Open innovation as a phenomenon

The argument that open innovation is a phenomenon is supported by many factors, the greatest being that open innovation is here to stay rather than a seasonal hype that will eventually die. Chesbrough argues that the level of revolution in the business industry today forces firms to closely interact with the outside world to better understand the market demands (Chesbrough, Vanhaverbeke and West, 2006). Open innovation is, therefore, one of the major results of this revolution. Companies risk losing their market share if they do not constantly engage the outside world and allow customers and other external innovators have a say in their operations. As a result, more and more firms are integrating external innovators with the aim of improving their service quality and maintaining customer satisfaction (Chesbrough, Vanhaverbeke and West, 2006).

Initially, through R&D, companies used to create new products and release them to the market with the hope that consumers will adjust to the products. Even though the method worked occasionally, there were too many risks involved. Open innovation came in and reduced such risks. By getting in touch with their customers, companies can create products and offer services that are more customer-specific rather than forcing consumers to adjust to the products (MIT Sloan Management Review, 2019). Also, open innovation has helped firms to build a 'community of fans' who actively help the firms to produce better products and offer high-quality services. The company later abandoned the KTP and sought to stick to closed innovation. The company was forced to pay a huge financial amount to the external partners as well as the developed software.

Martovoy believes that this is just an example of the many companies that will follow a similar direction of abandoning open innovation with fear of financial consequences of legal confrontations with external partners (Eriksson Lundström, 2013). He therefore argues that open innovation is a fad that will soon be history. Furthermore, the possibility of choosing the wrong partners and complex criteria of selecting the most appropriate inflow knowledge may scare away many firms especially the SMEs (Eftekhari and Bogers, 2015). Open innovation has helped firms to engage more with their employees. When employees feel more invested in the idea, they are motivated to report to work the following day (Chesbrough, Vanhaverbeke and West, 2006). Open innovation has allowed customers to be included in the production process which leads to better user satisfaction.

Products created are of better quality and designed to meet the specific needs of the consumer. However, like any other entity, open innovation has challenges and cons that if properly addressed, more firms will buy into the idea of open innovation. 6% over three years (Ollila and Elmquist, 2011). The company offers transportation network and has partnered with companies such as Toyota and Red Cross in a move to improve its comfort and response to emergencies. The firm also allows private investors to collaborate with its networks by using their cars while using the resources of the company. The private investors are then to pay an agreed amount of returns to Uber. (Ollila and Elmquist, 2011). Open for Entrepreneurship: How Open Innovation Can Foster New Venture Creation.