j.jbusres.2012.02.045.
About the Author
Filiberto Amati, is an author, a speaker and a consultant in Branding, Innovation, Design Thinking and Commercial Excellence. ExP&G, exPhilips, exCampari, he holds an MBA from IESE Business School in Barcelona, and a DBA from the Polish Academy of Sciences in Warsaw. Filiberto lived in 8 different countries, across 2 continents. He is currently based in Warsaw, where he runs the global consulting boutique Amati & Associates, and can be reached on twitter on @filibertoamati.