The future ofiInnovation will be tightly related to the growth of the services industry and the spread of Open Innovation. Firms have started to systematically use external knowledge to accelerate their internal innovation. In the next years we will see a strong trend of Open Innovation in Services and not only in the Services Industry but also in the Manufacturing Industry, as the bundle of products and services is becoming every day more common among manufacturers.
Since its conception the Open Innovation paradigm has been mainly focused on and implemented by the Manufacturing Industry. Just recently firms in the Services Industry such as telecom companies, hotel chains, internet firms or banks have become aware that the Open Innovation paradigm may also be successfully applied to their operations. But, why Open Innovation will be an especially valuable paradigm in the Services Industry?
First, Open Innovation promotes crowdsourcing and collective innovation. These concepts are easier to implement in the Services Industry where the customers are used to play a more relevant role in the creation and delivery process of new products. Moreover, the intangibility of services makes also easier the increase in the scale of the innovation system from a few innovators to a multitude of innovating agents. Second, Open Innovation may solve the problem of the lack of distribution channels for innovation. A huge amount of firms that develop new services have a limited success due to difficulties and the costs in accessing distribution channels. Open Innovation creates new distribution channels to service innovators: for instance, the most important Telecom companies in the world are opening their voice and data networks to the distribution of services created by a third party, Banks have started also to use their ATM and branch networks to distribute new services not invented by them. Third, Open Innovation accelerates time to market, so it could increase the firm’s competitiveness in the Services Industry where time to market is already typically much lower than in the Manufacturing Industry.
However, there are some open questions related to the Open Innovation paradigm in the Services Industry that still have to be solved in the future. For instance, innovations in services have a significant component of tacit knowledge, especially in the case of process innovation. We still don’t have Open Innovation mechanisms that solve the delicate issues related to tacit knowledge sharing. Perhaps, some of the current innovation brokers such as Innocentive or Innovationexchange may redefine the knowledge exchanges beyond the current IP based exchange system. In fact, Intellectual Property Rights are more difficulty enforced in the Services Industry, where many innovations cannot be patented. When deciding the degree of openness of the research projects, one of most common problems of Open Innovation is to correctly assess the innovation capabilities of your partners. The tacit knowledge component and the still unstructured innovation process in many services firms make this task even harder.
Open Innovation has the potential to radically change the way we thought about Services competitive dynamics; However it is still a run into the night where management commitment and common sense will be needed.
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