Firstly and foremost before we start to talk about innovation, we first need to understand how innovation came about and how it is used. Businesses generally started off using a 'closed innovation' approach and style of enhancing and profiting their product. Closed innovation processes where all done internally inside the business, in the one company without any knowledge externally from the outside, of how to market, enhance, and increase the profitability of the product. Companies have now shifted from closed innovation processes and techniques to open innovation techniques, to general agreement it was realised that there where more skilful, genius, qualified people outside that could make the product better, because not all smart people work for the same company.
There where a number of erosion factors that will under mind the logic of the closed innovation process, for one there are now a lot more educated people, and therefore there Is a growth of highly skilled and more experienced people externally. Another erosion factor is that there is now an increased amount of college, post college and university students with degrees, more people have received more training in recent years also, these people are scattered around the country and with the closed innovation technique could not be made use of in one single company. Another erosion problem is the presence of private venture capital which creates new firms that commercialised external research, these firms then converted into growing valuable companies. Usually these firms became competitors for the large firms that had previously most of the R&D in the company, also non US firms became more and more effective competitors as well. Nowadays suppliers and customers are more knowledgeable, and are therefore more aware of the product, and whether or not it suits their needs completely. Companies therefore where forced to use an open innovation strategy, the erosion factors have had an impact on companies...