Open Innovation in Action - Modes of Open Innovation
Dr. Sabine Brunswicker
Fraunhofer-Institute for Industrial Engineering & ESADE Business School
Open Innovation 2.0 Conference, Dublin May 21, 2013
Open Innovation in Action: Modes of Open Innovation
The innovation game has
changed¹
Source: 1) Chesbrough (2003)
Open Innovation in Action: Modes of Open Innovation
The orginial concept of open innovation describes a cognitive framework for a firm’s strategy to profit from innovation
Open Model
existing
market
new market
other firm’s
market
idea sourcing
running/successful innovation projects discarded innovation projects
Closed Model
market +
+
+
new
product/
service
internal
innovation
resources
internal
innovation
resources
external
innovation
resources
technology
sourcing
co-development
partnerships
spin-out
Source: see also Chesbrough (2003, 2006)
Open Innovation in Action: Modes of Open Innovation
Since 2003, the phenomenon is widely discussed and firms experiment with a range of different practices; do we know which ones matter?
Google Search Open Innovation
Nov 2011 > 8 million hits
May 2013 > 700 million hits
Widely discussed phenomena Multiple case studies Lack of insights
? Adoption and
pervasiveness of
of different
modes of open
innovation
Open Innovation in Action: Modes of Open Innovation
In our new executive survey we found that open innovation is on the rise; it receives increasing management support at the top executive level
Executive study
UC Berkeley and
Fraunhofer
Sampling among the largest firms in Europe and
US
Firm criteria: >1000 employees and >250
million USD in sales
Key informants: CEO, COO, or CTO at
headquarter
Data collection
October– December 2012
125 datasets
(5 % response rate)
Adoption of
open innovation
Abandonment
Open innovation
experience
Management
support
Intensity
78% practice open
innovation today
No firm has abandoned
open innovation
Median of 5 years
71 % have increased
management support
82 % have increased
open innovation activity
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 125
Open Innovation in Action: Modes of Open Innovation
There is not „one“ single open innovation strategy; it involves a „bunch“ of practices
Open Innovation in Action: Modes of Open Innovation
Large firms like GE experiment with start-up competitions and idea contests to implement inbound open innovation and create new innovation ecosystems
Challenge
Powering the
Grid
Powering your
Home
B2B Entrants
Opportunity to
develop commercial
relationship with GE
GE investment
Nearly 4000 ideas
75,013
entrepreneurs
23 partnerships ($
200 USD investment)
Source: www.ge.com, Chesbrough (2012) California Management Review
Co- investment &
venture partners
Emerald Capital
Foundation Capital
….
Open Innovation in Action: Modes of Open Innovation
Open innovation intermediaries are on the rise; various types of firms have been experimenting with their services and learn their lessons
Intermediary
Searcher
Medium-sized firm (in
collaboration with
assocation)
Solver Community
Reseachers, scientist, etc.
“Request for
proposal”
Ideas and
Solutions
Market for Ideas and Technologies
Problem: Strong durable
gear materials that do not
require lubrication
Solutions:
26 Solutions submitted
16 new Solutions
8 Solutions with potential for
development
Open Innovation in Action: Modes of Open Innovation
We can differentiate between inflows and outflows of knowledge; they do not necessarily imply a direct financial compensation
Direction
Inbound
Outbound
Pecuniary Non-pecuniary Financial flows
Source: Chesbrough & Brunswicker (2013); Dahalander (2010)
Inbound &
pecuniary
Inbound
& non-
pecuniary
Outbound
&
pecuniary
Outbound
& non-
pecuniary
Source. siehe auch Chesbrough (2003, 2006); Dahlander (2010)
Open Innovation in Action: Modes of Open Innovation
There are various inbound practices to implement open innovation
IP In-licensing
Informal networking
Publically funded
R&D projects
Contracting external
R&D services
Open Innovation
Intermediaries
Inbound
University grants
Supplier
innovation awards
Own crowdsourcing
initative
Customer and
consumer co-creation
Idea and start-up
competition
Open Innovation in Action: Modes of Open Innovation
Co-creation and informal networking are the top inbound practices; new practices score rather low
2.34
2.64
2.66
3.37
3.71
3.73
3.87
4.19
4.38
4.43
1 2 3 4 5 6 7
3.80
4.09
3.76
4.01
4.47
4.04
4.11
4.28
4.12
4.68
1 2 3 4 5 6 7
Customer and consumer co-creation
Informal networking
University research grants
Publically funded R&D consortia
Contracting of external R&D service
Idea and start-up competitions
IP in-licensing
Supplier innovation awards
Crowdsourcing (unknown problem solvers)
Specialized services OI intermediaries
Not important Highly important
Significant decrease
Significant increase
No change
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91
Importance in 2011 (mean values)
Change of importance 2008-2011 (mean values)
Inbound practices
Open Innovation in Action: Modes of Open Innovation
Joint venturing is the top outbound mode of open innovation; spin-offs and donations score very low in terms of priority
2.26
2.43
2.84
3.45
3.75
3.85
4.21
1 2 3 4 5 6 7
3.91
3.74
4.20
4.63
3.97
4.39
4.62
1 2 3 4 5 6 7
Joint venture activities
Selling of market-ready products
Participation in public standardization
Corporate business incubation & venturing
IP out-licensing & patent selling
Donations to commons or nonprofits
Spin-offs
Not important Highly important
Significant decrease
Significant increase
No change
Importance in 2011 (mean values)
Change of importance 2008-2011 (mean values)
Outbound practices
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91
Trusted Network
New
partners
Pearlfinde
r
Supplier
Government
Researcher Development
partner
Open Innovation in Action: Modes of Open Innovation
Indeed, we found that new partnerships and innovation networks are the driving force of openness; IT offers firms new affordances for new kinds of innovation networks and empowers individuals
Pearlfinder
• Company owned digital community
• Challenge-driven innovation
• Multi-staged process and individual
Terms + Conditions
• Link with other open innovation
practices
Partner and partner selection
• Suppliers, universities,
developmant partners,
• No start-ups
• Selection based on„manageral fit“
and stabiltiy, IPR-Policy,
„Academic Excellence“ and
concrete idea
• Selection process based on new
methods such as incubation lab
Challeng
e Uni
Open Innovation in Action: Modes of Open Innovation
Large firms do not yet recognize the value of connected communities; however, the gravity is shifting….
The gravity is shifting….
People-centric and digital networks
Bottom-up innovation
Connected citizen
Open Innovation in Action: Modes of Open Innovation
There is an internal component of openness; managing the journey from closed to open innovation is the biggest challenge
3.69
4.55
4.53
4.53
4.89
5.26
3.61
4.28
4.49
4.6
4.97
5.6
1 2 3 4 5 6 7
Avoidance of external or already existing knowledge
Effectiveness of intellectual property protection
Identifying new innovation sources
Protecting internal critical know-how
Management of external relationship with innovation sources
Managing the organizational change internally
Challenges of engaging in open innovation (mean values, 1=not important to 7= highly important)
when firm's started
today
Not important Highly important
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91
Open Innovation in Action: Modes of Open Innovation
There are different maturity stages of open innovation; it is a journey of experimentation and learning
Closed system First experiment
Creating of
innovation
ecosystem
Systematic
processes to
manage internal
and external
innovations Pe
rfo
rma
nc
e
Maturity levels
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Self-sustaining
system
(Platform player)
Fokales
UnternehmenKonkurrenten
Kunden
Kunden der
Kunden
Lieferanten
2nd tier
Lieferanten
Unis/ Forschungs-
einrichtungen
Komplementoren
Intermediäre
Communities
Interne
Technologie-
Basis
Aktueller
Markt
Aktueller
Markt
Gescheiterte Ideen/
abgebrochene Projekte
Erfolgreiche Ideen/ erfolgreiche
Projekte
Interne
Technologie-
Basis
Aktueller
Markt
Aktueller
Markt
Gescheiterte Ideen/
abgebrochene Projekte
Erfolgreiche Ideen/ erfolgreiche
Projekte
Gescheiterte Ideen/
abgebrochene Projekte
Erfolgreiche Ideen/ erfolgreiche
Projekte
Source: Brunswicker and Ehrenmann (2012)
New capabilities and processes:
Design-led experimentation
IP by design
Network orchestration…
Open Innovation A „new“ paradigm for managing innovation?
It is not easy to implement open innovation; it requires a systemic shift and re‐thinking of many aspects of one’s business to utilize it effectively
„If you’re not failing every
now and again, it’s a sign you’re not
doing anything very innovative.“
Woody Allen
Managing Open
Innovation in Large
Firms
Survey report - Executive Study
Open Innovation 2013
Henry Chesbrough
Sabine Brunswicker
Contact:
Back up
Open Innovation A „new“ paradigm for managing innovation?
We are observing a shift towards the network level of open innovation activities; innovation communities and partnerships become more and more important
Source: Pisano and Verganti (2008)
Elite Circle Consortium
Innovation Mall Innovation Community
Governance
Pa
rtic
ipa
tio
n
Flat Hierarchy
Clo
sed
O
pen
Top Related