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Open innovation in practice – Google versus Microsoft, Dr. Siham El-Kafafi and Jing Chai

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Dr. Siham El-Kafafi
ICL Education Group, New Zealand

Jing Cha
Greenspot Ltd., New Zealand

PURPOSE: This research aims to critically assess two open innovation strategies, the inbound open innovation/inside-out innovation and the outbound open innovation/outside-in innovation, and their application in two world renowned organizations.
DESIGN/APPROACH: The research will first discuss the application of the inside-out innovation strategy at Google, which provides the largest search engine in the world. This will be followed by a discussion of the application of the outside-in innovation strategy of Microsoft as one of the most influential personal computer software corporations in the world. Finally, the results of a comparison and evaluation of both Google and Microsoft’s applications and adoption of the open innovation models and strategies will be provided.
FINDINGS: The following are some of the findings resulting from analysing Google’s inside-out innovation strategy versus Microsoft’s outside-in innovation strategy:
• Successful open innovation strategies not only refer to developing new products, but also include strong marketing competencies to commercialize the products;
• Google and Microsoft have strong resources, experience and capabilities to market new products to potential customers, and effectively communicate with the potential customers about the value created by the products;
• Google and Microsoft adopt both inside-out and outside-in strategies and put great efforts into minimizing the disadvantages of such strategies;
• The success of the outside-in innovation strategy depends on how an organization supports outside innovators by facilitating an environment that supports both intrinsic and extrinsic motivations, as exemplified in the case of Microsoft.
ORIGINALITY/VALUE: This research highlights the challenges and success factors confronted by two of the world’s most renowned organizations when they apply the open innovation models from which other organizations could benefit, especially when planning a collaboration with external innovators.
RESEARCH LIMITATIONS: This research reports on findings of two case studies that cannot be generalized on all types or sizes of organizations.
KEYWORDS: Inbound Open Innovation, Outbound Open Innovation, Innovation Strategies in Google and Microsoft.

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