What is Open Innovation? - Success stories and transformation in the IoT era

What is Open Innovation? - Success stories and transformation in the IoT era

 Open Innovation

Qualitative transformation is also required for open innovation in the IoT era, where transformation that transcends industrial fields takes place. 

However, there is a thick wall that needs to be overcome in order to proceed with open innovation in Korea. In this article, we explore the path to success for open innovation in the IoT era based on examples such as recruiting external partners and transforming in-house culture.

What is open innovation?

'Open innovation' is an innovation methodology that creates new value by using a wide range of external technologies, ideas, and services. It was proposed by Dr. Henry Chesbro of Harvard Business School.

It aims to procure technologies that do not exist in the company, to develop them at a low cost, or to gather collaborators more broadly and openly and cause innovation, unlike the existing outsource.

The advantage of open innovation is that it can create value quickly and efficiently by introducing a wide range of technologies or ideas from outside, unlike the existing method of creating new services or values ​​by obsessing over one's own technology or resources.

In today's era when the Internet of Things (IoT) is leading a transformation that transcends industrial fields, there is a limit to the technology and speed of single development by one company. In such a case, different innovation management than before is required.

Open Innovation in the IoT era

IoT transcends existing industrial value chains and boundaries to realize 'social optimization by expanding scale and evolving knowledge'. In this era of industry change, it is effective to link several companies rather than one company, and open innovation becomes important.

However, open innovation in the IoT era is qualitatively different from existing open innovation. Here, we consider both external and internal transformations for the new look.

Open Innovation, Partnership, and Impact on Society

Although open innovation is gradually expanding in Korea, Korean companies tend to focus on the efficiency theory of 'procure technology that cannot be developed in-house' and 'develop it at a cheaper place than develop it in-house.

How is open innovation in the IoT era different from the past? To understand this, let's look at the case of an advanced foreign company.

Siemens has been advanced in the use of IoT, such as promoting a smart city concept using IoT or Industry 4.0 that uses IoT in factories. The representative open innovation policy that symbolizes the company is 'Picture of the Future, which has been continuously implemented since about 2000. This is an activity to inform the outside of Siemens' future vision every year. 

In general, many companies secretly use the future vision as part of their mid-term management plan, etc., but Siemens' Picture of the Future actively discloses it to the outside world, enlightening society and inviting joint development partners to become social demonstration partners. aiming for

Deutsche Bahn (German Railway) is also conducting similar activities, and this is also promoting social enlightenment by informing the outside world of the future vision of transportation that the company draws.

In the IoT era, where the appearance of society itself changes, it is important to actively inform the outside world of the worldview that companies draw and induce them to move the world.

GE has been innovating its business model under the 'Industrial Internet' concept. At first, the focus was on close partnering with specific companies in each field, but recently, they are trying to build an IoT software platform, Predix, and build a more open ecosystem using it as a hub.

Specifically, by providing a development environment so that a third-party application developer can develop apps on Predix, or by allowing devices other than GE to access what was previously only accessible to GE devices, use Predix as a hub. The relationship with the company is greatly opened up.

Korean companies tend to prioritize collaboration with places they are familiar with, but in IoT, where various components are spread, they need to move toward broader and more open collaboration.

Uber wants to significantly change its existing transportation infrastructure (especially the taxi industry), which is why it is in conflict with related industry groups and regulators around the world. Nevertheless, it is succeeding in steadily securing users and rapidly expanding its business scope.

One of the driving forces is the ability to break through existing regulations and systems, and Uber has been actively involved in social institutions in various places (system proposals, etc.). In fact, within Uber, the legal sector and the public policy sector are divided, and the public policy sector consists of a group of professional lobbyists.

Korean companies tend to think within the framework of the existing system, but in the IoT era, where the existing industrial structure changes significantly, it becomes important to change the system itself.

Creating a corporate culture for open innovation

When promoting open innovation in the IoT era, internal innovation is also important, and it is often necessary to switch to a business development that is different from the successful experience of existing business development. In particular, for Korean companies, business development is rigid at the sectoral level, so it is necessary to reform them while rethinking the organizational process or corporate climate.

In promoting IoT, it becomes necessary to cross-sector and industry walls. In particular, in order to overcome the divisional barriers within the company, there may be an approach that promotes company-wide reform at once with a top declaration like in Europe or the United States, in theory. However, it would be okay to aim for a middle-up & down approach that expands the scope to the entire company by organically implementing the use cases of IoT adoption at the site level.

The value of IoT is the optimization of society through scale expansion and knowledge evolution, and it is desirable to start small and gradually expand or develop it. At that time, it is important to continuously improve the system based on actual data acquisition or analysis results.

Korean companies tend to have a waterfall-type development style that proceeds as planned.

For example, as GE introduced an agile management style called FastWorks when doing IoT, Korean companies will need to introduce the style of business development itself and intentionally change the corporate climate.

Expectations of government, administration, and financial institutions towards open innovation

How should the government, administrative agencies, and financial institutions surrounding the business company support the company working on the IoT to undergo both external and internal transformation at the same time?

Representative expected roles include 'testbed and showroom maintenance' for promoting demonstration and dissemination of results, and 'facilitation of cooperation for demonstration promotion' such as partnering for demonstration/business development.

IoT has the potential to change the existence of social infrastructure or industry itself, and it is necessary to proceed with design while repeating trials and failures in the actual field, and the importance of a testbed and showroom showing the results of hypothesis verification is high.

Korean companies are required to have more external links than ever before, so it is significant to provide support as a third-party organization.

In other words, in the IoT era, government/administrative/financial institutions are responsible for demonstrating/connecting towards the creation of a new society. We look forward to creating the IoT ecosystem with pride as the 'industrial coordinator' that creates the IoT era.

Concluding

The era of science-fiction movies that connects the physical world and the Internet has come. While IoT has the power to change the 21st century, Korea without a foundation for open innovation has a big handicap. It is expected that not only companies, but also the government, administration, and financial institutions will come together to deepen the discussion on open innovation.