Embedded Files
Pattern description
Pattern description
In open business models, collaboration with partners in the ecosystem becomes a central source of value creation. Companies pursuing an open business model actively search for novel ways of working together with suppliers, customers, or complementors to open and extend their business.
Inventive problems
Inventive problems
It’s necessary to perform all the operations of the Value-added chain in order to create the product.
It’s necessary to perform minimum number of the operations of the Value-added chain in order to reduce costs of the product manufacturing.
The company should be large and have a complex structure to perform a large number of diverse operations for the development, production, and delivery of a complex product to the customers.
The company should be small and have a simple structure in order to:
- reduce the variety and complexity of the company activities;
- focus on a small number of core operations;
- have a small stuff;
- minimize the cost of development, production, sale, and delivery of products to customers.
Application examples
Application examples
Pharmaceutical company Eli Lilly, although belonging to an usually secretive industry, founded the InnoCentive platform in 2001. It serves as a venue for researchers from all around the world to contribute to and be financially rewarded for solving the company’s current challenges. InnoCentive was spun out of Eli Lilly in 2005 and it is now open to all businesses looking to solve innovation problems. Over 300,000 registered problem solvers have contributed to finding answers and have been awarded a total of over US $40 million for their suggestions since InnoCentive was founded.
IBM in its often-cited metamorphosis from product to service provider, decided to stop developing its own operating system. Instead, it now actively participates in advancing the Linux Open Source system. With this move, IBM reduced its development costs by 80 per cent, while its server business, which profited from its seamless compatibility with the increasingly popular free Linux operating system, received a healthy boost. IBM’s intimate knowledge of Linux helped its new services business to flourish, and the company’s turnaround in the late 1990s was in large part due to its increasingly open business model.
Valve Corporation, a video game developer and distributor based in Bellevue, Washington, benefits in two ways from its Open Business model. On the one hand, the company decided to build its debut first-person shooter Half-Life in 1998 in such a way as to make it possible for technically minded players to easily create mods for the game. Thanks to the active support of Valve Corporation, an ecosystem of developers who brought their own first-person shooters to market was created. Among these developers were the creators of Counter-Strike, one of the most successful video games of the Internet era that led to the creation of highly popular professional gaming leagues in Asia. Valve then repeated its Open Business model success with Steam, its digital video game distribution platform. In contrast to its competitors, who reserved their distribution channels for their own products, believing them to be a core competency requiring protection, from 2005 onwards Valve permitted any game developer in the world to use Steam to distribute its games in exchange for a 10–40 per cent share of the turnover. At the present time, Steam hosts some 2,000 games from both independent developers and all major game studios. Thanks to its Open Business model, privately owned Valve is now valued at over US $3 billion and ranks as one of the great hidden champions of the entertainment industry.
Google Sites
Report abuse