July 17, 2008

IT enabling open innovation

I'm promoting an off-topic comment to be a new article.

In a question on an earlier posting, christian said...
My comment is more in the form of a question than a comment. I do hope that is not an issue for you. In my own blog (youcollaborateglobally.blogspot.com) I have been focusing mainly on the collaboration aspect, at this point in time within the global enterprise. I however increasingly see a need for further collaboration and innovation across a companies eco-system, including suppliers and customers. Have you been looking into how using some of the web 2.0 tools to achieve this. How do we get it in place and how do we make it work? Many thanks in advance for your response.
I have a couple of thoughts on this. First, of course there has been a lot of division of labor that has been enabled by information systems. The whole offshoring of PC industry component supply and assembly was only possible because of fax, then e-mail enabled detailed 7/24 communications between onshore designers and offshore manufacturers. Of course, Dell’s supply chain was an exemplar of such coordination.

On the specific question of tying information systems to the practice of open innovation, there was a good article by Mark Dodgson and colleagues about P&G using IS to enable OI in the special issue of R&D Managmeent back in 2006 (see DOI: 10.1111/j.1467-9310.2006.00429.x).

As for Web 2.0, sure technologies can enable a division of labor. (We’ll set side the question of what is “Web 2.0”).

I think the real question is, will it? Will they believe that the specialized investment will pay off? The best case is that everyone agrees on the same interfaces on both sides. So if AJAX is used by Google and Yahoo Maps on the website side, and IE and Mozilla and Safari on the client side, then there is less risk on both side for using the technology. However, if only one server (or client) uses the technology, then there's risk in writing code for the interface before knowing it will catch on.

Another related question is: will firms cooperate and share the revenues? Or will some (ala Microsoft) vertically integrate or otherwise try to capture the profits for themselves?

My thinking if the business issues can be solved, the technology is easy. But then I’m a former engineer turned manager turned business professor, so I’m probably biased.

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