Open or Closed Case

What is better for a product-based IP Strategy, an open system of innovation or a closed system?  The answer is both and neither, and here is why.

Strategy, at its core, is the interplay between interaction and isolation.  Everything that you do in IP strategy, from the most complex to the most mundane, is to create favorable interactions and isolations between you, customers, partners, and competitors.  For example, the right to enforce exclusivity granted by a patent could create a useful interaction in the form of a license to a partner at the same time it creates a useful isolation by discouraging a competitor from infringing.

In competitive strategy, interaction is seen as a way to achieve growth and isolation is seen as a way to cause decline.  Watch any competitive sports game, and you will see this interplay, for example, a team working together to keep a ball away from a competitor’s top scorer.  Considered in this growth light, an open system would seem a good way to go since it maximizes the potentially useful ideas and resources available to advance a business, perhaps introducing from many people an abundance of useful ideas and resources that a single individual or enterprise could never match.  We see an open system with products such as Android in mobile telephones that many product companies have adopted for their smartphones.

The catch is that in innovation strategy and its impact on competitive strategy, some of the greatest forms of diversity are actually caused by isolation.  The diversity of everything, from species of animals to human languages, was caused by the separation of animals and people respectively.  Likewise in innovation, many disruptive ideas, such as the steam ship, developed outside the innovation circles of those selling the previous generation solutions, in this example the clipper sailing ships.  Breakthrough diversity would seem to favor a closed system.  Apple’s pioneering iPhone stems from such a closed system.

There is one pattern to think about as you debate which system to use for your innovation and associated IP strategy.  The usual pattern in product solution development is for truly innovative ideas to emerge from closed systems where they are free to develop far enough away from the mainstream to avoid being diluted by ideas that would pull them back to the traditional ways.  iPhone, for example, was created to give customers what they did not yet know they wanted, and therefore could never have communicated if they had been involved in the creation process.  Open systems often come in to play as a means to make an alternative competitive product solution very fast given that a huge number of people can have an input on building something new from the kernel of the idea generated by the pioneering product solution of its kind.  Android appears in that role.  Linux also arose on the framework of an idea for computer operating systems first developed in a closed system environment.  The question is whether an open solution like Android or its equivalent can exist without there being a closed solution like iPhone or equivalent out there first.

As an IP strategist, you should leverage both open and closed systems.  You would appreciate that the most brilliant ideas do not tend to come from committees – a plus for closed systems – and that individuals are not always the best at looking at the diversity of possibilities – a plus for open systems.  You likewise recognize that committees can safeguard against catastrophic ideas – catastrophic potential being a negative for closed systems – and that a diversity of thought can make it impossible to set a focused direction onto something truly innovative – lack of focus being a negative for open systems.

So you need a bit of both.  And if a decision to be open or closed becomes a company doctrine, start worrying.  It’s not a problem if you lean one way or another, but if you make it a policy to be just one way or another, it will likely bite you somewhere along the line.

Image credit: maury.mccown

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