Open (OI) and Closed Innovation (CI) in Digital Creative and Cultural Industries

free essayIn 2003, it was declared that a significant number of companies and industries considerably changed their way of innovation (Galli 2011, p. 19). Various industries transformed their efforts from a Closed Innovation (CI) to an Open Innovation (OI) model. Hence, this shift appealed to scholars and practitioners.

Closed Innovation Model

Closed innovation is strongly internally focused, provides maximum control, and keeps competitors at bay (P.C.). Consequently, a company should do everything by itself, from idea generation, product & development to task assignment and distribution, planning and orientation, service and financing. A firm hires the smartest people, exploits talent and knowledge; responsibilities and tasks are assigned to them according to the functions and positions within a firm. Research discoveries originate inside a company, and Intellectual Property management aims to prevent other firms from profiting from the firm’s ideas and technologies. Within such a controlled innovation model, radical advances are difficult to achieve because they require dynamic and creative approaches, which do not fall into the pattern of well-organised methodology (Herstatt 2015, p. 292). Standardization of the innovation process can no longer be considered the best form for modernisation and improvement. Some scholars claim that it is a weak-chain approach, which converts design into a disciplined activity and sometimes determines a low quality of the outcome. Consequently, closed innovation is not acceptable to address new problems to be solved. If the idea or technology is rejected, they are collected in the internal databases of the company. As a result, a number of promising business technologies remain unexploited and unused (Galli 2011, p. 20). The fact is that companies are afraid to lose their intellectual property, and at the customary level, there is no organisation that has all the methods and resources available to take advantage of all opportunities. At last, сlosed innovation principles show that, if the company creates the best and most promising ideas in the industry, it will win.

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Open Innovation Model

Nowadays, open innovation is at the steering wheel of modern dominant approaches. It uses external as well as internal ideas as the key elements of the innovation process. Companies realised that there is no need for such an overall control. A release of valuable ideas does not need to be necessarily accomplished inside the company and by its own activities. If the company makes the best use of internal and external ideas, we will achieve the triumph. Innovation projects can be advanced provided that the firm will use both internal and external paths to market and generate ideas within and beyond the organisation. Therefore, open innovation embraces three principal processes – incorporation of external ideas, external commercialisation of inside-out innovations, and collaboration with competitors and partners (Herstatt 2015, p. 292). It is an opportunity to benefit from existing knowledge, solutions, and ideas made by other companies and individual figures. However, even unknown users turn to play in the innovation process, working on different activities. Acceptance of outside knowledge implies traffic in ideas while seeking for problem solution or new product representation. All in all, the company does not require smart and intelligent employees; it works with people inside and outside the firm. The company needs to display a better business model rather than being first to the market, and such model allows companies to use other firm’s Intellectual Property. Thus, open innovation, which encourages and explores a large number of opportunities, is a shift in using, managing, and employing IP.

Nowadays, business reality is not exceptionally grounded on pure open innovation. In fact, firms stake both on closed and open activities. Therefore, the future lies in the right balance of the two approaches where the organisation uses available tools in order to provide successful services and products quicker than an opponent and, at the same time, protect intellectual property and raise the possibility to construct essential competencies.

Complexity and Risk Level of Open Innovation

However, the prevailing philosophy inside companies still remains inward-facing. Companies sometimes display ambiguity and distrust towards open innovation. The greatest threat for implementation of the model is a reluctance to take risks. The companies that are used to the traditional model are not alive to the value of new innovations in their business setting. It is a challenge to select the right open innovation practice; nonetheless, the central issue is recruitment of qualified and interested employees. If a project fails to evoke contributor’s interest, it will create woes to the company. A possibility of criticism concerning inappropriate partners or contributors keeps workers aloof, restraining them from participating actively in open innovation programmes. Insufficient clarity of participation procedure might also suspend the workers from duties or put them out of countenance. The employees might keep questioning the quality of out-of-company ideas or making an attempt to “evaluate them in addition to their daily workload” (p. 295).

Cultural and Digital Creative Industries

Cultural industries produce tangible or intangible products, creative or artistic, which produce capital through utilization of cultural assets (Ukessays 2015). These industries combine creativity, IP, and cultural knowledge in order to provide products and services of cultural significance. Nowadays, this industry transformed into a more important element after integrating modern mechanism and monopoly capitalism discarding just a status emblem. It is considered a potential instrument for economic development and creation of positions of employment. Among the most principal features of cultural industries are flexible working hours, a low degree of unionization, low or average wage rates, and self-employed providers with high level of job satisfaction. The list of cultural products includes video games, literature, television, music, and theatre performances.

The process of digitalisation now has a considerable impact on creative industries. Digitalisation changes the means by which creative works are used and created. Besides, it has contributed to the development of the original category of creative services and goods (video games), and a new way of financing creativity emerged: now producers and consumers are aware of ‘crowd-funding’ (Towse & Handke 2013, p. 1). Creative industries not only engage individuals but also companies, cities, and national and international institutions to defend economic and cultural sectors. In contrast to other creative industries, digital technologies have enriched rather than destructed the industries: for instance, digital banners facilitate performances to be understood widely (Jones, Lorenzen & Sapsed 2015 p. 12).

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Creative industries, middle size or big firms, are centred on the cultural ones; however, they are not limited to them. A distinctive feature of cultural industry is non-monetary terms, and a cultural product requires a human activity input. Creative products do not dispose an exceptional cultural value. They are directed to commercial purposes based on creativity (software, fashion design, and digital advertising). Creative industries offer a fixed schedule, and the salaries are relatively high.

The Open Context of Innovation in the UK Digital Creative Companies.

The UK has developed a dominant technical infrastructure for sharing academic knowledge. The high priority is still to encourage professors and scholars to accept this culture of openness more actively. Burberry, British Airways, BAE Systems, Barclays, Dyson, UBS, and the NHS are England based companies that are the advocates of open innovation and digital transformation (Tuitt 2016).

Roland Harwood provided such examples of open innovation in software projects enabled by NESTA: the ‘discover’ programme, which represented a set of requirements put forward by the network operator Orange, and the ‘jam’ programme resulted in collaboration between the Formula 1 car manufacturer and the UK National Air Transport Control Services (Hanganu 2013).

Orange was interested in such offers for products and services that would earn ?50m over three years. There were a large number of ideas, of which six were chosen for further development. One of them was ‘Last Second Tickets’, a mobile service that offered the customers of Orange unsold cinema and theatre tickets at a discounted price (Hanganu 2013).

The second case is the airport operation software, which allowed National Air Transport Control Services to control better airport operations and save approximately several million pounds.

In such innovation programmes, partners and competitors act as an independent unity between research and development elements in different companies to help them operate developmental processes. Open innovation models enable these processes as a norm. Eventually, such units have accumulated a huge amount of expertise, which gives useful lessons on this matter.

Philips Research MiPlaza campus even created their own open innovation systems environment. The organisation can boast of unlimited innovation partners, appropriate processes to manage IP, and a well-developed infrastructure.

Open Innovation. Customer Oriented Companies and Social Media Platforms

The entertainment industry benefits from quick growth and expansion of online games with a large number of players worldwide. The business model of offline video games selling was prevailing for two decades. Since 1990s, companies and businesses pursued open innovation. Nevertheless, Flickr transformed its business model from online gaming to photo sharing because one of the preferred features was online photo sharing while they can do nothing with the game.

Companies can do much in order to make customers participate in the innovation process. LEGO succeeds in letting its clients elaborate design: the company just included programmable cars with plastic parts (Chesbrough 2010). The next approach expects students learning robotics using LEGO; they can study programming and design constructing cars and lorries from LEGO details.

Moreover, effective use of social media networking platforms reinforces existing abilities and links theme matter experts to the project. LinkedIn in a few moments identifies a person having particular knowledge that others seek (Lindegaard 2012, p. 2). It gives the opportunity to familiarise others with experience and lore within the company. Social media offers these key elements, which strengthen open innovation: contact with consumers and partners, identification of new members who assist in company’s efforts, and promotion of innovation outcomes. Moreover, it is extremely important to be aware of what happens in open innovation ecosystem/social media world because of organisations, which require the solution a person can offer. All in all, it is an opportunity to reach out potential companions or colleagues.

Scholars emphasize on the importance of social media platforms to create open innovation and crowdsourcing system. Crowdsourcing appears with the availability of outsourcing, the crowd and social web. Participants take active part in co-creation of products and want to form a part of the social community. The use of social medial contributes to the broad international perspective and fertilization of prominent ideas. The quality of the ideas increases because users further improve the output.

Closed Innovation in the Performing Arts (Cultural Industry)

In a closed innovation model in the frame of theatrical production, the first stage implies working out the performance (equivalent to R&D phase) by the producer or choreographer, who gives preference to one among a range of ideas. Playwrights, set-designers, actors, costume designers, and composers work on the part of development concentrating on internal capacities of the group. The boundaries of these stages can be extended if the screenplay expects a viewer’s participation.


Julianna Faludi provides a brilliant example of closed innovation in the performance art by discussion of Ferenc Feh?r performance ‘Morgan and Freeman’. Ferenc Feh?r, an experienced and successful dancer-choreographer, tried his hand as choreographer, dancer, and composer. He also researched and developed the conception of the performance, and only two contributors were involved. The performance entered the market due to the artist himself and the festival. Therefore, communication costs are not high, there are a small number of participants, and the artist shared the information without the communication.

At the same time, during the work of Lisbeth Gruwez, the choreographer, and Maarten Van Cauwneberghe, the composer, an inseparable unity of music and dance was noticed. A one-dancer choreography accompanied by music was represented on the stage. The dual system of implications was put together during the work. A narrow set of tools was utilized to enter the stage of development because, for instance, music was simultaneously created.

In both cases, the cost of producing materials is extremely low. Nonetheless, innovation costs can increase and exceed the benefit because different innovative solutions require greater efforts. A stock of plays creates further lock-in if there is no variety; however, some of them reckon on reliability of an old repertoire.

Open Innovation in the Performing Arts (Cultural Industry)

Art production creates an impasse among the scholars. There is a fixed belief that both environmental and organisational characteristics foresee innovation activities of theatres. Stylistic innovations dominate over technological ones in the production of games and music. Investigators who examine open innovation in the cultural industries principally concentrate on exploring networks and flexibility of establishments. The reason is, the efficiency of cultural projects is interrelated and explained by their network. Open source projects can determine forms of open innovation in the performing arts.

Independent companies in terms of theatre are not necessarily bound to concrete theatre venues; they are sustained by the main financial grants. Companies usually rely on their internal opportunities; however, the can benefit from an external source, such as customers and suppliers, competitors, universities, governments, and local spaces. Performances serve as a line between the viewer and the artist in producing meanings. Artistic production artists can count on outside sources to stimulate the circulation and generation of ideas while designing a performance. Independent establishments have a secondary interest in creating reliable audience. Consequently, the marketplace for art production ‘deals’ using shows including venues, companies, and managers. It is necessary to raise absorptive capacity, taking into account external and internal values and paths.

User-led innovation methods have also been accepted in the sphere of media. The audience often contributes to the creation of performance, allowing direct communication between the viewer and the performer. In ‘Leonce and Lena’ by Maladype, the viewer made a choice about the course of events entering the scene (Faludi 2015 p. 52). Such participatory form was producer-driven. Though a user-led innovation model enables participation of group of amateurs in performance, they only become producers by the commercialisation of a product.

A producer-driven model implies a director or choreographer who seeks for external innovative sources and forms original markets. The uniqueness in the performance art assumes a risk-taking behaviour. In addition, the group of artists should adapt themselves to collaboration in order to raise chances.

Private contributions and grants were a pivotal element of realising performances. The relationships between the audience and the artists were direct because the profit on ticket sales replenished the budget of the company. Thus, the staging of ‘Leonce and Lena’ was a real breakthrough and innovation, which offered prospects of new contemporary model and strategy of companies. Members of the audience were invited on the scene, and the progress of events was entrusted with the viewers. Moreover, the artists performed in the middle of the room, moving through rows with the audience.

Conclusion

In 2003, Chesbrough claimed about the shift from closed to open innovation model. This fact appealed to a number of scholars and practitioners. The difference between closed and open innovations lies in maximum control and self-sufficiency from idea generation, product & development to task assignment and distribution, planning and orientation, service and financing (CI). It hires only the smartest people and uses their knowledge and talent; the tasks are assigned according to the functions and occupied positions. IP management prevents from profiting from the ideas; however, it is impossible to achieve advances within such a controlled innovation model. It is a weak-chain approach, which converts design into a disciplined activity; usually, it involves a low outcome. Promising business technologies remain unexploited and unused, and now, this innovation cannot be applied to solve modern problems. Open innovation is a dominant modern approach, which, in contradiction to the closed approach, uses external as well as internal ideas as the key elements to the innovation process. The company achieves triumph if it makes the best use of internal and external ideas. It embraces such a principle as collaboration with partners to benefit from existing solutions made by others. Companies that follow this approach do not hire smart employees; rather, they work with people inside and outside the firm. The companies used to the traditional mode, are not alive to the value of new innovations in their business setting. They display ambiguity and distrust towards open innovation, and the major threat is a reluctance to take risks. Nowadays, business reality is grounded both on closed and open activities, and the future lies in balancing the two approaches. Cultural industries are those that combine creativity, IP, and cultural knowledge in order to provide products and services with cultural significance. This industry transformed into more important elements after integrating of modern mechanism and monopoly capitalism discarding just a status emblem. Cultural products involve video games, literature, television, music, and theatre performances. On the other hand, digitalisation has contributed to the development of the original category of creative services and goods. Digital technologies have enriched rather than destructed the industries. A distinctive feature of the cultural industry is non-monetary terms, and a cultural product requires a human activity input. Creative products are directed to commercial purposes based on creativity (software, fashion design, and digital advertising). Many companies based in England are the advocates of open innovation and digital transformation. Software projects enabled by NESTA represented a set of requirements put forward by the network operator Orange. One of the thoroughly aired ideas was one of the ‘Last Second Tickets’, a mobile service, which offered the customers of Orange unsold cinema and theatre tickets at a discounted price. The second case is the airport operation software, which allowed National Air Transport Control Services to control better airport operations and save approximately several million pounds. Companies can do much in order to make customers participate in the innovation process. LEGO succeeds in letting its clients elaborate design. Also, effective use of social media networking platforms reinforces existing abilities and links theme matter experts to the project. LinkedIn in a few moments identifies a person having particular knowledge that others seek. A closed innovation model in the frame of cultural industry and the performance art in general implies an extremely low cost of materials, which can increase and exceed the benefit because of different innovative solutions. ‘Morgan and Freeman’ performance entered the market due to the artist himself and the festival, so communication costs were not high. User-led innovation methods in open innovation approach were implemented in this sphere. In ‘Leonce and Lena’ by Maladype, the viewer made a choice about the course of events entering the scene, and the artists played in the middle of the room, moving through rows with the audience.