Open innovation playbook

Competitive digital innovation strategies in Asia’s most dynamic markets

 

Enable disruptive digital innovation in China

China is at the forefront of digital innovation yet foreign companies are often unprepared to participate due to a lack of local innovation capabilities. Open innovation strategies provide a solution. The term ‘open innovation’ was coined by Professor Henry Chesbrough of UC Berkeley in 2003 to illustrate how companies incorporate external ideas and expertise to advance their innovation goals. Dr. Chesbrough identified four factors driving the shift from closed to open innovation:

  • Shorter innovation cycles for digital products
  • Dispersed knowledge due to mass entrepreneurship
  • Increased mobility of knowledge workers
  • Rapid growth in venture capital to fund innovation

These factors have become increasingly important in  China since the start of the decade. Modern China is among the world’s most digitized and entrepreneurial economies. Technology workers are highly mobile with numerous opportunities and limited company loyalty. And local competitors have used corporate venture capital and M&A to expand rapidly into new markets.

In the decades following China’s economic opening up global companies secured market share with superior technology and products. The competitive landscape is now shifting due to the increasing importance of both digital technologies and localization. Digital technologies are outside the core competencies of many incumbent market leaders. And they enable disruptive new value propositions, business models and distribution channels.

Analysis of Baidu search term trends indicate a growing interest in open innovation across China. And a recent survey of multinational companies by the German  Chamber of Commerce found that a significant proportion of companies are planning to collaborate with external partners, with strongest growth in engagement among startups, consultants and public research institutes.

 

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