A Strategy to Measure and Improve Open Innovation

Maturity in Industrial Organizations: A Case Study on Two

Large Enterprises

Hafez Shurrab

Muhammed Mateen

Operations Improvement Project TEK 165

CHALMERS UNIVERSITY OF TECHNOLOGY

Gothenburg, Sweden, 2014

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ABSTRACT

Open innovation (OI) concept emerged at the beginning of 2000. It was first coined by Henry

Chesbrough after he observed the competitive advantages collaborative innovation could gain.

Even though the term of OI became widespread, many large enterprises continue ignoring

using it due to the organizational and corporate culture that tend to preserve knowledge in-

house instead of sharing it with their partners. However, OI as a concept can be translated into

different forms of organizational assets and practices. Based on that fact, a company may partly

practice OI, while the leadership does not really recognize or highlight it as such. That part of

OI practices reflects to the degree of innovation openness and the overall maturity level. In this

study, the visibility of OI practices is addressed. The study investigate the possibility to

formulate a generic conceptual model that can be used to map and visualize OI maturity, taking

into account the constraints of different contexts such as the industrial category and

organizational culture. Moreover, the study builds up logical paths for how companies and

researchers can approach improvements related to OI maturity.

In order to experiment the effectiveness of the proposed model, two large companies with

different industries are studied as practical cases for how to measure innovation openness and

OI maturity in a company. The context of each company is considered and carefully studied in

terms of constraints that this particular context involve to impede the application of ideal OI.

The maturity level of each OI dimension is measured for both companies based on the

outcomes of the interviews. Further, general and specific recommendations are suggested for

the two companies as well as with regard to OI. Finally, the model is graphically illustrated,

and further future research improvements are suggested.

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TABLE OF CONTENT

1. INTRODUCTION ________________________________________________________ 1

1.1. Research Problem ______________________________________________________ 1

1.2. Delimitation __________________________________________________________ 2

1.3. Research Objectives ____________________________________________________ 2

1.4. Problem Analysis ______________________________________________________ 2

2. METHODOLOGY ________________________________________________________ 2

2.1. Literature Study _______________________________________________________ 2

2.2. Research Method ______________________________________________________ 3

2.3. Data Gathering ________________________________________________________ 3

2.4. Discussion and Analysis_________________________________________________ 3

3. LITERATURE REVIEW ___________________________________________________ 4

3.1. Organizational Structure of Product Development ____________________________ 4

3.2. Significant Enablers of Product Innovation __________________________________ 4

3.3. The Eight-Step Model of Change__________________________________________ 5

3.4. Innovation____________________________________________________________ 6

3.4.1. Closed Innovation __________________________________________________ 6

3.4.2. Open Innovation (OI) _______________________________________________ 6

3.4.3. Integration of Knowledge in OI _______________________________________ 6

3.4.4. Triple Diamond OI Process __________________________________________ 7

3.4.5. Types of OI _______________________________________________________ 8

3.5. OI Maturity Framework _________________________________________________ 8

3.5.1. The Elements and Sub-Elements of OI Maturity Framework ________________ 8

3.5.2. The Different Maturity Levels of OI Maturity Framework __________________ 9

4. EMPIRICAL FINDINGS ___________________________________________________ 9

4.1. Case Backgrounds ____________________________________________________ 10

4.1.1. Company A ______________________________________________________ 10

4.1.2. Company B ______________________________________________________ 10

4.2. OI at Company A _____________________________________________________ 10

III

4.2.1. Leadership and Organization ________________________________________ 11

4.2.2. Processes and Tools _______________________________________________ 11

4.2.3. People and Skills __________________________________________________ 12

4.2.4. Culture and Values ________________________________________________ 13

4.3. OI at Company B _____________________________________________________ 13

4.3.1. Leadership and Organization ________________________________________ 14

4.3.2. Processes and Tools _______________________________________________ 14

4.3.3. People and Skills __________________________________________________ 15

4.3.4. Culture and Values ________________________________________________ 15

5. ANALYSIS _____________________________________________________________ 15

5.1. NPD and OI Governance _______________________________________________ 16

5.2. Organization and Leadership ____________________________________________ 17

5.3. Process and Tools _____________________________________________________ 19

5.4. People and Skills _____________________________________________________ 20

5.5. OI Maturity __________________________________________________________ 21

6. RECOMMENDATIONS & CONCLUSIONS __________________________________ 22

6.1. Practical Recommendations _____________________________________________ 22

6.1.1. Recommendations for Company A ____________________________________ 22

6.1.2. Recommendations for Company B ____________________________________ 22

6.2. Proposed Conceptual Model ____________________________________________ 23

6.3. Conclusions _________________________________________________________ 23

7. DISCUSSION & FUTURE RESEARCH _____________________________________ 24

7.1. General Reflection ____________________________________________________ 24

7.2. Future Research ______________________________________________________ 24

References __________________________________________________________________ 26

APPENDICES ______________________________________________________________ 28

APPENDIX A: Organizational Structure of Product Development ____________________ 28

APPENDIX B: Change Management ___________________________________________ 30

APPENDIX C: Open Innovation ______________________________________________ 31

APPENDIX D: The Interviews and Questionnaire ________________________________ 37

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1. INTRODUCTION In strategic management, New Product Development (NPD) is a crucial aspect in today’s business

for growing and maintaining business market shares (Proctor, 2014). Around 27% of companies’

sales on average comes from new products that have been launched in the last three years (Edgett,

2011). A survey of executive opinion shows that the first driver of corporate growth and success

lies in enhancing innovation abilities of organizational NPD (Kahn, 2005). Nevertheless, slightly

over than 50% of businesses harvest their financial objectives from NPD projects, and only 44%

are introduced to the market on time (Edgett, 2011). Many scholars addressed innovation as the

missing element needed to coin the adding value successful NPD projects result in (Hansen &

Birkinshaw, 2007). Arguably, the conception of innovation and how it creates real value-adding

products still has lack of consensus, in both literature and practice, and that contributed in emerging

new forms and classification of innovation terms, including open and close innovation

(Chesbrough, 2003).

Leonard-Barton (1992) defines NPD as the comprehensive process of creating a new product to

market. Jain (2009) discusses different meanings for what a new product could be. He says that

when a product stimulates a completely new market or clearly stretch out the market for an existing

product, it could be then called a new product. Furthermore, Jain (2009) claims that a new product

could be also a product that replaces or adopts an existing product, or even an old product launched

in a new market. Trott (2008) defines a product as a group of benefits delivered for exchange and

can be tangible and intangible or a combination of both characteristics. NPD process involves two

parallel themes of tasks including engineering and marketing. The engineering theme revolves

around the idea generation, product design and technical requirements, while the market theme is

oriented toward research and marketing analysis (Harris & Botten, 2008).

1.1. Research Problem

Innovation researchers qualitatively and quantitatively studied and analysed closed and open

innovation (OI) from different perspectives. For instance, Chesbrough (2003) discussed the era of

OI, trying to highlight the transition in history from the traditional innovation approach, closed

innovation, to OI. Similar studies tried to connect collaboration with ultimate success referring to

OI as the supporting background. However, the idea of adopting and applying OI practices seems

unrealistic and very challenging for many types of corporate cultures, which limits the opportunity

to study and investigate the approach on different contexts with a view to draw valid conclusions

and models. In fact, OI may be actually practiced and not explicitly recognized. In other words, a

company may pass through a successful experience of OI without realizing that, and making that

explicit needs comparative analysis and applying different measurements. Therefore, the degree

of innovation openness in a company should be firstly detected and measured. Besides, the

contextualization of industries makes it quite difficult to point out one successful way of applying

OI. Therefore, a part of a company case should be studied separately, considering the influence of

its particular context. Further, one company may apply different modes of OI on different brands

based on particular conditions and considerations. Here, the challenge lies in extracting these

conditions, focusing on the more generalizable ones and addressing the other unique corners for

future research contribution. Above all, a company may totally or partly lack the required

potentials to approach OI, and it would be of interest to measure its maturity in this regard. When

OI maturity is successfully measured, many recommendations for how to improve that maturity

level should be derived.

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1.2. Delimitation

The focus of this report is to give suggestions on how companies can improve the practices of OI

being implemented and standardized for the sake of getting mature in different OI dimensions. The

intentions of the suggested scope does not give meticulous and specific recommendations of case

to case OI projects. Instead, the focus is on providing the companies with guidance and general

conceptual map on how the advanced research can result in suggestions for how to handle different

dimensions of OI. Furthermore, due to privacy policies of companies, the details of each internal

process in which the companies consider are not covered in this report. Instead, the general

overview of processes are discussed to present the suggestions. Therefore, these suggestions might

not be applicable to some specific problems that companies might face in the course of advancing

in OI. Moreover, this study does not discuss the effectiveness of OI. Instead, OI is assumed to

represent the ideal case whereby companies need to align themselves in order to gain the benefits

of it.

1.3. Research Objectives

The main purpose of this study is to develop a way of measuring the maturity of OI activities of

NPD, and test it on two cases. The following general questions are sequentially tackled for this

study:

● How is it possible to measure the OI maturity of different companies?

● How is it possible to improve that maturity based on the study findings?

1.4. Problem Analysis

It is expected that the findings and solutions proposed to answer the research questions will result

in recommendations for the companies to be studied, whereby their OI maturity levels could be

improved. Further, a guiding conceptual model embracing our approach in defining the scope,

maturity, and improvement paths of OI will be proposed for future research and reuse. In order to

formulate our approach, we begin with comparing relevant literature to the degree of innovation

openness with the two real cases we study. Also, we use the same comparative analysis for other

success drivers and models of OI that can help in drawing relationships between practices and

different levels of OI maturity. That would help in determining which a specific maturity level

matches a particular maturity dimension for a company, and how that could be interpreted and

used for future improvements.

2. METHODOLOGY This section of report enumerated the approach which has been used into account for fulfilling the

project requirements. It describes the research method done, and how data was gathered and

analysed for this project.

2.1. Literature Study

A number of different theories were identified by reading books and articles before preparing the

questions and conducting the interviews. The general keywords used to look for relevant literature

include open innovation, new product development, knowledge management, open innovation

maturity, and change management. The portals used were Google Scholar, Sience Direct, Emerald,

and Chalmers Online Library. The theories focused on organizational structures for supporting

NPD, the eight-step model of change management presented by Kotter (2012), success drivers of

NPD based on significant enablers, OI definition as presented by Chesbrough (2003), knowledge

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integration theories for integrating internal and external knowledge involved due to openness of

the company boundaries and triple diamond OI process which illustrates how external resources

can be integrated into idea generation, idea development and commercialization phase of any

product. Also different modes of OIs were discussed to analyse the innovation openness the

company already has. At the end, the theory on measuring the maturity level of the company was

studied to support the recommendations suggested for future improvements.

2.2. Research Method

The research method used for the analysis of OI in two companies, Company A and Company B.

It was based on logical sequence of connecting the case investigation with literature, while keeping

in view the purpose of this report. The name of both companies has been kept confidential due to

privacy reasons. The investigation and results were obtained by first gathering the data that lead

to identifying the problems, and then analysis was performed and suggestions were made based

on the analysis.

For developing better understanding, a plethora of different theories covering aspects of OI has

been used. These theories have been garnered by reading different relevant literature. Then theories

were used to establish a questionnaire including different patterns of OI practices. The answers to

these questions were used to build empirical cases for either of the companies. Empirical cases

were analysed in terms of how each company is performing within in their context, and how their

current practices resemble or differ from the corresponding theories of OI. Finally, the analysis of

the empirical study was used as a baseline for measuring maturity level of the companies and

suggesting how they can be increased.

2.3. Data Gathering

The data about both Company A and Company B was gathered through a face-to-face interview

at each company. Both companies were supportive and open to take part into the interview for

helping us to carrying on our research. The representative at each company was requested to have

an interview via email. At first, Company A was contacted and after getting the reply with the date

of interview, the company has been visited. The same procedure was followed for Company B.

The communication regarding the date of interview was done using emails. The interviewees were

requested to record the interview instead of writing down the answers because of short time period

offered.

2.4. Discussion and Analysis

The literature was divided among the team members to analyse the companies for their OI practices

compared to the relevant literature. The interview questions were narrated into empirical study,

which was then analysed. The output of analysing the interview questions was taken as input to

measure the maturity level using the questionnaire shown in table 1 appendix D. The reason for

why this maturity questionnaire was not directly used during the interviews is to increase the

validity of the data by qualitatively gathering it instead of just scoring the questions. We have seen

a chance to lose this validity if the maturity questionnaire has been directly answered by the

interviewee. The qualitative data collected through the interviews served as a base of arguments

for estimating the valid scores of OI maturity. To be more specific, in both companies, information

related to NPD and OI governance, the organizational aspect and leadership style, different

processes and tools, and people and skills alignment in relation to OI strategies were compared

with the theories. This quantitative results of maturity model were used to provide the basis for

giving recommendations for future improvements.

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3. LITERATURE REVIEW In this chapter, a group of theories related to effective NPD and innovation creation are viewed

and discussed. Section 3.1 addresses how different forms of organizational structures may

facilitate innovation creation with regard to NPD activities, while section 3.2 is used to discuss

eight success drivers of product innovation. Further, since acquiring new organizational

capabilities, and integrating new changes are among other requirements to fulfil the needs for

having competitive NPD strategies, section 3.3 addresses change management success factors.

After that, section 3.4 is dedicated to open and close innovation concepts, integration of knowledge

in OI, triple diamond OI process, and types of OI. Finally, an OI maturity framework is

summarized in section 3.5.

3.1. Organizational Structure of Product Development

Allen (2001) discussed different organizational structure that are common in companies for

organizing product development (PD) activities. He firstly views a simple model of the innovation

process shown in figure 1 appendix A, where information related to technological capabilities and

market needs represents two streams from which problems and solutions are drawn to and form

innovation. The structure of organizations can be based on either of the two stream, but the

challenge lies in integrating both streams in parallel. In departmental organizations, knowledge is

grouped into specialties, whether they are in market or technology. These organizations are

characterized by their hierarchical structure. Functional organizations are mostly aligned more to

either market or technology as shown in figure 2 appendix A. The second form is the project

organization, shown in figure 3 appendix A, whereby specialists are no longer grouped into

separate departments, but are instead distributed over project teams. Each project is dedicated to

developing narrow range of innovative products. Both structures should be combined so that their

advantages are kept and their limitations are overcome. The matrix organization shown in figure

4 appendix A emerged as a reaction since the required coordination level is achieved, while

maintaining current knowledge in the relevant technologies (Allen, 2001).

In general, there are two parameters that determine which organizational form will be dominant

including rate of knowledge and market change and subsystem interdependence. Industries have

different rates of knowledge and market change ranging from rapidly developing technologies and

market needs to primarily stable technologies and market needs. Most organizations involve a mix

of both modes. Likewise, subsystem interdependence in organizations ranges from high to low

across PD activities (Allen, 2001).

Leonard-Barton (1992) discussed the effects of having core capabilities and rigidities. He argues

that technology-based organizations differentiate themselves by focusing on their core capabilities

that have been acquired over years of expertise. However, focusing on limited scope of core

capabilities for a long time leads to a conflict between micro-level change-oriented social systems

and the macro system, which turns these capabilities into rigidities. Figure 5 appendix A shows

the four dimension of a core capability. All dimensions intersect with each other, but mainly three

dimensions primarily influence the organizational values and norms including skills and

knowledge base, technical systems, and managerial systems (Leonard-Barton, 1992).

3.2. Significant Enablers of Product Innovation

Cooper (2011) has addressed eight critical success drivers for why new products succeed. The first

driver of new product profitability is considering products that deliver unique differentiating

benefits that completely fulfil what customers’ or users’ need. The second driver is putting the

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highest pressure of new product process on market and customers. In other words, the

organizational thinking should be based on how new technologies can contribute to the market

regardless of the features they can come offer. As for the third driver, considering front-end loading

(FEL)/front-end engineering design (FEED)/pre-project planning (PPP) increases the success

potentials of NPD project. Nevertheless, we discuss the definition of OI in the next sections, which

implies that the involvement of relevant parties should be part of NPD projects in all phases. That

may be problematic with PPP concept. However, we assume that OI concept could be still

considered during preplanning phase so that there are rooms for OI collaborations based on a more

generic stage-gated plan than usually expected by PPP. In the same discourse, the fourth driver

requires that the highest level of attention in the earliest stages should be given to sharply defining

both the project and the product. That is a crucial factor for relatively fast introduction of new

products. The fifth driver is keeping the customers/users involved during the development phases

(spiral development) to minimize the number of attempts to get the right product introduced.

Cooper (2011) refers to the necessity of thinking globally for the sixth driver. He discusses the

global product, which embeds a global concept even though it is tailored to meet local needs. The

seventh driver emphasizes the importance of creating a powerful marketing plan including a well-

conceived properly executed launch as the first impression for a product plays a significant role of

the commercialization phase. Finally, Cooper (2011) draws attention to not accelerating the

development projects at the cost of the quality because that will ruin the central concept of value

proposition and customer centricity

3.3. The Eight-Step Model of Change

Kotter (2012) suggested a model, shown in figure 1 appendix B, for managing changes within

organizations. He observed the behaviour of more than 100 companies and proposed eight steps

to be followed to increase the likelihood related to a success of the changes to be integrated. The

order of the eight-step model is important to be followed. The first step is establishing as sense of

urgency whereby change managers try to push people out of their comfort zones and increase their

work efficiency and effectiveness. The second step is to form a powerful change guiding coalition

by which change initiatives are set among the top organizational priorities, and challenges are

overcome. Then, Kotter (2012) believes that creating a sound vision for a change initiative comes

as the third step and is quite important to guide and inspire the efforts given by the change team.

This vision has to be smartly formulated so that it is easy to communicate. Therefore, the fourth

step is to improve a change vision until it is understandable, simple, clear, and strongly relevant.

After that, Kotter (2012) expects that someone from the change management team, supervisors, or

executives will try to undermine the efforts dedicated to implement a change whenever it is to a

certain extent incompatible with their convictions. Therefore, the fifth step is to empower the

change actors/employees for broad-based action so that no one individual’s focus is lost and

shakeable for any similar reasons. Subsequently, in planning, Kotter (2012) recommends to avoid

postponing the harvest time of a change project that leads to generating long-term wins. Instead,

the sixth step entails that short-term wins, 6-12 months, has to be a basic part of the change

management plan because people are naturally impatient, and realising their efforts in relatively

short-term regular basis will fuel their energy to continue. However, celebrating wins should be

balanced so that gains are consolidated and the momentum of the progress are not lost, and that is

the seventh step. Finally, Kotter (2012) believes that since each singe change carries within it new

cultural aspects, the eighth and final step has to be anchoring and integrating these aspects to the

organizational culture, otherwise, a great part of the efforts and resources that have been used to

prepare a change-enabling organizational culture will be lost.

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3.4. Innovation

The innovation as defined by Kuczmarski (2003) is a way of looking into future where ideas,

methods, products or services are developed with novelty. Chesbrough (2003) stated that for

generating ideas and taking them to market, companies are re-formulating and rethinking ways by

taking in ideas from outer environment and integrating these ideas with in-house R&D. Generation

of ideas for innovation can either be done openly or being in closed environment.

3.4.1. Closed Innovation

Closed innovation process is based on a philosophy to have control over innovation. Talking about

closed innovation, Chesbrough (2003) has explained how a company in closed innovation

conducts the whole R&D within its boundary without external influence, as illustrated in figure 1

appendix C. Also, companies develop products or services and deliver them to market on their

own.

Although company has best people to innovate, there are still constraints associated with closed

innovation process. The rigidity of closed innovation process for not involving external

environment makes it a slow process to innovate (Chesbrough, 2003).

3.4.2. Open Innovation (OI)

In OI, the organizational boundaries are diffused in a way that a company can access knowledge,

technology, and/or ideas that are outside its boundaries. Wallin and Krogh (2010) claimed that

companies benefit from OI in terms of reduced cost of PD and improved quality of a product and/or

service, utilizing the supplier and customer expertise available outside the boundary.

The Chesbrough (2003) explains OI model in which internal and external ideas are used for

developing products or services. The porous boundary of a company assists the pace of innovation

by combining internal and external ideas as shown in the figure 1 appendix C.

In OI, trust, respect, and definite authority across the boundaries of a company are basic

requirements (Kahn, 2005). There are several other factors as explained by Kahn (2005), which

are:

● Senior management is committed towards strategic goals of innovation.

● Innovation platforms in structure of organization provide opportunity for continuous OI.

● Relations have to be built with external resources during the whole innovation process.

● Thrill is important to improve continuously.

OI involves resources which are not directly part of a company. Therefore, retaining the

knowledge learned from new development and making it explicit to everyone are challenges for

companies that require careful integration of knowledge.

3.4.3. Integration of Knowledge in OI

From the concept of OI for products or services, people come together to work as a result of

collaboration. The knowledge between people working in collaboration is seen as either tacit or

explicit (Wallin & Krogh, 2010). Tacit knowledge is only retained in individuals, while explicit

knowledge is available to teams working together. Wallin and Krogh (2010) have suggested a five-

step model for integrating knowledge in OI. These five steps are:

1. Define the innovation process steps: While defining steps for innovation process,

plausible solution is to take into account stakeholders for discussing the sequencing of steps

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2. Identify innovation relevant knowledge: It requires identification of tasks and relevant

knowledge/expertise required to solve task. If knowledge is not available within boundary

of company, the best suited knowledge is acquired from outer resources

3. Choose an appropriate integration mechanism: In this stage of knowledge integration,

rules for out-sourcing, defining of sequence for OI processes and allocating decision

making and problem solving power to personnel working in OI are formulated.

4. Create effective governance mechanism: Decision for selecting participants, procedure

of selection, personnel responsible for controlling quality of innovation, win-win situation

among collaborative teams is done in this stage of knowledge integration.

5. Balance incentives and controls: A balanced model of incentives for individuals

consisting of intrinsic and extrinsic motivation is set for being more effective innovators.

3.4.4. Triple Diamond OI Process

Muller and Hutchins (2012) described how Whirlpool has successfully undergone OI process

using triple diamond concept, and has profited from efficient use of it. The basic model has three

stages including idea generation, idea development, and commercialization.

Figure 2 – Appendix C: Triple Diamond OI Process - Source: (Muller & Hutchins, 2012)

1. Idea Generation

In this very first step of process, as shown in figure 2 appendix C, cynosure is towards

identifying who will be the target customers, who are market leader competitors, how the

corporate can acquire the resources. The deep insight of identifying these resources leads to

generation of ideas. For idea generation, boundary of company is open for customers,

suppliers or individual innovators at initial stages. Through a controlled integration these ideas

are converged with the business requirements of organization. It leads to the development

stage.

2. Idea development

The narrowing down of ideas continues in this stage with screening out the irrelevant ideas on

large discussion pool. Once the most enticing idea is selected, next is to give it a shape through

development process. Resources from outside organization are acquired and analysed with

their capacity of developing. Resource hunting is either done by acquiring the technology, or

even ventures are agreed upon for idea development.

3. Commercialization

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After developing the products, the next step is to make it available in markets for consumers.

For this phase, rather than relying on internal market strengths, new idea of looking resources

for marketing is the last step in Triple Diamond process. Agencies with the capability of

delivering the products in markets and joint venturing with other organizations for selling or

products are the new ways of commercialization.

3.4.5. Types of OI

Gassmann and Enkel (2004) has proposed different modes of OI, and suggested that it is not

necessary that one organization implements all these processes at the same time. These types are:

1) Out-side in OI 2) In-side out OI

1. Out-side in OI

This type of OI enables company to open up for outer resources. These resources can vary

from suppliers to customers. It creates the opportunity for the company to integrate external

ideas, knowledge, purchasing of licenses and outside technology for innovation. Von Zedtwitz

and Gassmann (2002) stated that acquiring outer sources to company requires strong control

for evaluating the ideas and external expertise.

Uses and Challenges According to Dahlander and Gann (2012), uses of out-side innovation include enabling

company to utilize large number of ideas and external knowledge through customers and

suppliers, availing resources and competences of partners and radical change in problem

solving for NPDs. Talking about challenges of out-side in innovation, Dahlander and Gann

(2012) have explained that a large number of sources requires control. It becomes then

difficult to opt and make use of resources. Also, the potential for exploiting firm’s core

competences to outer environment is high.

2. Inside-out OI

In this type of OI, the strategy of a company is selling innovation and knowledge to external

market. A company generates profits by selling out its sources, intellectual property, ideas and

technology to others.

Uses and Challenges Inside-out innovation provides the company with the benefits of selling its ideas which have

low business relevance or no use for the company. The other uses include utilizing outer

sources for commercializing a company in-house innovation because of their higher potential

and expertise (Dahlander and Gann, 2012). The challenges of inside-out OI are possibility of

resources brain drain to competitors, making it difficult for a company to allow others for

making benefits under license due to in-house innovation (Dahlander & Gann, 2012).

3.5. OI Maturity Framework

3.5.1. The Elements and Sub-Elements of OI Maturity Framework

Enkel et al. (2011) proposed a framework for measuring OI maturity derived from earlier similar

propositions. The main challenge they experienced was in delimiting the level of excellence for

OI practices. The valuable elements of OI include innovation climate, partnership capacity, and

internal processes and tools. Enkel et al. (2011) emphasize following the order in which these

elements are stated.

Starting with climate innovation, Enkel et al. (2011) addressed extended view for the sub-elements

that contribute to a climate for innovation that include leadership, incentives, and communication.

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In regard to leadership, enabling climate for OI requires not only spoken and written leadership

support, but also walking the talk. As for the incentive system, it should consist of both rewards

or assessment and targets. Finally, for communication, there should be a strategy for internal

communication and success stories should be shared and communicated within the organization.

According to Thamhain (2003), in order for employees to be creative, they should be in the first

place inspired. Enkel et al. (2011) add that middle and lower-level employees have also to stay

committed to the outward-looking behavior required for effective integration of the OI concept,

and champions can significantly contribute to the diffusion of this new mind-set among employees.

As for partnership capacity element, and according to (Enkel et al., 2011), the reputation of the

organization as a trustworthy satisfying partner is one sub-element of the partnership capacity.

Besides, making clear agreements and defining explicit targets represent another sub-element.

Moreover, combining the right selection of partners with the right form of partnership could be

also viewed as a sub-element. As an underlying sub-element, the search strategy based on the goals

of the partnering process could also affect innovation performance. Finally, employees’

capabilities of partnership management represent another sub-element of partnership capacity

(Enkel et al., 2011).

The third element proposed by Enkel et al. (2011) for OI maturity is the internal processes. One

practical sub-element is process mapping as there is a need to gather and disseminate all relevant

information about all OI activities. Furthermore, all resources required to facilitate OI activities

can be divided into two types including innovation centres and a transaction budget. Knowledge

management is another sub-element that is practically translated by the maturity framework as the

need to document knowledge and incorporate it into concrete products and solutions. In addition

to that, there is a need to measure the innovation system, meaning that organization should be able

to follow up OI projects from inputs to outputs and draw on the ideas generated. Also, intellectual

property protection is quite important for organizations with advance core competence. According

to (Enkel et al., 2011), the best attitude in dealing with IP issues is for all parties to facilitate

creating win-win contracts. Table 1 appendix C summarizes the elements and sub-elements of OI

Maturity Framework.

3.5.2. The Different Maturity Levels of OI Maturity Framework

Enkel et al. (2011) proposed five levels of OI maturity, as shown in table 2 appendix C, based on

the elements discussed in the previous section. As for the climate for innovation, the leadership,

incentives, and mind-set are divided into five levels based on how they support and facilitate

innovation creation. Similarly, the training and education, partnership selection, and reputation are

classified into five levels of how much the partnership capacity supports innovation creation.

Finally, central coordination, resources, knowledge management process, and legal and IP system

are broken down into five levels, incorporating degrees of how the internal process facilitates

innovation creation. Figure 3 appendix C shows an example of a spider web on which the scores

of the elements and sub-elements of the OI maturity framework are mapped out, indicating to the

level of each item. The figure shows how the maturity in this case is too low.

4. EMPIRICAL FINDINGS This section gives a general background about each company to be studied, and describes the

practices being followed for each case. The practices discussed here are interpreted and translated

from the answers given by the person selected for the interview.

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4.1. Case Backgrounds Company A and Company B are two samples we select to test our approach. The following two

sections review a general background of each company.

4.1.1. Company A

Company A is a consumer-based organization that is doing business for making available products

ranging from consumer tissues, baby diapers, feminine care, sustainable packaging, publication

papers and solid-wood products. These products require continuous innovating technology to serve

the customers. Therefore, Company A opened up its boundaries to increase the innovation capacity

to meet the customer demands and customer satisfaction.

At Company A, the limitations of traditional innovation have been identified. Company A has

undergone the change of traditional view of innovation to new emerging concept of innovation

called OI. Company A has developed processes based on the experience on how to utilize the

resources capabilities for boosting up its internal innovation speed. These resources are not only

limited to consultants or suppliers. In fact, Company A even welcomes its existing and potential

customers to take part in producing innovative ideas and products. In order to work with these

external virtual employees, Company A has developed processes on how to utilize these resources,

mitigating the potential associated risks. These processes are continuously improved to get more

and more mature in this new concept of OI. The company is eager to find ways and suggestions

that could help in improving the OI process and getting mature. The goal is to study the practices

of the company on OI, measuring the existing maturity level and giving the recommendations on

how the company can further improve its maturity level.

4.1.2. Company B

Company B is one of the biggest car manufacturers in Sweden. The company has portfolio of many

cars with different ranges for its customers. The strategy of company is always to meet the

customers’ expectations and continuously provide them with more innovative models of cars while

taking into considerations the comfort level and safety of passengers as a top priority. Because of

increasing competition in the market and customers’ demands, the focus of Company B is to boost

up its innovation. For bringing new innovation to the market, Company B is on its way to changing

the practices of traditional innovation to new and emerging concept of OI where Company B has

started to look for more resources sitting outside the company. These resources could add value

towards company innovation, making it possible for the company to compete in the market and

meet the customers’ expectations. Company B is currently in the phase of establishing the

processes of OI by managing the different dimension of it. This report will focus on measuring the

existing maturity level, identifying the hurdles associated with OI concept and suggesting on how

Company B can improve the maturity level of OI.

4.2. OI at Company A The management of Company A has shown great commitment towards OI. It is dependent on the

requirements of project and the scenarios to partly or completely integrate OI to a project at

Company A. The basic priorities Company A addresses are efficiency, innovation, and growth

backed up by sustainability. OI is internally communicated through project launches and via

website and internal systems. The website is also used for external communication of innovation.

Each PD project is based on consumer insights by which Company A takes as inputs to formulate

the project vision. Moreover, there are brand platforms on which brand vision, mission, values,

and other characteristics for current and previous products are found. These platforms efficiently

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guide NPD project members to formulate a relevant vision. Further, both consumer insights and

brand platforms are backed up by long- and short-term strategies setup by the top management to

approach the overall company vision. Examples of project purposes could be product upgrade,

cost saving, new generation, or radical development.

The company has value for patents and intellectual property (IP) rights. For the innovation done

in-house, Company A maintains the ownership of IP solely and is not open for outer environment.

When it comes to OI, the ownership of IP is handled from case-to-case. In some cases, depending

on business requirements, IP rights owned by partners are allowed to be used by Company.

Whereas in other cases, the IP rights owned by Company A are given to the outer partners as a

process of OI. All cases are based on a win-win principle.

4.2.1. Leadership and Organization

Company A has set defined rules, policies and guidelines for its employees to practice OI. The

intentions of building up the procedures for OI is to equip employees with the ability of making

right choices to get desired results. The desired results of OI is attention requiring matter because

apart from internal employees; suppliers, vendors or even sometimes customers are part of the OI

process. The strategy for controlling the OI quality used by Company A focuses on collaborating

only with key suppliers using the resources from both parties. The resources put by Company A

also involve the most experienced senior managers in OI.

When it comes to dealing with conflict of ownership with customers, OI becomes more

challenging.In many scenarios the idea brought by customer is already in the pipeline of the

company, and therefore, cannot be revealed in advance. In these kinds of problems the preference

of Company A is to avoid the conflict by giving the ownership to the customer.

Company A has different kinds of portfolios for different brands, and all that is governed by the

leadership and followed up with plans including cost and time estimations. Besides, there are

different expectation levels correspond to different uncertainty levels of brand project portfolios,

and that is considered while measuring their performance. In general, the preliminary estimated

times and costs for projects with high levels of uncertainty at Company A are not realistic.

Therefore, considering project delivery time and budget estimations are not confirmed until the

project charter is mature enough and the estimations are scientifically justified.

4.2.2. Processes and Tools

The processes for innovation at Company A are very structured, which have been developed over

long period of improvement and change processes. Company A has developed an innovation

funnel with stage-gated processes. The model for innovation could be complex for any outsider,

but for internal employees, relative training helps them making it understandable. Moreover, the

innovation academy at Company A provides the platform for understanding the process. For

external suppliers or partners, project planning is used to enable their participation in the process.

The idea generation in the company follows two different dimensions for internally and externally

generated ideas. A management system has been developed for internally generated ideas. All the

employees at Company A have the access to put their ideas on this management system. Besides,

whenever a project requires a solution, this system is scrutinized for plausible ideas. Additionally,

any employee can post a challenge on this system in order to get help by other employees to come

with solutions. Company A has also provided customers with the option of giving their inputs and

ideas through its website. Using this website, customers can approach the company with ideas.

Furthermore, this online portal has the possibility for the company to put challenges to customers

for possible solutions. All the ideas or solutions generated internally or externally are evaluated

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carefully by the responsible personnel, and then implemented accordingly. The records of

customers' trends and needs are not a basis for starting the innovation. The ideas are just generated

according to business needs.

The external suppliers and parties are involved in the projects from very beginning, and

collaborators provide detailed solutions to problems.

Company A encourages preferable organizational behavior help in keeping the momentum of

change against any obstacles by reviewing and telling relevant inspiring success stories.

Additionally, individual behaviours are observed, and feedbacks are given regularly to avoid as

many disagreements as possible. Most importantly, Company A in the first place hires employees

that are more willing to accept challenges and have consistent behaviour with how Company A

works. However, disagreements with individuals are put on the table of discussion if they have

meaningful technical, organizational or ethical point from a collective perspective. When the

disagreements have no significant reasoning, it is the manager job to help individuals in getting

their work done smoothly by receiving regular feedbacks and giving continuous support. Each

individual is supposed to have someone to back to except top management, who should get

consensus on the strategies to be followed. If a serious challenge could not be resolved by any

manager, it is escalated to the top management so that they can decide on how to approach possible

solutions. Thanks should be also given to the idea of OI portal, where external parties can

collaborate in solving intractable problems.

For Company A, there are continuous improvement groups responsible for tracking the feedbacks

that projects and even organizational processes come up with. If there are problems need to be

resolved for any organizational pattern, then again, looking for solutions follows the same

pathways of how ideas are generated. Once the effective solutions are addressed, they are added

to systems, whether they are changes or additions. If the solutions are something to do with specific

project context, then they are added to where the reusable information for that specific context is

located. All changes are communicated internally to increase the awareness of the overall company

knowledge and keep all employees updated.

4.2.3. People and Skills

Although there are identified trained managers and core teams for OI, participating in it at

Company A is still possible for everyone in the company. Any employee in the company involved

in innovation projects is allowed to go for OI. The employees are provided clearly with the degree

to which they can open up the internal environment to the outsiders. In all external collaborations,

Company A has an agreement in which clearly defined degree of openness is mentioned. It helps

employees to understand how much they are allowed to be open. The presence of in-house

innovation academy makes it possible for employees to get training on understanding the concept

of OI and how to utilize OI for problem solving and being more innovative for the company.

The employees involved in OI are not rewarded with some special incentives if they perform

extraordinary in their projects. Either they are awarded by idea of month in case of very brilliant

idea produced, or the other way is to put innovation requirements in their annual objectives by

which employees are given rewards in form of increment in their salaries. The motivation for

suppliers and partners includes having long-term relationships with Company A, being authorized

to use IP, and being enabled to sell the products under license to others. The involvement of outer

resources directly into defining OI processes has not been given much attention. In fact, OI

processes are developed over time through continuously improvement and learning.

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4.2.4. Culture and Values

Learning at Company A is mainly encouraged by the fact that there are different sources of

knowledge embedded in the information systems of the company. The sources are made accessible

and friendly to use by all employees. Besides, there is a rather comfortable space for learning from

failure and risk taking during the early stages of project planning. Company A also strives to make

the efforts dedicated for brand innovation explicit for its customers. According to the feedback

received from the B2B customers of Company A, the brands delivered by the company are

perceived as innovative ones.

To maintain its competitive advantage, Company A offers financing researches in specific areas

of the company’s concern in order to dig deeper into new findings matter core competence.

Company A is also open to academia when it comes to interview-based researches. It is also worth

mentioning that individuals that have high potentials in the company’s core competence area are

not exposed to the internal system as long as they are not permanent employees of the company.

The resources of expertise gathered over years are revealed in limited manners when they are no

longer assets for gaining competitive advantages. That could be due to the emergence of newer

versions of technologies making these assets outdated, or simply when other competitors discover

and realize them. However, these sources of knowledge are not shared for free. Instead, Company

A tries to gain as much profit as possible out of them by different business ways. Moreover, such

knowledge is only revealed after looking at the profile of whom it would be shared with. That

might be a strategic partner for instance that is more likely to stay as such for several years ahead.

As for mitigating the risk of losing employees positioned in the area of the company core

competence, the policies are set up so that the employees are kept satisfied and happy to continue.

Otherwise, Company A does apply strict solutions of specially designed contract whereby these

particular employees cannot work for competitors in case they want to leave for a certain period

of time. Instead, fast development and evolution using different modes of OI is another way

Company A adopts to mitigate that kind of risk.

4.3. OI at Company B Company B has process for internal communication called needs for means process. The process

involves the information related to each car including the vision, and other kinds of helpful

information to do with the very early stages of the PD, who the customers are to be approached

for that particular car, how the company would like to position this car as well as what the big

challenges and significant points are to be considered. Further, managers and supervisors

contribute in vision dissemination throughout their teams. There are also books, newsletters,

publications, and website spaces where cars’ projects and information are posted.

Company B is in the process of valuing IP rights and continuously improving its efforts towards

the handling of IP rights. In past the output of work done for Company B was taken as IP rights

by outsiders and company was more focused towards the work or output for continuity of their

growt. In recent years locus of Company B is towards maintaining the IP rights has changed. Now

Company B is holding the patents and building up portfolio of IP rights. Also work is being done

for mutual collaborations where in some cases Company B can own IP rights without any barriers

and in other cases company B can use IP rights owned by outsiders under licensing. Company B

has given more attentions for avoiding its core competence to be the part of this kind of

collaboration.

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4.3.1. Leadership and Organization

The strategy used by Company B for controlling the quality of inputs from outsiders is to use

project plans and requirements of projects in accordance with market demand. If the contribution

made by outsiders differs from the plan then ideas given by them are not accepted. In this way

using plans for producing the results using the inputs or outsiders along with internal efforts are

controlled by Company B.

The Company B is on the road to building up paths for collaborations with minimum possibility

of conflicts for ownership. The conflicts are mitigated at the beginning of collaboration by defining

the ownership of results either for Company B or its collaborators and then starting the work.

Company B is careful and has in general few project cases of overspent budget and late of delivery.

However, the limited space for risk taking is given as a free process aside. Time is very critical in

automobile industry and that is why tolerance is rather tight.

Projects are prioritized according to mid-term goals whereby the most focus is given to the types

of cars that will be introduced in the next quarter. Nonetheless, long-term goals are also considered,

but they come in lower in priority.

4.3.2. Processes and Tools

There are two principles for idea generation at Company B including the inspirational part, which

is based on challenges to be resolved, and the main idea generation part. Company B has internal

information systems through which anyone in the company can post challenges and problems

related to any process they have. Moreover, there are also specific challenges come from the top

management that are given very high attention and resources. Additionally, there are challenges

come from car projects. The ideas go through an evaluation and development process whereby

innovation studies are set up and the ways of how to integrate or incubate these ideas are

investigated. Some ideas are marked as very good ideas, but not for immediate integration. In that

case, such ideas are patented and preserved as assets for future. In general, the idea development

process continues for good ideas until they have the complete picture even if they will be preserved

as patents.

The only mode Company B has opened up for customers to give their feedback is by Facebook

and its authorized dealers. The customers are not directly integrated into idea development.

However, Company B has a continuous focus towards evaluating the customer preferences and

needs before launching any new product into the markets.

For integrating knowledge from the outer world, only contractors, suppliers or collaborators

allowed to participate in any project can get the access to the internal idea pool and company

system, where they can add their knowledge. The pool has also options for employees of Company

B to invite any other companies, who are not even directly part of a project, to add their inputs to

ongoing issues and challenges.

Automobile industry is sensitive to antithetical behaviour of individuals toward any part of the

system. Therefore, in order to avoid that kind of disturbance, the time for disagreements is only

given if there is a free space to discuss them such as coffee and lunch breaks. Company B plays to

be as safe as possible. In other words, if a project seems to experience many challenges that need

time and evaluate different opinions on how resolve these challenges, Company B will avoid doing

this project until the concerning issues are less challenging.

At Company B, changes approved to be added to the system are integrated and everyone related

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to the area of a change is informed and kept updated. But lessons learnt in general are only passed

through by people of expertise to the newcomers in form of mentorship or training.

4.3.3. People and Skills

The demand and selection of outer resources is related to in-house competency of Company B. If

the company feels the lack of availability of any particular competencies, then the outer resources

that have ability to provide these competencies are selected for projects. Company B has not a

special department for innovation creation. Instead, selecting people is based on who can

contribute in finding solutions to the challenges posted. In other words, people post their suggested

solutions, and challenges owners select who could be good fit to work with the team that already

exists. There are no formal trainings for employees inside Company B to train them on producing

new ideas using the concepts of OI.

All the employees inside the company B can bring up new ideas. The new ideas are not rewarded

monetarily. Instead, new excellent idea generation is either awarded in terms of annual appraisals,

or employees are presented to the whole company on yearly basis celebration. Furthermore, the

involvement of outer resources like collaborators, suppliers and consultants is very limited for

defining the internal processes of innovation.

4.3.4. Culture and Values

Learning from failure at Company B is facilitated through project evaluation sessions and project

reports. The time available aside the work including coffee and lunch breaks is a space offered to

discuss risky issues with managers in higher ranks. That is how Company B encourages risk taking.

Besides, employees are encouraged to study and conduct researches as there are programmes make

it possible to study and work in the same time. Furthermore, the closeness and open boundaries

between people in powerful titles and anyone else makes it more encouraging to ask and learn

from executives, and get immediate help in solving problems.

As for how much innovative Company B sees itself, customers’ feedbacks reflect that they are

innovative to an extent of upper-intermediate level. Company B also supports lots of research

studies related to its core competence. Besides, R&D department is responsible for benchmarking

and keeping eyes on the emerging relevant technologies, especially if they have something to do

with the company core competence and its competitive advantage.

Company B tends to preserve patents and IP rights. However, a few initiatives are recently brought

up for discussing how to benefit from the patents. It is though done in a very limited manner.

5. ANALYSIS This chapter is dedicated to analyse and compare the two cases with each other backed by

corresponding theories. The analysis is made so that the questionnaire shown in table 1 appendix

D can be answered indirectly, i.e. not directly by the interviewee. Section 5.1 is used to analyse

NPD and OI governance, while section 5.2 is used to analyse the organizational side and leadership

style. Further, section 5.3 is used to analyse different processes and tools used by both companies

to enable OI creation, while in section 5.4, people and skills alignment are analysed in relation to

OI strategies. Finally, to determine the maturity level for each case, the findings from the

interviews are interpreted and analysed in section 5.5 to answer the questionnaire shown in table

1 appendix D.

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5.1. NPD and OI Governance There are different definitions embracing different angles of what a new product is (Jain, 2009).

Sharing the same understanding of the definition itself in companies is quite important from

organizational (Allen, 2001) and innovation (Cooper, 2011) points of view. NPD process in

organizations reflects how the leadership align their resources and the organisational structure in

order to facilitate efficient development of new products. Therefore, the implicit value of

innovation and creativity of NPD could be limited by a leadership’s narrow conception of the new

product definition.

Organizational visions can embody the leadership’s conception in how new products should be

developed and delivered. Viewing the case of Company A, the management has great commitment

towards OI, aligning it among other basic priorities including efficiency and growth backed up by

sustainability. That reflects the leadership maturity with regard to NPD since it properly aligns and

integrates a progressive level and up-to-date of NPD concepts, such as OI, to its visions. However,

Company A experienced long management change and continuous improvement process to

achieve hallmarks by OI and reach that level of leadership maturity. On the hand, Company B

narrows down it visions to it products adopting needs for means principle regardless the NPD

framework adopted, spending little time to explore and discuss new concepts and updates of NPD,

such as OI. That obviously reflects less level of leadership maturity than Company A has.

Creating and effectively communicating sound change visions are among other crucial steps

required to make a change possible (Kotter, 2012). Both Company A and Company B create and

communicate visions for any change initiative to be undertaken. All means of internal and external

communication are harnessed to disseminate the different visions. Moreover, both companies

enable their employees to see how each project is positioned and prioritized to approach the main

vision of either companies. Therefore, Company A and Company B have the ability to guide and

motivate their employees’ efforts toward the desired change direction.

While defining the different types of OI Gassmann and Enkel (2004) has described that out-side

in innovation involves utilization of external resources for performing the innovation for own

benefits by any company. This type of OI is characterized by the challenge of exploiting core

competence of the Company As described by Von Zedtwitz and Gassmann (2002). Both Company

A and Company B has adopted themselves to this kind of OI where collaborator or external

suppliers are hired for performing the work for own purposes. In Company A the work done by

in-house team is solely kept as property by claiming the IP rights and the innovation which is a

result of mutual collaboration is taken either into IP rights of Company A or given to collaborators

depending upon the business requirements. Dahlander and Gann (2012) suggested that out-side in

innovation provides a potential risk of opening up core competency of the company to outsider.

Compared to his potential risk as described by Dahlander and Gann (2012) Company A has

focused on opening up for collaborations only for the work which could not be performed by the

use of in-house core competencies. Although company B has also focused on opening up only

those functions of work which could not be done by utilizing the core competency but the control

of IP rights was not found to be strong in company B. The company B has valued for keeping the

IP rights and now is focusing more on creating it IP rights and patents for its innovation and in

case of collaboration a win-win situation is being given the preference for future projects.

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5.2. Organization and Leadership Allen (2001) discussed different forms of organizational structures for facilitating innovation

creation in companies including departmental structures, project-based structures, and the

combination of both types. For Company, there is a special department for OI. However, it is

difficult to judge if it has a departmental structure for creating innovative results since projects are

mainly used at Company A as tools to integrate changes. Moreover, OI department focuses only

on how to manage the process of OI, but innovation creation is not necessarily dependant on the

department initiatives. In other words, if OI is to be used for a change project, the department

facilitates the related activities. That makes innovation creation at Company A managed through

a rather balanced combination of project-based and departmental structures. As for Company B,

there are also many projects used to integrate changes. However, the prominent structure that teams

and employees should mainly stick to is the departmental structure. What makes it that explicit is

the high degree of difficulty and low flexibility found at Company B for involving team members

from different departments in a projects unrelated to their departments, which is not the case for

Company A. However, Company B has efficient way of interdepartmental innovation creation

based on a challenge posting option discussed earlier. In general, the way both companies combine

the different organizational structures of innovation creation defines to which extent they restrict

the limitations of either structures including substantial difficulty in following in specialties’

updates for project-based structures, and a complication in coordinating the work with specialists

from different departments for departmental-based structures (Allen, 2001). Company A seems to

have a less problematic situation with regard to both structural challenges, while Company B needs

to be more balanced by properly integrating more projects and flexibility in team formation and

selection to improve its capability to follow updates.

Apart from the effective structure, Allen (2001) also discussed two main parameters that contribute

in forming an organizational structure to support NPD, including rate of knowledge and market

change as well as subsystem interdependence. Being a company for hygiene and forest products

with massive numbers of applications and intermediaries, Company A needs involving a wide

range of stakeholders to stay competitive, which makes it reasonable to build an organizational

structure that enables high level of cross-departmental coordination. However, the average

subsystems’ complexity of hygiene and forest products could be regarded as less interdependent

than for automobile industry. In other words, Company A may need separate pools of specialists

that do not require high levels of coordination among them. On the other hand, to produce any type

of automobile, coordination between specialists is more demanding due to the high

interdependence of the organizational subsystems required to produce an automobile.

Nevertheless, Company B seems to have more departmental than project-based structure that

might contribute in embedding individual superior properties, but less competitive complete

outcomes, which is the case for Company B.

Leonard-Barton (1992) argued that focusing only on the core capabilities of a company turns them

into rigidities due to the conflict generated between micro-level change-oriented social systems

and the macro system. By comparing Company A with Company B, we find the skills and

organizational knowledge, the installed technical systems as well as the managerial strategies are

more strictly and limitedly aligned to the core capabilities in case of Company B than Company

A. That makes these core capabilities more rigid for Company B due to the higher degree of scope

narrowness and change difficulty in terms of the overall organizational values and norms than for

Company A.

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Cooper (2011) suggested eight drivers for why new products succeed. In general, based on these

drivers, it can be said the OI gives Company A higher potential than Company B for driving out

successful products. Firstly, to enable developing unique superior products within relatively short

time, Company A adopts the traditional way to deliver mix of brands portfolios based on business

strategies, placing different expectation levels to different uncertainty levels of each brand

portfolio. However, that is not what gives Company A the advantage over Company B since it also

employs the same strategy. Company A gains the advantage of its unique Idea Generation Systems

that are supported by rules, policies and guidelines for OI to involve key customers, suppliers, and

vendors. That kind of open collaboration brings in more valid ideas and significantly improve

customer proposition. Moreover, to introduce new product in due course, Company A resolve

conflict of IP ownership early and agree on the mutual benefits. If this process does not go

smoothly, they replace the collaborator as soon as possible. Besides, in special cases, when

customers seem to share similar ideas the Company Already preserves for strategic purposes,

Company A tends to give the ownership of these ideas to that customer.

On the other hand, Company B strictly focuses on its core competence and business strategies, and

relies mostly on internal contribution when it comes to NPD idea generation. Besides, the quality

of external contributors are measured against internal planned targets, knowing that these

contributors are not deeply and early involved in planning. Additionally, in order to ensure the

suitable speed of NPD projects, Company B interact with partners to allow minimum likelihood

of conflicts, define the ownership of the desired results at early stages of collaboration, involve

maximum use of standardization and limited space for risk taking, and prioritize focusing on the

types of cars that will be introduced in the next quarter.

Cooper (2011) also discussed the role of having a front-end NPD project as a success driver. For

both Company A and Company B, careful accurate planning is a must requirement. Furthermore,

they both rely on effective leadership and senior expertise to get accurate and valid estimates of

tasks’ costs and durations. The main difference between both companies is that Company A

overcomes uncertainties and limited competitive timeframes by involving key suppliers and

enabling information sharing on certain platforms, where all related parties interact and get

updated. On the other hand, Company B follows the standard ways of doing a project to minimize

the risk.

As for global products, the top management at both Company A and Company B try to inject this

concept in the business strategies. For Company A, the different advantages of OI sources as well

as brand platforms represent the distinctive core input for an effective strategy making process

derived by the company leadership to gain a competitive advantage. For Company B, R&D and

marketing departments and the company’s distribution channels play a significant role in providing

the top management with the required valid data. In other words, Company B follows the

traditional way deriving business strategies taking into account the global product concept.

To comment on the organizational changeability that is quite important for innovation creation,

the conservative culture of risk taking and limited time and resources offered aside the regular

work reduce the ability of Company B to significantly change and adapt to the external

environment. However, it still has other changeability potentials corresponding to some change

steps Kotter (2012) discussed such as having powerful change leaders with sufficient authority to

provoke the sense of urgency and push people out of their comfort zones, and the ability to achieve

short term wins. The power leadership could be claimed by the long year of expertise the

employees at Company B has, that may touch the range of 40 years, while the company’s ability

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to achieve and consolidate short-term wins could be claimed from their result- and mid-term

oriented working strategies. Similarly, Company A possesses the same potentials in addition to

what an OI culture offers in that regard.

5.3. Process and Tools Wallin and Krogh (2010) described how much it is important for any company to have basic model

for launching new products. The model must include clearly defined steps and processes of idea

generation and evaluation, checking the feasibility of idea and finding their relevance to the

business needs. While focusing on this practice, Company A has developed a systematic model to

be followed for innovation creation. The model is named “innovation funnel”. This innovation

funnel is provided with stage gates at the end of each process. At each stage gate the results are

evaluated and checked for feasibility in correspondence with its relevance for the business.

Likewise, Company B has also developed an innovation process which consists of three bucket-

steps. These buckets are used to generate and assess ideas on the basis of challenges put either by

a project owner or top management. In response to these challenges, the ideas to be generated

undergo evaluation and development processes. If they are found fairly interesting and strongly

relevant to the business, the selected ideas are realised and integrated into suitable projects (Wallin

& Krogh, 2010). If some good ideas are interesting but cannot be integrated immediately into

business, Company B preserves those ideas by getting patents for future.

Muller and Hutchins (2012) has described the model of OI and suggested that in the idea generation

phase, customers, suppliers, and contractors are integrated into the process in a controlled way.

For getting the ideas out of the company boundaries, Company A has made online platform where

challenges are put for plausible ideas. The online platform on the website of Company A welcomes

any individual to post ideas. Once the ideas are collected, the challenges owner evaluates the ideas

based on their relevance and feasibility. Whereas when it comes to integrating customers and

suppliers, Company B has not opened up its boundaries for every outsider. Only suppliers or

vendors contracted for specific assignments can put their input for ideas generation. A Company

B, customers are not taken directly into idea generation. Instead they can only provide feedback

through Facebook pages.

Knowledge integration and making explicit knowledge that is learned as result of OI requires

attention and often challenging for the companies practicing OI. Wallin and Krogh (2010) has

suggested model for integrating the knowledge. Wallin and Krogh (2010) has suggested involving

outsiders in discussion, resolving issues and defining processes. This model enables outsiders to

add their knowledge and making it explicit for everyone. OI brings together lot of resources at one

platform thus requiring handling the knowledge with more systematic way. Both company A and

Company B has provided external collaborates a way to make their knowledge explicit by giving

inputs towards company. Company A integrates suppliers and collaborators in their projects from

initial discussion and allowing them to provide the solutions for problems given. In company B

knowledge of suppliers and collaborators is integrated by giving them access to internal systems

and portal of Company and adding their inputs for ongoing projects and issues.

Kotter (2012) said that a company may start to celebrate a success before the right, which leads to

the loss of the change momentum. In this regard, Company A encourages preferable organizational

behavior against any obstacles through telling inspiring success stories, giving regular feedbacks

and continuous support to avoid disagreements and hiring ambitious employees. For Company,

the antithetical behaviour is dealt with more strictly due to the sensitivity of time factor in

automobile industry. Therefore, to avoid that kind of disturbance, the time for disagreements is

20

only given if there is a free space to discuss them such as coffee and lunch breaks. However, the

likelihood for Company B to avoid discussing innovation-demanding issues is high due to the

conservative behavior of risk and uncertainty avoidance adopted and deeply rooted in the

company's culture.

5.4. People and Skills Being open while working with outer environment is attention requiring matter at Company A due

to the risk for internal and confidential information to be exploited for the sake of competitors.

Wallin and Krogh (2010) has proposed to open up only for those competencies which are not

available in-house. Furthermore, Walling and Krogh (2010) suggested if a company choose to go

for OI, it needs to identify the right personnel with good expertise of working in open environment.

These personnel should be empowered for problem solving and decision making features.

Compared to the suggestion as proposed by Wallin and Krogh (2010), both companies have taken

into consideration that their core competencies should not be open up to the outer environment.

Company A has formulated OI team, who are, on regular basis, performing OI. However, anyone

inside Company A still has the liberty of practicing OI for any specific project. Company A has

done work in setting up the guidelines and rules for its employees, elaborating degrees of allowed

openness while working with external environment. Company B lacks in terms of providing

guidelines to its employees for collaboration openness. Also there are no special teams at Company

B for practicing OI. Instead, Company B chooses to open its boundaries if internal competency

lacks to provide the required expertise. Anyone with the ability to provide the required expertise

is chosen by personnel responsible inside the company for delivering the results.

The contribution and performance of people is directly affected by reward system being offered

for outputs of work done. Wallin and Krogh (2010) have discussed two types of rewards which

can be used to motivate the internal and external resources, thus boosting the performance of OI.

Wallin and Krogh (2010) suggested providing the external and internal contributors with a balance

of intrinsic and extrinsic rewards. From the empirical study of Company A, it can be seen that

being innovative is considered to be the main cynosure of employees’ duty, and they are just hired

for delivering the innovation. Company A motivates its employees by their measuring innovation

performance in comparison with the annual objectives, which makes it extrinsic reward. Besides,

if any employee brings up some really remarkable innovative idea, he is awarded with the idea of

month award. The similar kinds of rewards for employees are awarded for their innovation at

Company B. Annual appraisals are used to motivate employees for being more innovative, then

targets or presenting some really good idea are used in addition to that. Apart from the annual

appraisals, employees are recognized as best idea givers during yearly celebrations, which can be

classified as intrinsic reward according to Wallin and Krogh (2010). For external collaborators like

suppliers and consultants, the use of rewards system is also important as suggested by Wallin and

Krogh (2010). The balance of rewards also needs to be maintained for resources from outside the

company boundaries. Kahn (2005) has also described the importance of supplier partnership in

longer terms to approach high-performing OI. Compared to the suggestions addressed by Wallin

and Krogh (2010) and Kahn (2005) for suppliers’ involvement and motivation, Company A is

using the tactics of motivating their suppliers by ensuring them long-term relationships for future

projects, and involving collaborators in different modes and processes of OI. Company A has also

developed the scenarios to enable collaborators to sell products or innovation to other customers

and organizations, which was a result of joint innovation between Company A and the

collaborators. The freedom of allowing outsiders to sell the results of joint ventures to others

21

enables them make more business in the market, and thus, motivating them to keep longer

relationships with the company. Company B is in a process of continuous improvement for the

strategies matter supplier relationships and motivation compared to the suggestions addressed by

Wallin and Krogh (2010) and Kahn (2005). The source of motivation is to create a win-win

situation for outsiders in collaboration projects, where IP rights are shared among each other.

Company B has taken the initiatives and on the road to improve this dimension of OI.

Wallin and Krogh (2010) emphasize involving different stakeholders including collaborators and

outer sources into systems for defining the steps required of OI processes. It will help in ensuring

commitment and keeping outsiders motivated for ongoing projects. Although Company A has not

directly integrated outsiders for defining its general process steps, it still ensures involving

outsiders in meetings and discussions from early project stages. It enables Company A to get them

committed towards common goals. The contribution of only internal stakeholders has been

practiced at Company A for defining internal processes. Whereas, Company B is in the process of

defining its process steps for how to collaborate with outsiders and create a win-win situation.

5.5. OI Maturity The maturity level has been formulated by using the analysis of questions asked during the

interview. The analysis of questions led to answering the maturity level questions, as seen in table

1 appendix D, which were based on the maturity framework described by Enkel et al. (2011). Each

answer or option refers to a certain level of maturity in ascending order from one to five. The

meaning of each level is also described in the table. The dimensions of maturity for both

Companies A and Company B, illustrated in figure 4 appendix C for Company A, and figure 5

appendix C for company B, are explained here on how to interpolate the understanding of each

dimension level. Enkel et al. (2011) clarified that in order to get high score (5) in the dimension of

clear OI strategy, OI should be part of the communication strategy, where the top management

communicates the strategy towards all the employees of the company. At Company A, OI is

promoted by the top management as a strategy of innovation and that is why the company has a

maturity level of five, whereas for Company B, the communication of OI is not practiced by the

top management. Therefore, it has a minimum maturity level of one for the same dimension. The

communication by the top management including communicating people and NPD projects as a

strategy has a maturity level of five as described by Enkel et al. (2011). Compared to the maturity

level of success stories as a communicating tool at Company A, the top management is sharing

success with everyone in the organization, which gives them 5 for the maturity. At Company B,

success stories is shared among the employees instead, and that also gives Company B 5 for the

maturity. The dimension of initiative taking in OI gets a level of five in maturity if every single

employee shows the willingness to opt for OI, and level one if there are only few initiatives among

the employees for OI. For Company A, initiative taking level is only three because only specialized

personals get themselves into OI. On the other hand, for Company B, OI is not considered to be

an option among all the employees. Instead, only a few employees are taking part into OI activities.

At Company A, shared innovation facilities do not exist, while there are many clear evidences of

these shared facilities for Company B. In general, this is how the data of maturity framework is

used to analyse and score the results of all the remaining dimensions for both companies, as shown

in figure 6 appendix C.

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Figure 6 – Appendix C: OI Maturity Level for Company A and Company B

6. RECOMMENDATIONS & CONCLUSIONS

6.1. Practical Recommendations 6.1.1. Recommendations for Company A

Even though Company A seems to integrate and adopt OI as a great extent, there are still significant

practices need to be more considered. First, OI at Company A is used when it is expected to be

effective. That reflects that low level initiatives are used for target setting related to OI. In other

words, there is no an explicit strategy for using OI before a project is defined. Further, employees

are not rewarded on the basis of OI targets when there are targets. Therefore, we recommend that

OI should be integrated more in the company strategies, and employees should be motivated

through a rewarding system on the basis of OI targets.

Another main issue is that we could not find in the interview text what proves the existence of

shared innovation facilities for OI activities with partners. Therefore, if that is valid, we

recommend establishing shared OI facilities to sustain its culture and provide a tangible evidence

of its existence.

Apart from that, Company A is performing superiorly in five OI dimensions, and fairly good in

the rest of eleven OI dimensions, which should be also considered for improvement after the main

issues discussed earlier.

6.1.2. Recommendations for Company B

Even though Company B is a big company with great long history, its OI maturity is relatively

low, 2.1/5. Company B should start to discuss and incorporate OI into a communicated strategy.

The integration should include setting adjustable targets and employees reward system for based

on OI. Besides, it is recommended that Company B opens up the possibility for all employees to

take the initiatives instead of making it confined to champions. Moreover, screening external ideas

and opportunities at Company B should be made possible and attractive for all employees, and OI

should be communicated throughout the organization whereby employees are brought into contact

via central position. Not least, OI transaction currency should be made integral part of budget.

23

However, knowledge sharing infrastructure is excellent at Company B, and it should be made best

of for the sake of getting the other related dimensions more mature. Furthermore, there is little

efforts at Company B for aligning its attitude related to legal and IP systems with the concept of

OI, and that needs to be set up based on win-win situation instead. Finally, the maturity levels of

the other dimensions range between 2-3, and that also needs significant improvement based on the

five levels as described by Enkel et al. (2011) . Nevertheless, they are all based on the fact that

Company B should first decide to adopt OI in order for other dimensions to be improved.

6.2. Proposed Conceptual Model Our approach enabled successful screening and measuring of OI maturity in different companies,

regardless the validity and accuracy degree of the information provided by the interviewees. Using

the same logic of the approach we adopted, a proposed model, shown in figure 7 appendix C, has

been formulated as a toolbox for who are willing to investigate how to approach OI from a generic

perspective, whether they are companies or researchers.

The figure shows a cone that begins with an elliptical cross-section, comprising smaller elliptical

zones. The widest oval ring represents the ideal scope of OI, while the smaller rings represent the

different modes of OI. Relevant theories, concepts, and models are suggested for each pattern. The

con gets narrower along the perimeter of cone, forming a funnel. This funnel represents the

constraints OI experiences while taken to be applied in a certain context. The funnel ends with a

spider web that represents OI maturity levels in relation to that specific context. As the constraints

are taken off, the spider web gets wider and closer to the ideal scope of OI. The lower of extension

of the figure represents how a lack of maturity for a particular dimension could be generally

enhanced. Finally, the triple diamond model of OI process suggested by Muller and Hutchains

(2012) is proposed as a guiding model for how to develop a strategy to gain more maturity for one

or more dimensions.

Figure 7 – Appendix C: Proposed Conceptual Model for OI Mapping and Development

6.3. Conclusions The concept of OI is quite new for many companies. OI involves producing NPD through mutual

collaborations in different ways depending upon possible scenarios for approaching desired

results. The formal way of practicing OI involves management commitment towards it,

24

recognizing efforts of people, the way company collaborates and handle associated issues like

conflict on ownership of innovation output. It also includes how the company screens ideas

gathered from inside and outside the company. Apart from that management and integration of

knowledge, equipping internal and external participants with facilities required for OI is among

many other factors that reflect practices of OI in any company. It is very common that a company

does not recognize OI as a formal mode of NPD, but still practicing a plethora of OI activities. In

broader view, OI proceed starting from generating and presenting ideas, passing by the

development of these ideas, and in the end even commercializing them.

The practices of OI get mature if a company is dealing with each dimension of it in a sensible way.

There are models available from research that explains the framework on how individual

dimensions of OI can become more mature by establishing the standards and practicing these

standards. These models can be knowledge management and integration frameworks and triple

diamond model of OI process that enables the understanding of open innovation phases.

The implementation of the frameworks described above will lead the company into getting more

mature for OI. The maturity of OI for any company can be calculated by using framework as

presented by Enkel et al. (2011). The maturity level calculated from framework of Enkel et al.

(2011) helps and company to look where it stands in terms of OI, and which direction it needs to

approach.

7. DISCUSSION & FUTURE RESEARCH

7.1. General Reflection If implemented carefully, OI can be a source of catalyst to organizations for its innovations. OI

concept is about looking for resources that are not employed by the company. These resources can

become useful sources of innovating new ideas for products or services. These resources can vary

from suppliers, contractors or even customers in terms of personnel. Also, resources can be in form

of acquiring the technology, which is currently not available within the property of the company.

The outer resources can be integrated either in idea generation, idea development or even the

marketing and distribution of the final product or services.

OI requires processes and tools to be in place within the company. These processes and tools

enable internal employees to get benefit for practicing OI concept and evaluating new ideas for

developing products. A system of trainings in place will enable to practice OI more efficiently. In

OI, knowledge integration and management is handled with extra precaution as the contribution

of outsiders needs to be shared with the employees within the boundary of the company. Apart

from knowledge management, there might be other issues require precautionary measurements.

The most important issue of OI is about conflict of owning IP rights as output of joint work

between collaborators. That needs to be discussed in the beginning of the collaboration phase to

minimise the potentials for having conflicts.

7.2. Future Research OI research area is still relatively young, and highlighting spots of research improvements is highly

probable. Based on the model shown in figure 7 appendix C, we suggest further research

opportunities. To begin with, the scope of ideal OI can have more collaboration in terms of defining

a full and valid view of how OI should be ideally practiced. Further, there is a lack of research

studies that address standard instruments for contextualizing the scope of OI. Therefore, we

recommend studying how OI should be ideally practiced in particular contexts such as for different

industrial categories and organizational cultures. Moreover, it might be interesting to study if the

25

maturity model for OI suggested by Enkel et al. (2011) is sufficiently efficient to use, completely

or partly. Besides, the strategy of the empirical study Enkel et al. (2011) propose might be

questioned, and differently used as we did in this study. Finally, researches related to effective

models, strategies, and plans required to improve the levels of one or more OI maturity dimension

for a particular context are highly recommended.

26

References

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APPENDICES

APPENDIX A: Organizational Structure of Product Development

Figure 1: A simple Model of Innovation Process – source (Allen, 2001)

Figure 2: Organizing the Innovation Process by Departments – source (Allen, 2001)

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Figure 3: Organizing the Innovation Process by Project teams – source (Allen, 2001)

Figure 4: Organizing the Innovation Process in a Matrix Structure – source (Allen, 2001)

Figure 5: The Four Dimensions of a Core Capability – source (Leonard-Barton, 1992)

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APPENDIX B: Change Management

Figure 1: Kotter’s Change Management Model

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APPENDIX C: Open Innovation

Figure 1: Closed and Open Innovation – source: Chesbrough (2003)

Figure 2: Triple Diamond OI Process - Source: (Muller & Hutchins, 2012)

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Figure 3: Example of OI Maturity Score Presentation – Source (Enkel et al., 2011)

Figure 4: OI Maturity Level for Company A

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Figure 5: OI Maturity Level for Company B

Figure 6: OI Maturity Level for Company A and Company B

34

Figure 7: Proposed Conceptual Model for OI Mapping and Development

35

Table 1: The Elements and Sub-Elements of OI Maturity Framework – Source (Enkel et al., 2011)

36

Table 2: Expected Behaviour at the different maturity levels of the OI Maturity Framework – Source (Enkel

et al., 2011)

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APPENDIX D: The Interviews and Questionnaire

Innovation at Company A 1. How innovation is communicated by your company/department?

Are all employees aware of its importance and eager/enabled to participate in its related

practices and activities?

How innovation vision is formed and communicated?

We continuously communicate innovation internally. The basic priorities we addresses include

efficiency, innovation, and growth backed up by sustainability. Examples of how the basic

priorities, including innovation, are communicated could be project launches and via website and

internal systems. The website is also used for external communication of innovation as a core value

we have adopts.

How innovation vision is formed and communicated?

Each product development project is based consumer insights by which Company A takes as inputs

to form the project vision to be communicated. Moreover, there are brand platforms on which

brand vision, mission, values, personality, tone of voice, name, logo and tagline for current and

previous are found. These platforms efficiently guide new product development project members

to formulate a relevant and effective vision for the project. Further, both consumer insights and

brand platforms are backed by long- and short-term strategies of the company, which represent the

top management vision for how the potential new products can approach the vision of the

company. By such input, the purpose of any NPD project and the area of innovation are most likely

made explicit enough as a vision to be communicated by the project team and all relevant

stakeholders. Examples of purposes could be something to do with upgrade, cost saving, new

generation, or radical development.

2. Who owns the assets and intellectual property resulting from open innovation? How are

profits and losses shared among participants?

Do you consider license selling of innovation for some products to other

organizations/companies?

For all the in house innovation, it is kept inside the company. This is patent intense of industry.

The product could look simple but still the patents are important for us. Open innovation is based

case-by-case on how to share intellectual properties. It could be the external partner has the IP and

we has freedom to use some time collaboration with suppliers and sometimes development

agreements on how to share intellectual property rights and part of it shared by suppliers and part

is shared by us. It depends on product and services acquired. Sometimes suppliers offer

technology, service or even products to use by us and supplier maintain the IP right. Negotiate on

how to win-win for both.

Leadership and organization 3. Who controls the quality of contributions made by outsiders?

If we work with suppliers we have a common project to develop but not all the suppliers are chosen

for that. Only some important and strategic suppliers are chosen by putting resources from both

sides and our internal resources control the contribution of suppliers on that project. More

experienced Project Managers are put into projects.

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4. How should conflicts of ownership, not-invented here, company confidentiality (e.g.,

between the Company And outside participants) be dealt with?

What kind of challenges are faced for maintaining the ownership?

Dealing with this upfront in the beginning of process makes it easy. Because of this so far no

problem for conflict of ownership has been faced. But if we don’t agree for this in the beginning

then it can create conflict. If we cannot agree upon having the IP rights we stop negotiations. Stop

the project. Long period for deciding the IP and slow down the process. Then find some other

partners. Consumers also have ideas with idea of improvement or new ideas and it is difficult to

control because of conflict of ownership because we can’t tell what is in the pipe line of our

Company And We can’t tell it to consumers what are we about to launch then it is difficult and to

avoid this conflict we normally give IP rights to consumers before they approach us. It could be

thought but still we avoid conflict.

Not-invented here is present in more or less in all the companies. No clear solution but it is about

communication of idea of open innovation and allowing people to try and fail. And see that it is

not that dangerous to take something from outside. Also to avoid no-invented here we are doing it

within in their competence because this is our best expertise available in house. Don’t open up in

those areas

5. How the innovation performance is measured in accordance with the objectives set by

leadership?

In your opinion, for different change projects done at your company, were there more

underestimations, overestimations, accurate estimations, or good enough estimations for

the time limits, costs and effort needed?

How does your company prioritize innovation projects among other change projects?

There is a carefully planned project portfolio for every brand. The drivers for how to a portfolio

mix should be are the brands and the strategies. For instance, the portfolio of some brands may

include basic upgrades, while for other brands, radical changes are more considered. From that

sense, Company A has different kinds of portfolios for the different brands, and that is governed

by the leadership and followed up with plans including cost and time estimations. Therefore, the

innovation performance is measured by comparing the actual performance of a portfolio

management with the portfolio plans. However, there are different expectation levels correspond

different uncertainty levels of brand project portfolios, and that is considered while measuring their

performance. In general, the preliminary estimated times and costs for projects with high levels of

uncertainty in Company A are unlikely to be realistic. Therefore, the early estimations are not

taken for granted, and there is a point of time at which these estimations are finally considered for

success measurement.

Process and tools

6. What kind of standard procedures (model) and steps of the innovation process (e.g. idea

generation, Idea development, and commercialization) are in practice in your

organization?

Innovation funnels describing the process with different stages having stage gates and mile stone.

A project model to follow and process is available to fill in the funnel.

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7. How ideas in NPD are generated, developed and assessed for innovation?

For example is there any idea pool integrated as collaborative innovation solution to the

company?

While defining the model of open innovation, customers and suppliers were not involved instead

it was developed solely by us. Experience is used along with benchmarking from outer market. In

benchmarking because of wider concept of open innovation the process are not just taken and

implemented in house instead they had been modified and implemented in accordance with need

of it. The success story of P & G has been used to set up.

External world is involved by working with lead customers and working with consumers and

business-to-business (working with nursing institutions, papers and tissues used for kitchen).

Customers are involved and asked to test the initial product and giving there feedback and ideas.

Collaborate about more soft part like information and they could be the part of whole process till

the launch and this is one example of their involvement.

Internal ideas are accessed in idea management system. All employees put in their ideas on this

system. Whenever new project is started the team can search the archive to know if there already

been any idea developed in this. Possibility for any projects to reach out to other employees by

posting the challenge by mentioning the problem and I need ideas and solutions.

External ideas have different routines and processes. For instance, we have innovation portal on

our website where external ideas are invited to put their contribution. We put our challenges and

mention that these are the areas we are looking for if you can help please contribute than the owner

of issue within the company evaluate the ideas and put it in projects.

8. How long in average does it take to properly understand the innovation/NPD process?

What kind of efforts have been taken to avoid high complexity of innovation processes?

The way of using open innovation is a complement to in-house innovation which means that part

of project could have open element not whole projects are open. Also totally open projects are

there. Because of big size of our company it might be difficult for outsiders to understand the

process easily. Project plan is one way to show to avoid complexity.

Training helps new employees understanding complexity of innovation. Also we have innovation

academy where our employees go and learn innovation process.

9. How do you gather knowledge of customers' needs and preferences based on the history

of their interactions with products and on real-time contextual data?

No interaction at all.

10. How externally and internally acquired knowledge is integrated?

For instance, are expertise of individuals and teams, and locus of innovation identified?

Normally when we do something externally we have a need and we have demand so that a good

base and it makes it easier to integrate external knowledge. The involvement of external parties in

project is the way we integrate their knowledge. External sources are put in project from very start.

They are part of brain storming sessions where they can put in their expertise or we could ask them

to give their detailed input to problems.

11. How do you plan for short-term wins and stick to the concept of open innovation in the

same time? Are they claiming the success of the product development process?

40

The answer to this question has already been explained in question 12.

12. Are there special organizational behavior (activities, consultancy … etc) to help keeping

the momentum of the change against any obstacles?

Company A encourages preferable organizational behavior help in keeping the momentum of

change against any obstacles by reviewing and telling relevant inspiring success stories.

Additionally, individual behaviors are observed, and feedbacks are given regularly to avoid as

many disagreements as possible. Most importantly, Company A in the first place hires employees

that are more willing to accept challenges and have consistent behavior with how Company A

works. However, disagreements with individuals are put on the table of discussion if they have

meaningful technical, organizational or ethical point from a collective perspective. When the

disagreements have no significant reasoning, it is the manager job to help individuals in getting

their work done smoothly by receiving regular feedbacks and giving continuous support. Each

individual is supposed to have someone to back to except top management, who should get

consensus on the strategies to be followed. If a serious challenge could not be resolved by any

manager, it is escalated to the top management so that they can decide on how to approach possible

solutions. Thanks should be also given to the idea of open innovation portal, where external parties

can collaborate in solving intractable problems.

13. How the lessons learnt are internalized and integrated to the organizational culture and

values?

At COMPANY A, there are continuous improvement groups responsible for tracking the

feedbacks that projects and even organizational processes come up with. If there are problems need

to be resolved for any organizational pattern, then again, looking for solutions follows the same

pathways of how ideas are generated. Once the effective solutions are addressed, they are added

to systems, whether they are changes or additions. If the solution are something to do with specific

project context, then they are added to where the reusable information for that specific context is

located. All changes are communicated internally to increase the awareness of the overall company

knowledge and keep all employees updated.

People and Skills 14. Who is allowed to participate in open innovation, how and why?

We have chosen to be quite open for our people to be open and try. If you have a project and task

you can use open innovation to use. It is not compulsory to go for open innovation but it is an

option for them. We have innovation teams that are working with adjacent projects are more

expected to go for open innovation. We have tools and support and guidelines about what is

confidential and what is not and its open for employees to understand what is open and what is

not. In every external collaboration, we have an agreement and in the agreement we define the

degree of openness. It helps employees to understand how much they are allowed to be open.

15. What kind of trainings are provided to make the employees innovative for NPD? (e.g.

creativity, innovation or problem-solving techniques

There are in-house innovation academies present which provide all kind of necessary trainings to

employees required for understanding the concept of innovation and the techniques required to

resolve the problems.

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16. What kinds of motivations (reward system) are used to keep the employees and vendors

involved for open innovation? (e.g intrinsic motivation or extrinsic motivation)

Do not any specific rewards. The concept is that this is their job. Top idea provider of the month

is one option. For supplier is normal business relationship. In Collaboration project, the cost of

project and the risks are shared with the suppliers. That’s the way to motivate supplier. Also

suppliers can get longer relationship based on the efficiency of open innovation. And sometimes

suppliers are given the rights to sell the output of open innovation to other industries as well.

17. How different stakeholders are involved in defining the process steps required for

innovation? Does that usually gain their commitment?

All the processes are defined internally with keeping in line the business strategy of company.

These processes have been defined over the period of time by gaining the experience and learning

and are continuously improving according to need.

18. What are the main sources of risk associated with open innovation and how do you

overcome or mitigate such risk without negatively influencing the concept of open

innovation?

The answer to this question has already been explained in question 2 and question 4.

19. Does the problem-solving group include both experts and decision makers with formal

authority to proceed and define the steps, tasks, problems, and processes of open

innovation?

The answer to this question has already been explained in question 7 and question 14.

Culture and values

20. How does your company encourage learning from failure and risk taking?

Learning in Company A is mainly encouraged by the fact that there are different sources of

knowledge embedded in the information systems of the company. The sources are made accessible

for and friendly to use by all employees. Furthermore, the different alternatives of how to approach

a solution of any problem makes individuals more comfortable with adopting new methods and

tools even if they have higher risks. Above all, considering project delivery time and budget

estimations are not confirmed until the project charter is mature enough. Therefore, there is a rather

big margin for learning from failure and risk taking during the early stages of project planning.

21. How do you think that your company is conceived in the market regarding your

contribution to innovation?

Company A also strives to make the efforts dedicated for brand innovation explicit for its

customers. According to the feedback received from the B2B customers of Company A, the brands

delivered by the Company Are perceived as innovative ones. Besides, there is also recognition

from the end customer side that Company A is doing a lot to make its brands as innovative as

possible.

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22. How does the company resolve the issue of lack of core competence?

To maintain its competitive advantage, Company A offers financing PhD studies and master theses

in specific areas of the company’s concern in order to dig deeper into new findings matter core

competence. Company A is also open to academia when it comes to interview-based researches.

Thus, it can be said that Company A offers win-win learning situations. It is also worth mentioning

that individuals that have high potentials in the company’s core competence area are not exposed

to the internal system of this core competence as long as they are not internalized or hired as

permanent employees of the company.

23. How do you decide to collaborate for resources or processes involved in product

development

The top management of Company A has made a strategic decision whereby resources for product

development must not be produced in-house. However, to get the required resources, Company A

involves relevant resource and process owners in different stages of new product development to

make sure that, for instance, the ideas being generated are technically feasible, and the final

decisions are realistic.

24. When and how do you decide to reveal your resources to external environment? How do

you cope with the associated risk?

The resources of expertise gather over years are revealed in limited manners when they are no

longer assets for gaining competitive advantages. That could be due to the emergence of newer

versions of technologies making these assets more outdated, or simply when other competitors

discover and realize them. However, these resources of knowledge are not shared for free. Instead,

Company A tries to gain as much profit as possible out of them by different business ways such

as publications to be sold, skills to be trained, information for consultancy, as well as solutions to

be offered for other companies. Moreover, such knowledge is only revealed after looking at the

profile of to whom it would be shared with. That might be a strategic partner for instance that is

more likely to stay as such for several years ahead.

As for mitigating the risk of losing employees that are positioned in the core competence area of

Company A, the policies are set up so that the employees are kept satisfied and happy to continue,

and the company is a comfortable place to work in. Otherwise, Company A does not resort to strict

solutions of specially designed contract that employees sign whereby they cannot work for

competitors in case they want to leave for a certain period of time. Instead, fast development and

evolution using different modes of innovation is another way Company A adopts to mitigate that

kind of risk.

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Innovation at Company B

1. How innovation is communicated by your company/department?

Are all employees aware of its importance and eager/enabled to participate in its related

practices and activities?

How innovation vision is formed and communicated?

Company B has process for internal communication called needs for means process. The process

involves the information related to each car including the vision, and other kinds of helpful

information to do with the very early stages of the product development, who the customers are to

be approached for that particular car, how the company would like to position this car as well as

what the big challenges and significant points are to be considered. Further, managers and

supervisors contribute in vision dissemination throughout their teams. There are also books,

newsletters, publications, and website spaces where cars’ projects and information are posted.

2. Who owns the assets and intellectual property resulting from open innovation? How are

profits and losses shared among participants?

Do you consider license selling of innovation for some products to other

organizations/companies?

We are not very fond of sharing because it is very critical decision its legally difficult position. We

have not been very fussy about these sort of things. People we have been working on taking patents

and we did not bother that very much. But recently things have changed and now we are becoming

more conscious about having patents for ourselves for the knowledge we have. Don’t have a big

portfolio of patents but we are in the process of building it now. Looking for Collaborative stages

where how can we use patents without any barrier. Mutual licensing in collaboration is one option.

Core competence wouldn’t be the part of collaboration.

Leadership and organization

3. Who controls the quality of contributions made by outsiders?

Quality is controlled by keeping in mind the market aspects. If we the input of outsider can be

integrated for getting projects successfully in markets we keep that. Plans are the sources of

measuring the quality by outer contribution if they cannot bring up what is needed according to

plan then it is not taken as project part.

4. How should conflicts of ownership, not-invented here, company confidentiality (e.g.,

between the Company and outside participants) be dealt with?

What kind of challenges are faced for maintaining the ownership?

Actually we don’t have very good policy at the moment and we are in the process of defining and

sorting out the different types of collaboration. Now we have made agreements where we invite

outsiders to do work and we keep the output in our ownership. So that the people now from the

very start about the ownership. It avoids the conflict. In some cases companies come up with idea

and we utilize it under the license. We are still in the process of finding the best model for conflict

of ownership.

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5. How the innovation performance is measured in accordance with the objectives set by

leadership?

In your opinion, for different change projects done at your company, were there more

underestimations, overestimations, accurate estimations, or good enough estimations for

the time limits, costs and effort needed?

How do your company prioritize innovation projects among other change projects?

Company B is careful and has in general few project cases of overspent budget and late of delivery.

However, the limited space for risk taking is given as a free process aside. Time is very critical in

automobile industry and that is why tolerance is rather tight.

Projects are prioritized according to mid-term goals whereby the most focus is given to the types

of cars that will be introduced in the next quarter. Nonetheless, long-term goals are also considered,

but they come in lower in priority.

Process and tools

6. What kind of standard procedures (model) and steps of the innovation process (e.g. idea

generation, Idea development, and commercialization) are in practice in your

organization?

Are complementary or adjacent industries involved?

We use inspiration part where we ideas are generated based on challenges, then we have idea

generation part using a tool where people can put challenges for problems they have other people

can put their input from. Also we have challenges that are put by top management. In development,

ideas are evaluated and forwarded for development. Integration part where we study if the ideas

are feasible for project it was presented for or it is good for someone else in the projects. If any

good idea which cannot be implemented to our ongoing projects still we maintain the patents and

give it to others who are in need of that.

7. How ideas in NPD are generated, developed and assessed for innovation?

For example, is there any idea pool integrated as collaborative innovation solution to the

company?

On the whole there are three buckets. First bucket evaluate if idea is within the scope of project or

not. Second bucket evaluate if the generated idea can be implemented as it is put forth or it requires

more work to do before it can be impalement. Third bucket evaluates if the idea put is not in-

liaison with the company strategy at the moment but it could be of use in near future and talk to

people externally to sharpen the idea for future.

8. How long in average does it take to properly understand the innovation/NPD process?

What kind of efforts have been taken to avoid high complexity of innovation processes?

We are trying a lot to communicate manager from top to down using different modes like internet

and letters to make the complexity of process more and simpler.

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9. How do you gather knowledge of customers' needs and preferences based on the history

of their interactions with products and on real-time contextual data?

Customers can give their feedback via face book or through dealers. We use to had an portal on

internet which was closed couple of years ago because it became difficult for handling the inputs

of customers because most of the customers were using this portal for inquiring about the dealers

locations instead of giving ideas.

We do a lot on that. A lot of data we are analyzing for instance if new car is coming we analyze

all the data of old car then also some specific targeted research is carried out.

10. How externally and internally acquired knowledge is integrated?

For instance, are expertise of individuals and teams, and locus of innovation identified?

Only the consultant who have access to our internet can add their inputs to our ideas pool. This

idea pool also has the option for inviting different companies who are not part of project for giving

their inputs to any particular problem.

11. How do you plan for short-term wins and stick to the concept of open innovation in the

same time? Are they claiming the success of the product development process?

The answer to this question has already been explained in question 12.

12. Are there special organizational behaviors (activities, consultancy … etc) to help keeping

the momentum of the change against any obstacles?

In the development process of automobile industry are sensitive to antithetical behaviour of

individuals toward any part of the system. Therefore, in order to avoid that kind of disturbance,

the time for disagreements is only given if there is a free space to discuss them such as coffee and

lunch breaks. Company B plays to be as safe as possible. In other words, if a project seems to

experience many challenges that need time and evaluate different opinions on how resolve these

challenges, Company B will avoid doing this project until the concerning issues are less

challenging.

13. How the lessons learnt are internalized and integrated to the organizational culture and

values?

In Company B, changes approved to be added to the system are integrated and everyone related to

the area of a change is informed and kept updated. But lessons learnt in general are only passed

through by people of expertise to the newcomers in form of mentorship or training.

People and Skills

14. Who is allowed to participate in open innovation, how and why?

How are participants in open innovation selected? How are they enabled to contribute

(platform)?

Consultants have been working continuously with us on different projects from the early stages to

later stages. If we do not want to have any specific competency in-house then we go for outer

companies and it is not limited to just one company it can be even more than one company. We

select these companies on the basis of lack availability of in-house resources. It’s a quicker way

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of building knowledge. Building that resource in-house can take up lot of time. Public is not

allowed so far.

15. What kind of trainings are provided to make the employees innovative for NPD? (e.g.

creativity, innovation or problem-solving techniques

The employees learn over the period of time about different techniques required for innovation.

No formal presence of training on increasing the expertise of employees.

16. What kinds of motivations (reward system) are used to keep the employees and vendors

involved for open innovation? (e.g. intrinsic motivation or extrinsic motivation)

No special reward system in terms of monetary. It is their regular job which is given a regular

reward. Either in terms of annual appraisal

There is innovation award in which employee is lifted and showed to others that he had really put

some good idea and we are on the way to work. But no newsletters is published. Yearly basis

celebration of idea givers is celebrated.

17. How different stakeholders are involved in defining the process steps required for

innovation? Does that usually gain their commitment?

No integration of external stakeholder or collaborators for defining the internal steps.

18. What are the main sources of risk associated with open innovation and how do you

overcome or mitigate such risk without negatively influencing the concept of open

innovation?

Already explained

19. Does the problem-solving group include both experts and decision makers with formal

authority to proceed and define the steps, tasks, problems, and processes of open

innovation?

The answer to this question has already been explained in question 7 and question 14.

Culture and values

20. How does your company encourage learning from failure and risk taking?

Learning from failure in Company B is facilitated through project evaluation sessions and project

reports. The time available aside the work including coffee and lunch breaks is a space offered to

discuss risky issues and moves with mangers in higher rank. That is how Company B encourages

risk taking. Besides, employees are encouraged to study and conduct researches as there are

programmes make it possible to study and work in the same time, or take work leave period to

study. Furthermore, the closeness and open boundaries between people in powerful titles and

anyone else makes it more

21. How do you think that your company is conceived in the market regarding your

contribution to innovation?

As for how much innovative Company B sees itself, customers’ feedbacks reflect that they are

innovative to an extent of upper-intermediate level.

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22. How does the company resolve the issue of lack of core competence?

Company B supports lots of research studies related to its core competence. Besides, R&D

department is responsible for benchmarking and keeping eyes on the emerging relevant

technologies, especially if they have something to do with the company core competence and its

competitive advantage.

23. How do you decide to collaborate for resources or processes involved in product

development

Company B has different mode partnerships with its suppliers including short- and long-term

partnerships. The suppliers are not involved in the process of product development until the need

for that becomes so obvious.

24. When and how do you decide to reveal your resources to external environment? How do

you cope with the associated risk?

Company B tends to preserve competence knowledge within the company. However, a few

initiatives are recently brought up for discussing how to benefit from the patents Company B

already has. It is though done in a very limited manner.

Table 1: Questionnaire for Open Innovation Maturity Level Assessment – Source Enkel et

al. (2011)

Open Innovation Maturity Company

A

Level

Company

B

Level

Clear Strategy 5 1

Is open innovation incorporated into a communicated strategy?

OI is not mentioned in strategy X

OI is verbally supported by management

OI is incorporated into the organization’s strategy 1

OI strategy is explained and stimulated by management

OI strategy is demonstrated by management who “walk the walk” X

Communication of success stories 5 4

Are examples of how to do open innovation communicated throughout the

organization?

There are no success stories at present

Successes are shared informally, by word of mouth

Some success stories are shared by management

Success stories are shared in a regulated way X

Success stories are used for strategic purposes X

Clear Targets 2 1

Are there communicated targets which are in line with the open

innovation strategy of the organization?

no targets are set X

Lower level initiatives are used for target setting X

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Targets are set in line with the OI strategy

Targets are set for and communicated to employees

Targets are continuously adjusted for each activity

Assessment 1 1

Do Employees are rewarded on the basis of Open Innovation Targets?

no assessment based on OI activities X X

informal assessment of open innovation initiatives

Assessment is based partly on OI strategy and targets

Champions are awarded on the basis of targets

Balance of Extrinsic and Intrinsic Motivator

Initiative Taking 3 1

Are employees willing to take initiative and be entrepreneurial?

Little initiative taken by employees X

Individual initiatives at the lower levels of the organization

Champions are appointed to demonstrate entrepreneurship X

Champions are stimulating entrepreneurship

Employees in all parts of the organization are willing to take initiative

Screening 3 1

How external ideas and opportunities are screened in you company?

external opportunities are spotted accidentally X

Arbitrary screening focused on own advantage

Champions do the screening 3

Scouts assigned and led by champions

All employees are continuously looking for external opportunities

Intensity of Collaboration 5 4

Is knowledge exchange with partners practiced often in your company?

no regulated collaboration

Several informal partnerships between individuals

Large number of partnerships with limited intensity and a short duration

Partnerships become more intense, enduring and focused X

Intensity is judged and adjusted for each partnership 5

Standardization 3 2

How standardized is your partnership process?

No standardization

Informal way of dealing with partners, no plan upfront X

Standardized tools for partnerships are present, clear ownership of project 3

Most common partnerships are standardized

Balance between standardization and specification of project plan

Partner satisfaction 3 2

Are you focused on satisfying your partner?

Collaboration is based on affection

Focus on satisfying itself X

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Behavioral guidelines are defined 3

Partner satisfaction and the use of guidelines are stimulated by management

Partner satisfaction is monitored constantly

Diversity of Collaboration 3 2

Are you capable to work with diverse partners and in diverse forms of

partnerships?

arbitrary partnering

Focus on few, dominant forms of partnerships X

Diversity in forms with existing partners X

Specific forms, diversity increased with unknown, small and medium partners

Partnerships in all parts of the value chain

Network building 3 3

Have you built a network of diverse contacts and (potential) partners?

one-off contacts

Repeating contacts with several parties

Previously used parties gathered in network system X X

Network is expanded with more diverse, new parties

Network is linked with many others and strategically expanded

Partnering Selection Process 3 2

How structured is your partner selection process?

individual, opportunistic initiatives, no deliberate selection

Selection based on affection and previous collaborations X

Selection based on existing knowledge about (possible) partners 3

Selection based on vision and strategy

Selection criteria installed based on proactive strategy

Information gathering 3 2

Are your open innovation activities reported to a central position?

no reporting of initiatives

Initiatives are monitored by direct manager X

All open innovation initiatives reported to a central position X

Gathering of information and linking of externally focused initiatives

Information gathered and linked for both internal & external activities

Communication 4 1

Are your open innovation activities communicated throughout the

organization?

informal communication of initiatives X

Initiatives communicated in small team or groups

Communication among management via regular meetings

Initiatives communicated via widely accessible intranet X

Employees brought into contact via central position

Innovation Facilities 1 2

Are you able to facilitate open innovation activities in shared facilities? X

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No supporting facilities in place

Some partners get access to each other’s facilities X

Facilities open for new and smaller partners

Some shared facilities in intense partnerships

Facilities owned and built by network of partners

Transaction currency 1 1

Do your employees have resources that enable them to make

commitments and enter into agreements?

Commitment to agreements based solely on existing relationship X X

Commitment based on reputation, trust

Management makes budget available on demand

Management provides structural budget

OI transaction currency is integral part of budget

Knowledge Sharing 5 5

Are your employees able to share and access knowledge gained through

open innovation activities?

No sharing of knowledge

Knowledge shared in team

Irregular contact between departments

Project owners appointed to facilitate knowledge sharing

Knowledge is widely accessible through database X X

Knowledge Absorption 3

Are your employees able to exploit the knowledge gained through open

innovation?

individual absorption

Informal sharing of new knowledge and ideas between employees

Employees are actively stimulated to absorb and share knowledge X X

Intra-organizational knowledge sharing (between departments)

External knowledge is fully exploited in products and internal organization

Monitoring results 3 3

Are you able to monitor the progress of the results throughout the

organization?

No identification of results

Results thrown “over the wall”

Relevant manager monitors progress X X

Starting to establish process to follow output of project

Process in place that follows all output

Attitude Legal and IP system 3 1

Does keeping the IP rights in your company follow the concept of Open

innovation?

Your company wants to keep everything for themselves X

IP rights are given out on strong terms and conditions

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Trust is key factor for deciding IP rights owner-ship X

your company encourages deciding on long-term view

IP rights are decided on win-win conditions

Average Maturity 3.1 2.1