Open innovation and business modeling

Can we create a business model that foster innovation for organizations ?, notice the plural state! What did previous researchers work on to guide in answering that question?


From the definition of open innovation (OI), collaboration plays a major role in creating joint innovations between different constitutional stakeholders. Hence, networking as a concept is of great effect on innovation. Because of such importance, many researchers tackled the area of networking in innovative environments. In his approach to define networking in innovation, Nambisan in his book The Global Brain introduced network centricity as “network as the focal point and the associated opportunity to extend, optimize, and/or enhance the value of a stand-alone entity or activity”. That definition can be applied to reach a network-centric innovation. Thus, network centric innovation focus on external factors and how the network can accelerate innovation and create new innovations. Table below shows how Nambisan described the principle of network centric innovation.


From the previous definition of network centric innovation, Nambisan saw that the possession of leadership and the degree of innovation openness and space defines the different innovation paradigms and business models. Using the network leadership and the innovation space, Nambisan defined four types of innovative models: Orchestra, Mod-Station, Jam-central and creative Bazaar, as shown in the Figure below.


The Innovation space resembles the degree of innovation definition. It forms two domains; Emergent domain is where the innovation paradigm is less defined and unstructured, in that domain the focus is on the unknown connections and knowledge networks, to explore novelties in innovation. While in defined domain, the innovation paradigm is clearly defined and structured, hence the emphasis is on the known connections and knowledge networks, leading to exploitation of innovations and improvement in efficiency of innovative process. Similarly, network leadership is divided into two domains. Diffused domain is led by the whole network and community, including informal structure and linkages between different players. Hence, that model adapts an etherarchical structure of communication, characterized by emergent and unplanned community-based behavior. On the other hand, centralized domain is formed of a dominant player that leads a more formal structure and linkages between players, hence adopting a hierarchical structure (S. Nambisan et al, The Global Brain, 2008). These four domains reflected four business models that can be adopted as shown in above Figure. Each adapts the characteristics of the two domains it lies in. The most appropriate open innovation business model in that context for ICT industry is the creative bazaar model; where the innovation is less defined, which gives more freedom and push the companies to search for new unknown connections and exploring other networks, at the same time having a dominant player and a formal structure that secure the company’s management and strategic planning.

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