Open Innovation in Managing Innovation in the Service Sectors Essay

Open Innovation in Managing Innovation in the Service Sectors - Essay Example The competitors or the rivals who want to win over the competition and succeed in the market gathers considerable resources creating their own powerhouses and make considerable advancement. However, the scenarios are different now and newcomers face enough competition for entering the market. Thus, they often do not conduct enough research and commits a mistake in adopting new ideas. Open innovation is an opportunity to them in which the companies can commercialize both their innovations as well as their own ideas from other firms and from within their own firms to the market using channels that provide pathways out of their current business. This report focuses on the use of open innovation in the services sector. The significance of open innovation in service sector Open innovation has taken a significant place in the world of business and competition. Today more than hundreds of companies are seen to have executives who are assigned the title Manager of Open Innovation. There is a lso the dozen of software companies and their intermediaries who provide consultation regarding services or product open innovation. Open Innovation is suggested to provide businesses a more profitable way to innovate as it creates new revenue channels for the company, amplify differentiation in the market, reduces cost and accelerates the time for which the business operates in the market. The innovation in capabilities and its management is industry or sector specific and not specific to any firm. An innovation of intangible product and services are hard to measure. Therefore, it should be remembered that innovation related to the product is quite different from innovation in services. Services are intangible and the customers need to feel them. This makes it mandatory for the organization to place the customers to a most crucial position, access tacit knowledge regarding the requirements and the demands of the customers and finally innovate their services in ways that it caters t o their needs. For instance, innovation in the financial service sector has occupied an important place. Financial innovation is not only restricted to design, distribution, and development of financial services and product but also modifying and altering the role of the financial institution. Financial innovation is done address the issues of tax and regulations. Over the past few years, the banks that are an integral part of the financial sector have done some major innovations such as automated teller machine, credit cards, and internet banking. Internet banking has not only changed the consumer’s behavior but also the way they conduct their business. In case of the business and financial service sector technology has become the key driver of innovation. An important and crucial transition has come in this sector through the integration of data, data analysis and technology (Chesbrough, 2011; Open Innovation Community, 2013; Institute of Directors, 2013). The integration o f technology has brought changes in the innovation platform of the financial service sector such as the shift from the use of paper money to plastic money and mobile wallet.