Home > Articles > Business & Management

  • Print
  • + Share This
This chapter is from the book

Portfolio Management and Open Innovation

After promising to tie this issue of portfolio management to open innovation, it may appear that this promise was sidetracked. Not so. One important component of open innovation is that it creates an opportunity to share risks and expenses with external parties. The adverse consequences of the false positive are effectively neutralized when someone else is underwriting some or all of the costs. Details of how you can manage this risk-sharing, and the organizational structures that support it, will be covered in subsequent chapters. But, for now, error minimization, portfolio management, and open innovation need to be integrated into a total innovation management system that copes effectively with risk and probability, and that manages to a desirable economic outcome.

Many companies—and even whole industry sectors—compete primarily on the basis of innovation, for example, pharmaceutical companies that must routinely invent new medicines or the advertising industry that constantly must come up with snappy original taglines. Innovation is what enables these companies to maintain a competitive "edge" as opposed to competing on price, convenience, added services, or some other aspect of business. Even as the argument is made for other modes of competing, one cannot help but be reminded that convenience, services, and low-pricing is often the opportunity presented by an innovation of some type. No, the reality in the twenty-first century is that virtually all businesses are months away from a wave of novel competitors. Innovative companies survive.

Historically, innovation competition has revolved around each company's capability to assemble creative departments—and most important, teams of exceptional talent that strive to out-innovate their competition. This was accomplished by smart people, with excellent equipment and facilities, inventing new products—and even new technologies—and often making fundamental advances in science. Think Bell Labs as a prototype. Of course, even though Bell Labs continues as a distinct entity, it has not fully survived in the form that characterized it in its heyday because it has been altered by spinoffs, layoffs, mergers, and mission changes.

No doubt many factors contributed to the transformation of the central lab, with a broad remit for science. It is not the intent to thoroughly analyze Bell Labs or even to propose a scholarly hypothesis to explain its mutation. Surely some of those factors must include the broader access to knowledge because of the "information age." Business, also, has become more sophisticated in its capability to locate and license ideas. This decreased the need to invent it all in-house. The adage that "none of us is as smart as all of us" has been scaled up and globalized.

Even so, an enormous percentage of the applied science and technology, and ultimately, "reduction to practice" remained an internal skill. Responding to this reality, a significant number of graduating scientists, engineers, and technologists historically went to work for large corporations—as did designers, graphic artists and draftsmen. The shift to "distributed innovation" has taken place slowly—over decades—until today, when many sectors can point to significant fractions of their new product introductions and underlying technologies as originating outside of their corporate labs. Distributed innovation is a gathering of ideas and solutions from many quarters and the integration of the pieces, by a central organization into what would be considered the final innovation. Some, such as Procter & Gamble, have even declared this as a strategic intent, one they call "Connect and Develop," or C+D. They have set quantitative goals to increase licensing as the primary mode of innovation growth while maintaining a more constant level of internal R&D resources. This initiative is one you learn more about in the case study at the conclusion of Chapter 6, "The Challenge Driven Enterprise."

Now is the era of "Open Innovation." The shift to contract labs and licensed technologies is currently the major part of the open innovation movement. But recent increases in broadband Internet access and other leaps in communication enable you to imagine a future in which technical problem solving, on the spot invention, and on-demand innovation can be realized—maybe even predominantly—through open communities of scientists. Examples of these open innovation communities are InnoCentive, the authors' company, and TopCoder. These enabling platforms, and their attendant business entities, in which the network is managed on behalf of other institutions, have been named innomediators by Professor Mohanbir Sawhney at Northwestern University's Kellogg School of Management.

Later chapters discuss how the various innovation channels are selected, how they play off against one another, and how they are ultimately integrated for innovation. Putting all this together ushers in new organizational and partnering realities: Marketplaces in which intellectual property—with or without its legal appendages—is exchanged as readily as Hummels on eBay. Maybe that's a bit of an exaggeration in 2011, but stay tuned.

Just as the random soot patterns created the ability for the Naskapi to explore unknown regions, so too, do the various modes of open innovation enable organizations to explore unknown and unbiased, or at least differently biased, regions of technology, design, or policy, in ways previously too costly or too difficult.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020