Understanding Open Innovation and the Internet of Things
While most people think “Internet of Things” (IoT) is the ‘latest rage’ and newest member to the technology works, the roots of IoT date back to the last millennium. In fact over 30 years ago, the availability of Coke was checked from the internet! What is the “Internet of Things”? It’s the interconnection of the Internet to products/devices that enable real-time and interactive information sharing. Certainly, today’s smartwatches and wearables are significantly more sophisticated in their features, performance and capabilities but they fundamentally do the same thing – interact and communicate data.
Yet again, how would companies understand the ecosystem dynamics to truly interconnect devices and increase their value proposition unless they do not share information, cooperate and think of innovative ways to partner cross-industry. Open Innovation would be key to solving this problem.
We’ve seen, over the last decade, success with combining resources from within and outside organization to create new products, categories and cross-pollination for solutions. It can range from a consumer products company finding solutions to hair dyes from a Textile’s firm, too, answer phone calls while driving through voice commands. Open Innovation would enable companies in the IoT space to collaborate and increase interconnections of devices and their management. IoT needs 3 aspects to it – A sensor/device, an IoT platform and connecting Apps from the Internet to end-users. Multinationals across all domains are changing their mode of operation around IoT. Samsung with their Open Innovation Centre and rapid acquisitions are not just building capabilities but in fact building a large network of companies (focussed on startups), experts and entrepreneurs – and this is how they’d want to leverage Open Innovation. Microsoft, more concretely to explain and for instance, has created several new partnerships with complementary companies in the areas of security and networking, as well as its competitors. It’s a cleverly played move, in 3 ways – It helps Microsoft innovate rapidly, It’s trying to build a common platform/standard and further deepen into personalized solutions for users. And they’re leveraging Open Innovation to a great degree – to find new technologies and to use them in the context of Microsoft. These are not just strategic moves but massive financial investments made by such large institutions in different sectors and industries all co-relating and linking the importance of Open Innovation in the area of the Internet of Things.
Interestingly, according to McKinsey in 2013, the potential IoT market was expected to amount between $3 to $5 trillion per year by 2025, and applications ranging from healthcare to manufacturing to energy efficiency to transportation to agriculture. The Internet of Things would need and can use Open Innovation to create new sets of connections and combinations between products, services, and technologies. This would truly help in an exponential growth in learning, development, and ideation across industries. Such an interconnected Open Innovation approach would also foster a more “open environment” for example, creating smartwatches and wearables which are open-source in their model but closed-source in their manufacturing components. This open environment would be necessary for end-user value creation in terms of interconnectivity and speed of availability of new offerings.