Essay Example on Xiaomi is a Chinese electronics and software Company

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Xiaomi is a Chinese electronics and software company that was founded in 2010 by Mr Lei Jun In 2017 Xiaomi was ranked as the world's 5th largest smartphone company 1 Despite smartphones it designs develops and sells mobile apps laptops and wide range of consumer electronics like TV power banks headphones watches electric bikes and scooters etc 2 One of the main reasons why Xiaomi became the shining star of phone market is its strategy of implementing open innovation though user interaction But let's start from the beginning to understand how Xiaomi came to this strategy Figure 1 Xiaomi s users and service revenue 2013 2014 3 In 2010 the phone market was already matured and competitive Xiaomi as a young start up needed to attract top suppliers of critical components for its smartphones However most of the large component suppliers had tailored their factories to existing customers For example Apple had already sourced its components from 90 out of 100 global suppliers by that moments 4 Moreover other Chinese mobile companies earned reputation of cheap imitators of Apple products Those companies ordered from suppliers too many handsets than they could sell and eventually had to go out of the business Therefore at the beginning Xiaomi was rejected by 85 out of 100 top suppliers and it had to bolster its credibility somehow 



4 That is why it undertook several strategies However a few years later Xiaomi has become one of the largest smartphone company in China and its name began spreading all over the world In this paper we will look into Xiaomi's success discuss how it forms large groups of user fans how it cooperates with its users and utilizes open innovation that leads to its success 1 Open Innovation Open innovation is a hot topic in recent years It means that you let other people outside your firm or company engage into your work and therefore you ll be able to profit from their knowledge and resources a The contrary side Closed Innovation Figure 2 Closed innovation and Open innovation model 5 Open innovation is in contrary to closed innovation Before 1980s most companies adopted closed innovation They hired the best people to innovate instead of seeking ideas from the outside world They guaranteed the originality of their innovations and keep them secret from their competitors However they only conducted innovation process within the companies sometimes they could not reflect the desire of users Those developers could be spending months coming up with something that no user would like In other words the innovation risk was too high Later something came up and changed the rule of competition Knowledge resources and human resources were being redistributed Education is one of the reason for resource redistribution Since certain knowledge is no longer exclusive to large companies they could no longer hold their secrets tight Another reason is that people are becoming more loyal to career rather than loyal to companies Usually the highest bidding wins the best people In the late 1990s more and more new companies are swamping in As venture capital investment became popular small and new founded companies are joining the market faster than ever The globalization of economy is also driving the innovation resources to be redistributed faster Tabel 1 Features of closed and open innovation Closed Innovation Open Innovation Smart people working for the company

The company work with smart people both inside and outside the company The company innovate and design by itself and gain profit Utilize external innovations External help can create great value The ideas are held in secret Ideas are no longer secret other people will know but we ll be the first to work on it b Open innovation in current market In the early stage of entrepreneurship core team is founded by own employees itself However once the company is founded and started targeting bigger market it could not ignore what the users have to say What's more some companies like Xiaomi Haier and Procter Gamble have decided to bring users to their development group In a long term this is a great way to help the company survive the severe competition in market Open innovation is about sharing ideas and collaborating with other users and the company itself Base on the concept of open innovation we now have a new business model favoured by many firms in the world The online customer forums for example are examples of such innovation model These forums allow customers express their hope joy and disappointments online and when a problem or expectation is frequently mentioned the R D department will notice then handles it properly Haier for example started an open innovation project called hope It's an open innovation platform where people share ideas Procter Gamble one of the largest company in the world has innovation centres all over the world People working there are surfing the Internet every day to discover new ideas and find inspirations


When talking about open innovation in China none has done a better job than Xiaomi Compared to others the users of Xiaomi are apparently more engaged into the development phase of Xiaomi product While enjoying the rights to evaluate judge and criticize Xiaomi s users are also bearing responsibilities c Users motivation to contribute One question asked by many people is how Xiaomi gets its users to help them willingly In fact this is not just about Xiaomi In many other area we can see cases where people share their views happily with strangers without asking for any reward Github for example has many loyal users contributing their code and projects willingly And there are people working on the same project to help improve its performance For example regular users will help test the system and give feedback on the user interface of the smartphone system and high level users with system development background would be able to give suggestions on system improvement or module design


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