Small and medium businesses have difficulty getting past
a critical threshold that allows them to grow in the market. Helping them
collaborate with like-minded businesses helps their growth potential. A paper by
Dhakal, et. al. (2013) discusses an open-innovation concept of living labs that
allows stakeholders and customers to engage in the co-creation process together.
They studied a cluster in Australia to show how this enhances business
development and the economic engine.
A living lab is a user-centered open innovation ecosystem
(Hippel, 1986). It uses modern
technology to foster communication between stakeholders and customers to
co-develop products. The natural
environment becomes the testing grounds for new products and services and this
allows users to offer feedback on the success of changes and provide ideas on
how to improve on the products and services.
It provides a collaborative space (virtual or
physical) that distributes problem-solving tools, capacities, and
responsibilities to the end user to create greater innovation (van der Valt et.
al., 2009). This innovation is used to
enhance the offerings of companies through enhanced products and services. In
this context, innovation is seen as enhanced discovery whereby innovation
equals invention plus exploitation (Roberts, 2007).
Before an open innovation living-lab can be
successful the stakeholders will need to agree on joint goals, and focus on the
resolving of problems in the real world (Bergyall-Karaborn, et. al.,
2009). This process allows stakeholders
to work collaboratively on developing products and consideration customer
feedback to enhance their offerings. The information is shared among the
stakeholders to further develop mutual products and services.
When living labs have the right stakeholders and
functionally work well together, each of the businesses receives a benefit for
both the co-creation product/service as well as gain important knowledge for
the enhancement of other products/services. When innovations are significant,
it can have an impact on the regional well-being and local employment
opportunities (Keniry, et. al. 2003).
Living labs are beneficial to enhancing knowledge
clusters. Clusters are defined as “a
geographically proximate group of interconnected companies and associated
institutions in a particular field, linked by commonalities and
complementarities (Porter, 1998, p. 4). Cluster members need a way to
communication to foster mutual growth. Greater growth contributes to the
functionality of a larger economic hub.
The authors found that geographical togetherness of
small businesses form around competence similarities. To enhance the local
interaction it is possible to use open innovation (i.e. living labs) to further
their growth. It requires a method operationalizing processes and developing
mechanisms that help further innovation. Organizations that willingly
collaborate around certain key objectives with other stakeholders and use
customer feedback to enhance their products are likely to reap growth while the
region experiences greater economic enhancement.
Bergvall-Kåreborn, B., et. al. (2009).
A Milieu for Innovation – Defining Living-Labs. In K. R. E. Huizingh, S. Conn, M. Torkkeli
and I. Bitran (eds) Proceedings of the 2nd ISPIM Innovation Symposium:
Simulating recovery - the Role of innovation management, New York City, USA.
6-9 December 2009.
Dhakal. et. al. (2013). The innovation potential of
living-labs to strengthen small and medium enterprises in regional Australia. Australasian Journal of Regional Studies, 19
(3).
Keniry, J., et. al. (2003). Regional
Business – A Plan for Action, Department of Transport and Regional Services, Canberra.
Porter, M. (1998). Clusters and
competition new agendas for companies, governments, and institutions. In M.
Porter (Ed) On Competition (pp. 197-287), Harvard Business School,
Boston.
Von Hippel, E. (1986).
Lead users: a source of novel product concepts. Management Science 32, 791–805.
