Corporate Pirates?

August 20, 2010

When I asked Google for a definition of innovation, the top result provided a short explanation informing me that innovation is “an invention; a creation (a new device or process) resulting from study and experimentation.” Now I don’t mind this definition, it’s a lot simpler than many definitions I have been exposed to during my time at University. However, more recently I have come across some more interesting terms.

Yesterday, during a discussion with a colleague of mine, I was handed a book by Henry Chesbrough titled Open Innovation. Open Innovation proposes the sensible idea that a firm cannot rely on ideas developed entirely within its own walls. In short, Organisations should reach out from their confining boundaries to obtain innovative resources. This instantly brought to mind an image from War of the Worlds, where the aliens came to earth, wiggled their long tentacles around in manic attack pose, and plundered the Earth of its resources by sucking it dry.

I’m quite aware that this image the book commanded was a little over the top. On a plus note, it did bring back nostalgic memories of watching a War of the Worlds Theatre production in Manchester a couple of years ago, but I digress. I completely agree with Chesbrough’s notion that innovation cannot be defined to the internal environment of the firm. In such a world where knowledge is so widely distributed, ideas aren’t just going to come along, you have to go out looking for them. As such, Chesbrough’s theory is completely relevant to business.

But what tactics can an organisation employ to source out new ideas from the external environment? Can we rely on firms to be ethical about seeking out this knowledge? Could these approaches lead to some degree of conflict? These are all questions I have been churning over in my head over the last day or two. I haven’t yet come to a conclusive plane of thought, but I have had a few thoughts I think worth mentioning.

The main issue I have is with the implementation of open innovation strategies; without a well considered approach, fully fledged open innovation could be considered stealing… swashbuckling pirate comes to mind! What I am referring to is intellectual property (IP). Chesbrough suggested that through open innovation an organisation could legally utilise licenses, joint ventures and IP from other firms. But what restricts them from utilising the knowledge from other groups, rather than simply its competitors and unrelated industries?

Students, for example, are an interesting bunch to consider. What are the ethical and moral considerations an organisation should take if it focuses its energies on obtaining innovative ideas from those studying within the education system? A firm could organises a group of students together and provide an environment where these individuals can bounce ideas off each other. The end product of such a process would be a well developed idea which would ideally be internalised within the organisation, or sold on to the highest bidder. Top prize would be a completely disruptive innovation which the firm could leverage for future rewards.

But where would this leave the students who developed and mind-sparred the idea, and who in essence came up with this innovative spark? Going back to my earlier points, are there moral and ethical considerations a firm should take if it were to perform similar activities to this? Both groups must bring something to the table for such an approach to be successful, but the balance of reward for such an arrangement must be appropriate for the circumstance at hand. Would the firm be perceived as honest facilitators of innovation, or will they be looked upon as corporate pirates?