1.Innovation
When I think of innovation, the first thing that comes to my mind is something big and new that did not exist before. When one outstanding member of a group or a company turns upside-down the old way of doing things and come with something fresh. The discussion in class about innovation last time was very helpful (at least to me) to shed more light about radical or incremental innovation and its processes: divergent or convergent although, I still hesitate sometimes to differentiate whether something is innovation or not at first sight. The thing is sometimes you see little changes on products and people cherish it as different and innovative. Fore example, I read in an article this week about apple. It goes ‘Apple Remains America’s Most Innovative Company’.
For the sixth consecutive year, Apple ranked number one in Business Week’s 50 most innovative Companies report. The report goes on and mentions that Apple is sometimes criticized for not being an innovative company, i.e. they don’t create completely new ideas or products. The Ipad, for instance, builds off not only Apple’s own history with touch-screen devices like the iPhone and the iPod touch, but also on tablet computing devices that go back literally decades .However, what makes a company like Apple (and Google) innovative is not that it creates something completely new every single time, but that it is able to iterate designs, devices and functionality so hat products are popular with consumers and successful financially’.

2.Closed versus open innovation

Companies used to attain competitive advantage by funding large research laboratories that deal with all new ideas, creativity that give the company a new product or service which would make it to stand above the competitors. This older model of closed innovation reminded me of countries in the past when border between them and nationalization was meant so much more than anything else.

Closed innovation is vertically integrated that any innovation or new change or improvement is only expected from within the firm’s boundaries. A company with this model usually assumes, it has the best work force to innovate, it will always be the first one to get the new product or service to the market when discovered, and it can control its intellectual property so that competitors can not benefit from the new idea and so on. However, several factors prove this assumption wrong which led to the erosion of this closed innovation model (Chesbrough 2003). For one thing, the availability of highly educated people has increased over time and this led to realization of availability of knowledge outside the research laboratories. In addition the mobility of employees enabled the transfer of knowledge. When employees change jobs from one company to another, they take knowledge along with them to their new working place. Moreover, availability of venture capital increased the development of new ideas and technology more and more.

These factors led to the birth of open innovation, which is more transparent and go beyond the borders of a company. Companies started to look for innovate from outside the firm through licence agreement and out-licence ideas that does not fit with their over all strategy. Thus open innovation can be described as innovation which combines internal and external ideas.



Closed innovation
The red lines are research projects that are complete but never made it to development stage. we can see that as well the boarders of the firm is less transparent from it's outside environment.


Open innovation
less transparent boarders and exchanging projects with the outside.

Source: Chesbrough.