Making Open Innovation Ecosystems Work: Case Studies in Healthcare


Making Open Innovation Ecosystems Work: Case Studies in Healthcare

Tuesday, October 27th, 2015 - 14:47
In recent years, government agencies have been faced with the following challenge: finding innovative approaches to deliver technological solutions to agency operations while at the same time, dealing with declining tax revenues and calls for more efficient utilization of public resources.

In the private sector, there has been a steady flow of technological advances being developed among organizations and individuals.

Open Innovation

One attempt to address this challenge is the idea of open innovation. For our purposes, open innovation is about getting external ideas into an organization to improve its ability to develop new products and services. Open innovation is also a way to take internal innovations to market through external channels. These two approaches can be used by government agencies that are interested in improving and increasing the value of their innovation processes; a vital area of emphasis in recent years.

This definition highlights the two approaches by which agencies can benefit by adopting open innovation practices:

Approach One: By adopting or using innovations that were developed externally, agencies can capitalize on industry best practices. Because these resources already exist, there is often less incentive to spend time and funding on conducting basic research and develop ment internally within the organization.

Approach Two: By allowing their intellectual property (IP) that is developed internally to be released to the external markets, an agency can gain legitimacy, additional support options, and complementary products and services. In addition, releasing an innovation may attract additional ideas and components to the agency contributed by external parties. These contributions can be included in subsequent innovative projects.

Management Challenges to Open Innovation

Open innovation introduces three managerial challenges: 1) an agency must be able to motivate administrators and line employees to contribute intellectual property that is developed internally to those outside their organization; 2) the agency must be able to identify and access promising ideas developed outside the organization that can benefit its internal processes; and 3) an agency must develop the capability to incorporate these external ideas, along with internal resources, to improve its innovation pro cesses.

This report discusses a particular type of healthcare information technology—an electronic health records system (EHR)—that is an open-source software platform. Opensource software has been described as a particular manifestation of open innovation, based on two elements of the open source model:

  • collaborative development of the technology (i.e., a software platform) and
  • shared rights for everyone to use the technology.

Typically, open-source software projects generate revenues through the sale of complementary products and services, such as additional licensing fees for commercial support options. However, this is typically not an option for government agencies pursuing an open-source model, because the products are developed using public funding (making it illegal to sell them back to the public). However, despite not being able to generate revenues directly, agencies can derive significant benefits by establishing the technology as a de facto standard. The agency would achieve this by:

  • releasing the technology for public use,
  • attracting improvements and additional products from external adopters of the technology,
  • generating mindshare and goodwill within the industry market surrounding the technology, and
  • increasing the support options for the technology that are available to external adopters and the agency.

Open innovation allows the agency to solve a number of important issues related to the value of its innovative practices, but perhaps the most crucial issue is how to attract and motivate external participants to help with its innovation practices. To address this issue, we first introduce the concept of a technological ecosystem.

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