Why Companies Should Have Open Business Models

Because of two trends ? rising R&D costs and decreased product revenues (due to shorter product life cycles) ? companies are finding it increasingly difficult to justify investments in innovation. Business models that embrace open innovation address both issues. The development costs of innovation are reduced by the greater use of external technology in a firm?s own R&D process. This saves time, as well as money. And the firm no longer restricts itself to the markets it serves directly. Now it participates in other segments through licensing fees, joint ventures and spinoffs, among other means. These different streams of income create more overall revenue from the innovation. To partake more fully in the…