Assignment:
What is meant by the closed and open innovation models? Provide examples in your discussion.
When companies innovate using the closed innovation model they generate, develop, and market their own ideas and technological advances (Salvatore, 2012). When innovating using the open innovation model, companies explore ways to utilize external technologies and ideas to improve the firm. The pathway in open innovation is multidirectional, and a firm encourages other companies to use its technologies through licensing agreements and joint ventures (Salvatore, 2012).
Proctor & Gamble is an example of an organization that uses open innovation by encouraging other companies to use their innovations. Proctor & Gamble has a policy that offers any new innovation that is not used within three years to others through a licensing agreement or fee (Salvatore, 2012). Another example of open innovation is boundary spanning, which is often accomplished by exchanging managers to share ideas. Boundary spanning enhances leadership capabilities and communication, creates networks that support organizational goals and builds relationships that can increase innovation (Gilmore, 2009).
Comment on the following statement: "A company could produce and sell any product as long as there is a market for it."
A company would not be able to continuously produce and sell a product, at least in the short term, regardless of the market. The law of diminishing returns states that after a point a company will get diminishing returns from the variable input of labor (Salvatore, 2012). If a firm uses more and more variable inputs of labor, while maintaining static fixed inputs such as machinery and production space, the additional units of labor will have less fixed input to work with (Salvatore, 2012). In the short term a company would be smart not to attempt to increase production past the capabilities of its fixed inputs. If an organization did try to outpace its fixed inputs by increasing labor, eventually it would have a negative marginal product of labor, indicating that the firm would have a greater output with less labor (Salvatore, 2012).
A firm that unwisely attempts to exploit a receptive market by increasing labor beyond its infrastructure's capabilities may be driven by greed or haste. Proverbs 21:5 counsels: "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty." Managers must grow their organizations in a responsible and organized manner, carefully weighing their decisions and the repercussions of those decisions. Growing too fast by increasing variable inputs can have unintended negative consequences that managers should avoid. Otherwise, they may meet with the poverty described by Proverbs.
References
Gilmore, B. (2009). Decreasing organizational design failure: Organizational and leadership boundary spanning. Organization Development Journal, 27(2), 97-105. Retrieved from https://search.proquest.com/docview/197984894?accountid=12085
Salvatore, D. (2012). Managerial Economics in a Global Economy (7th Ed.). New York, NY: Oxford University Press.