The workplace ecosystem of the future 24.4.2024 Fabritius_share ii.pdf
Open innovation: Past, Present and Future Aspects
1. Dimitrios G. Salampasis
Doctoral Researcher
Luxembourg Institute of Science and Technology, Grand Duchy of Luxembourg
Lappeenranta University of Technology, Finland
Guest Lecture, June 15th
2015
Chair of Management and Digital Markets
Faculty of Business, Economic and Social Sciences
Universität Hamburg
2. AgendaAgenda
A brief background on open innovation
Real examples of companies from different industries adopting
open innovation practices
Insights on the organizational readiness for open innovation
and the human aspect of open innovation based on my own
research in academia and consulting
Future aspects of open innovation
Final take-aways
Q&A
3. The world today ...The world today ...
A shift in the locus of economic activity into emerging markets
Growth has moved elsewhere-to Asia, Latin America, the Middle East
Josef Ackermann, Former CEO Deutsche Bank
Unprecedented speed of technological change
The furious pace of technological adoption and innovation is
shortening the life cycle of companies and forcing executives to
make decisions and commit resources much more quickly
Dobbs, Manyika and Woetzel, 2015, McKinsey Global Institute
Aging population and failing fertility rates
Global connectivity through the unlimited mobility of trade,
people, capital and information in the realms of a a complex,
multifaceted, diverse and complicated world
5. Business Model Innovation
Product and Service Innovation
Process Innovation
Technology Innovation
Four levels ofFour levels of
innovationinnovation
6. Typical/Routine R&D andTypical/Routine R&D and
commercialization processcommercialization process
R In-house Scientists Developing Technologies
D In-house Business People Selecting Technologies
C In-house Business People Commercializing Technologies
7. It is unlikely that the best (or even very
good ideas) are all located in one
organization, and even with an idea in
hand, should one organization really
manage all of the technical and market
risk associated with commecializing
technologies?
Raul Chao, June, 5th
2012, Forbes
8. No matter who you are, most of the smartest
people work for someone else
Look Outside your Firm's
Walls to Innovate
11. Where you see problems …Where you see problems …
…… others see solutionsothers see solutions
12. The latest management buzzword
(Hagel and Brown, 2008)
A strategic business imperative for non-linear
growth: The Holy Grail for executives today
(Soni, 2008)
A mechanism to access sources of inspiration
and innovation-and create new sources of value
from outside the organization
(Tuff and Jonash, 2009)
Open Innovation is considered as …Open Innovation is considered as …
13. Open innovation is the alternative that allows big
businesses to work with each other, start-up
companies, and academia to create truly fundamental
innovations to the challenges they face.
Open innovation ecosystems allow these parties to
pool their strengths, budgets and practices together to
invent new solutions to the challenge of creating
ground-breaking, inspirational technology.
Professor Eugene A. Fitzgerald
May 17th
, 2015, The Telegraph
16. Defining Open Innovation: AnDefining Open Innovation: An
evolutionary approachevolutionary approach
Chesbrough,
2003, p.43
• Open innovation means that valuable ideas can come from inside
or outside the company and can go to market from inside or
outside the company as well. This approach places external
ideas and external paths to market on the same level of
importance as that reserved for internal ideas and paths
Chesbrough,
2006, p.1
• Open Innovation is the use of purposive inflows and outflows of
knowledge to accelerate internal innovation and expand the
markets for external use of innovation, respectively
Chesbrough and
Bogers, 2014
• We define open innovation as a distributed innovation process
based on purposively managed knowledge flows across
organizational boundaries, using pecuniary and non-pecuniary
mechanisms in line with the organization’s business model
17. The Open InnovationThe Open Innovation
ParadigmParadigm
Source: Frost & Sullivan - Research projects The closed paradigm The
open innovation paradigm
18. Why a shift towards open innovation?Why a shift towards open innovation?
• The world faces social, environmental and financial challenges of
unprecedented magnitude and complexity. No one actor can resolve
these issues single-handedly (McLaughlin and McMillon, 2015, p.3)
• Globalization: increasing competition and compelity, less control
and predictability, generation of unexpected volatility, explosion of
diversity and challenge, creation of unmatched opportunities
• Advent of information technologies and global connectiveness
• Changes in markets and customers: increasingly educated,
sophistication of needs, accrued awareness, P2P information
exchange, user communities, communities of practice, active
customers
• Product and service complexity
• Industry convergence: “the blurring of technical and regulatory
boundaries between sectors of the economy„ (OECD, 1992). Sectors
characterised by technology fusion, globalization, and technology
intensity (Huizingh, 2010)
• Increasing tradability of intellectual property rights
• Growth in private venture capital (Herzog, 2008)
20. User innovation
Co-development
Innovation Tournaments-
Contests
Lead user methodologies
User co-creation
Crowdsourcing
Innovation Ecosystems
Short-term non-equity
alliances
Crowdfunding
Platform innovation
models
Collaborative Innovation
Distributed Innovation
Bilateral Collaboration
Joint R&D Agreements
Cumulative Innovation
Know-How Trading
Mass Innovation
Mass Customization
Supplier Innovation
Early Supplier Involvement
Open Source
User-centered innovation
Customer Integration
Democratized Innovation
Structural Innovation
Embedded Innovation
Out-licensing
Cross-licencing
In-licensing
Overlapping terminologies to describe a trend towards more open
business models and a closer collaboration with customers
21. Closed vs Open InnovationClosed vs Open Innovation
Adapted from Chesbrough, 2003, The Era of Open Innovation,
MIT Sloan Management Review
Closed Innovation Open Innovation
The smart people in our field work for us Not all smart people work for us. We need to
work with smart people inside and outside
the company
To profit from R&D, we must discover it,
develop it and ship it ourselves
External R&D can create significant value.
Internal R&D is needed to claim some portion
of that value
The company that gets innovation to market
first will win
Building a better business model is more
important than getting to market first
If we create the most and the best ideas in
the industry, we will win
If we make the best use of internal and
external ideas, we will win
We should control our IP, so that our
competitors cannot profit from it
We should profit from other’s use of our IP
(license-out) and we should license in other’s
IP whenever it advances our business model
We will own all results from contract
research with universities
We will partner with universities to create
knowledge and encourage use outside our
field
22. Open Innovation: Understanding theOpen Innovation: Understanding the
functionalityfunctionality
Source: Chesbrough, H. (2006). Open Business Models: How to Thrive in the
New Innovation Landscape, Harvard Business School Press.
23. Organizations accepting the outside must deal with
the not invented here syndrome that persists in
many companies, as well as, the expectations of the
external submitters
Von Dyck and Harris, 2015, p.1
BNA’s Patent, Trademark and Copyright Journal
24. Open Innovation: Process TrajectoryOpen Innovation: Process Trajectory
Obtaining, evaluating, selecting, applyying
25. Decoupling the locus of innovation process-Decoupling the locus of innovation process-
Three archetypes of open innovationThree archetypes of open innovation
processesprocesses
Source: Gassmann and Enkel, 2004, p.6
26. Open Innovation types and mechanismsOpen Innovation types and mechanisms
Open Innovation Type Description Mechanisms
Outside-in (Inbound)
Pecuniary inbound
[Acquiring]
Non-pecuniary inbound
[Sourcing]
Involves opening up the
company’s own innovation
processes to many kinds of
external inputs and
contributions
• In-licencing intellectual
property
• Scouting
• Crowdsourcing
• Intermediaries
• Competitions and
tournaments
• Communities
Inside-out (Outbound)
Pecuniary outbound [Selling]
Non-pecuniary outbound
[Revealing]
Involves allowing unused and
under-utilized ideas and assets
to go outside the organization
for others to use in their
businesses and business models
• Out-licencing intellectual
property and technology
• Donating intellectual
property and technology
• Spin-offs
• Corporate venture capital
• Corporate incubators
Coupled
Bi-directional
Interactive collaboration in
form of joint production
Involves combining purposive
inflows and outflows of
knowledge to collaboratively
develop and/or commercialize
an innovative
• Strategic alliances
• Joint ventures
• Consortia
• Networks
• Ecosystems
• Innovation platforms
27. Levels of AnalysisLevels of Analysis
Levels of Analysis Possible Research Object
Intraorganizational • Individual
• Group/Team
• Project
• Functional Area
• Business Unit
Organizational • Firm
• Other (non-firm) organization
• Strategy
• Business Model
Extra-organizational External stakeholders: individual,
community, organization
Industry • Industry development
• Inter-industry differences
Regional Innovation Systems • Local region
• Nation
• Supra- national institution
Society • Citizens
• Public Policy
28. The value of open innovationThe value of open innovation
Shorter time to market with less costs and risk
More innovations over the long run
Increased quality of products and services
Exploitation of new market opprtunities
More flexibility
Improved absrorptive capacity and innovation processes
Monetized spillovers
Firms can push the technological frontier outward more
quickly
Complementary non-core business expertise in the
realms of commercialization
Empowerment of connectivity
Generation of opportunities
Non-commercial actors can leverage new engagement
opportunities
31. Online creativity contests to inspire
innovation among customers
Catalyst fund
New ways for developing
nations to access clean
water
Development funding – multidisciplinary
teams of employees, facilitators, mentors
Experimentation as a
service
Fintech startups-
Silicon Valley
Mentoring Program
for startups
Approximately 130 of every 10.000
patents filed are done with an academic
institution
32. Leveraging Open Innovation to build the ‘Bank of Tomorrow
“Both physical and digital, combining the best of both worlds, meaning…new forms of
interactivity facilitated by social networks, new services around mobility, digital
transformation, and simplification of processes.
For BNP Paribas, being innovative means anticipating changes that are affecting our clients
and transforming these changes into opportunities.”
Trista Bridges, April 30th
2015, Rude Baguette
Wipro to open innovation lab in Silicon Valley
The firm is seeking to build products on
automation, artificial intelligence tech in
partnership with innovative start-ups
Varun Sood, May 17th
, 2015, Livemint
33. Formed an “open innovation” program to support academic research that holds promise
of new therapeutic drugs
The collaboration will help foster medical innovation by bringing together complementary
skills. This initiative is another important step in the new era of medical discovery via open
innovation and public-private collaboration. UniQuest is delighted to be partnering with
AstraZeneca in this exciting approach towards the development of new treatments for
patients and the advancement of medical science in Australia.
Dr. Dean Moss, CEO, UniQuest
By giving globally leading academic research institutions such as UQ access to our
compounds and expertise, we are opening doors to unexplored areas of pre-clinical and
clinical research to help find the next generation of medical breakthroughs
Dr Ajay Gautam, AstraZeneca’s Executive Director
Scientific Partnering and Alliances for Asia Pacific and Emerging Markets
34. Open Innovation Space for Financial Technology Startups
Partnerships and innovation are the key to building the bank of the future, which is why we
are excited about the opportunity to further our commitment to innovation with MaRS. The
opportunity to have our team work alongside top design talent and entrepreneurs in a
collaborative environment will further our leadership in developing the innovations that will
change the way Canadians bank.
Aayaz Pira, Vice President, Digital Channels, CIBC
Techvibes NewsDesk, April 24th
, 2015
MaRS is committed to building bridges between corporations and best-in-class
entrepreneurs. Having just launched our new FinTech cluster, we are thrilled to have CIBC as
founding partner of MaRS’ corporate innovation hub.
Salim Teja, EVP, Venture Services, MaRS
Techvibes NewsDesk, April 24th
, 2015
35. Airbus Group to open innovation centre in Silicon Valley
Airbus Group announced the creation of a $150 million venture capital fund and said it had
hired a Google executive to run a new centre in Silicon Valley as it seeks to wave a digital
wand over its heavy-manufacturing culture. The plane maker said that Airbus Group
Ventures would invest in "disruptive and innovative" technologies worldwide.
The aerospace industry must work more closely with high-tech companies -- some of which,
like Google, are encroaching on its turf through drone projects
Tom Enders, CEO, Airbus Group
Reuters, May 30th
, 2015
36. Fiat Mio, the World's FirstFiat Mio, the World's First
Crowdsourced CarCrowdsourced Car
• More than 17,000 participants worldwide
• More than 11,000 ideas submitted
• Users were stimulated to think in broad terms about traffic and life
on-board
A compact and agile car,
comfortable and safe with
innovative traffic solutions
for big cities, a pollutant-
free engine and the
capacity to receive
personalized updates, and
changes in configuration,
and having interface
between car and user
38. NASA is turning to the public
and crowdsourcing for
outside-the-box thinking
about human space
exploration challenges with a
series of 10 new NASA Open
Innovation Service (NOIS)
Contracts.
The total value of all
contracts combined is $20
million over five years.
43. A digital-only account that lets
customers park their money in
as many as five currencies and
make domestic and
international transfers and
foreign currency exchange
IdeaStorm-Ideas and
Insights
Companies buy and
sell licences for the
usage of technologies
and patents
Food and beverages-improvement of
products and services based on
customer experience
Offered up its
fuel cell patent
portfolio to
unlicensed use
Focused on hydrogen-storage materials
for automotive applications collaboration
with University of Michigan
Dominating as a
component innovator in
the automotive accessory
space
44.
45. Some Open Innovation initiatives whichSome Open Innovation initiatives which
could be considered as failurescould be considered as failures
Boeing 787 Dreamliner
LEGO Universe
Crowdsourcing failures
46. Key Factors for Successful OpenKey Factors for Successful Open
InnovationInnovation
51. “Rome, …, wasn't built in a day. Likewise, open
innovation is not something you can achieve
overnight. It is not a single event, but a process
and a culture that must grow over time.
Open innovation won't just happen. It takes
work, commitment and patience to cultivate an
effective program. It is a major initiative requiring
focus, investment and time.”
Kevin Stark, Director Technology Solutions, NineSigma
Industry Week, October 12th
2011
52. Organizational ReadinessOrganizational Readiness
“In every organization that I’ve worked with, open innovation does not
come easily. There are tremendous internal barriers to doing it well.
Some of those barriers are cultural in nature; some, I think reflect the
logic of the reward systems that companies have in place. And if the
company wants to embrace open innovation and some people actually
start the process, there are a lot of things that they don’t realize until
they get into it”.
Prof. Henry Chesbrough
The Thought Leader Interview: Henry Chesbrough by Rob Norton,
Strategy + Business, Issue 63, Summer, 2011, p.63
“Open innovation works best when you have people collaborating side
by side, with people that are moving from one organization to another”
Prof. Henry Chesbrough
At the Court of KING HENRY
by Scott Wilson, Deloitte Review, Issue 10, 2012, p.45
52
53. We took down all the walls of the offices and created agile
pods. They’re teams of six to eight people, business and IT,
sitting together and collaborating as a team and
empowered as a team … Innovation will certainly happen
there; more innovation there than anywhere else ... There
are hundrends of white boards, it’s a very high-energy place
to work and teaching everybody how to work in this new
method is underway and maybe a third done … More than
100 people have already started working in this new format.
We are trying to create collaboration inside a bank …
Jeff Dennes, BBVA Chief Digital Banking Officer
in Crosman, May 18th
, 2015, American Banker
Software Development
Center
The Innovation Depot is taking all that collaboration and digital transformation
we’re doing out of the development center and opening it up into the
community … We want to look at things that simplify the customer experience,
new concepts in payments. We also look at things in and out of the financial
industry … It’s rare for a bank to give outsiders access to its internal software
… We’re also sitting down with the start-ups, understanding their business
models and figuring out how fast the bank can collaborate on their technology
… We are building technology from within the community rather than from the
outside …
Chad Ballard, BBVA Director of Mobility and New Business Technologies
in Crosman, May 18th
, 2015, American Banker
Innovation Prototyping
54. Organizational Readiness-Start withOrganizational Readiness-Start with
WhyWhy
Adopting open innovation practices that can have a lasting
impact requires going beyond doing one single thing
Improving the open innovation capabilities within an
organization is a system-level issue that requires a consistent
and coherent set of organizational interventions and changes
(Anthony et al., 2015)
Why does an organization adopt open innovation practices and
what kind of problems these practices will address and tackle?
Organizational change
Resource availability
Human capital
Timeline for impact
Organizational behavior, culture and psychology
54
55. Corporate IdentityCorporate Identity
Corporate identity is what drives your entire organization to perform,
what makes hiring top talent easier and what gives you the framework
by which to operate the company
Leinwand and Mainardi, 2014, Harvard Business Review
Value proposition
Capabilities system for value generation and creation
Sets of products and services
To create a better everyday life by offering a wide range of well-designed,
functional home furnished products at prices so low that as many people
as possible we be able to afford them
55
Committed to bringing the best user experience to its
customers through its innovative hardware, software
and services
56. Source: Salampasis et al., 2014 Academy of Management Meeting
Trust-Embedded
Open Innovation
57. Absorptive Capacity
(Cohen & Levinthal, 1990)
Connective capacity
(Lichtenthaler, 2009)
Knowledge Transfer &
Knowledge Exchange
(Wang & Noe, 2010)
Combinative Capabilities
(Kogut & Zander, 1992)
Planned Flexibility
(Verganti, 1999)
Dynamic Capabilities
(Teece et al., 1997)
Exploration & Exploitation
(Birkinsahw & Gibson, 2004
(a+b)
Common Identity
(O’ Reilly & Tushman, 2011)
Cultural Metacognition
(Chua et al., 2012)
Global Dexterity
(Molinsky, 2013 (a+b)
Etic & Emic trust
(Zaheer & Zaheer, 2006)
Emotional Intelligence &
Transparency
(Harvey et al., 2012)
Equality & Fairness
(Thomas & Ely, 1996)
Learning & effectiveness
(Thomas & Ely, 1996)
Organizational
internalization of
differences
(Thomas & Ely, 1996)
Ambidextrous Thinking Collaborative Culture Diversity ManagementKnowledge Sharing
Attitude
Organizational and Human Drivers for Open Innovation
Source: Salampasis et al., 2014, Academy of Management Meeting
58. Coordination Capabilities
(Jansen et al., 2005)
Systems Capabilities
(Jansen et al., 2005)
Socialization Capabilities
(Jansen et al., 2005)
Combinative Capabilities
(Jansen et al., 2005)
Planned Flexibility
(Verganti, 1999)
Strategic Behavior
Pursuing , Defender,
Prospector, Analyzer,
Reactor
(Miles et al., 1978)
Adaption Oriented &
Alignment Oriented
Mindset
(Birkinshaw & Gibson,
2004)
Initiative seeker, alert to
opportunities, cooperative,
broker, multitasker,
comfortable wearing more
than one hat
(Birkinshaw & Gibson,
2004)
Cultural Metacognition
Self awareness, aware of
working assumption, affect &
cognition based trust,
Understanding cultural
preconceptions
(Chua et al., 2012)
Global Dexterity
Authentic, Adjustment
oriented, Ready to break the
comfort zone, Forgiving
(Molinsky, 2013)
Emotional Intelligence &
Transparency
(Harvey et al., 2012)
Equality & Fairness
(Thomas & Ely, 1996)
Organizational
internalization of
differences
(Thomas & Ely, 1996)
Changing roles
(Cunningham & Hyman,
1995, 1997; Hales 1986,
2005)
Discretionary behaviour
(Purcell & Hutchinson,
2007)
Giving value to the human,
empathy, indulgence,
honesty, disinterestedness,
universality, amity, team
spirit, patience, courage
(Polat, 2012)
Organizational and Human Innovation Capabilities
Ambidextrous Thinking Collaborative Culture Diversity ManagementKnowledge Sharing
Attitude
Source: Salampasis et al., 2014, Academy of Management Meeting
63. Global Open Innovation LeaderGlobal Open Innovation Leader
63
• Understanding the interconnectivity and interdependence
between the local and global sphere
• Understanding the impact worldwide problems have on a local
level
• Showing appreciation of people from culturally diverse
backgrounds
• Understanding and appreciating people from other cultures
• Focusing on awareness and understanding of cultural issues so
as to expand and remain competitive
• Ability to foster and promote the design products and services that
appeal to a culturally diverse, global audience
65. Human Side of Open InnovationHuman Side of Open Innovation
“The set of voluntary and involuntary processes that institutionalize
individual knowledge, motivations, behavioural norms, attitudes,
skills, incentives and values towards the formation of a collective
panorama of organizational culture, behaviour, cognition, capabilities
and ethos, all engulfed within an open, transparent and trustworthy
corporate environment”.
Salampasis, 2015, p.90, PhD Dissertation, LUT
•“Democratic value scheme” (Baumgartel, 1960, p.467)
•“Inner layers of the personality” on the organizational level (Heller,
1961, p.495)
•“Develop ´power-with´ instead of ´power-over´ and ´co-action´ to
replace consent and coercion” (Wren, 1994, p.260)
•Humans will always be the source of enduring advantage. The
companies that succeed best will be those that focus on the humanity
of work and capitalize on what humans can uniquely do (Seidman,
2014, Harvard Business Review)
66. 66
People and Organizations at aPeople and Organizations at a
crossroadscrossroads
Direct results always come first. In the care and feeding of
an organization they play the role calories play in the
nutrition of the human body. But any organization also
needs a commitment to values and their constant
reaffirmation, as a human body needs vitamins and
minerals. There has to be something this organization
stands for or else it degenerates into disorganization,
confusion and paralysis.
Peter Drucker, The Effective Executive
67. 67
People and Organizations at aPeople and Organizations at a
crossroadscrossroads
Source: Salampasis, 2015, p.86, PhD Dissertation, LUT
68. My view of OpenMy view of Open
InnovationInnovation
The open innovation paradigm is an organizational state of
mind and the ultimate mechanism for mixing and transferring
of cultures, ideas, people, skills and behaviours
complementary to the widening and reordering of existing and
new knowledge, both within and beyond the traditional
organizational zone.
Salampasis, 2015, p.18, PhD Dissertation, LUT
69. The meaning of open innovationThe meaning of open innovation
Open innovation is meaningful for organizations that wish to extend
their greatest strengths step-by-step and not for the ones which
simply wish to explore unknown pathways too fast
Internalizing a unique
portfolio of new capabilities
Adopting open innovation practices does not mean
•Pursuing a multitude of generally disconnected growth avenues and
organizational changes
•Lacking focus
•No ability to define what the company is really about
70. Measuring open innovation
Impact of appropriability
Theoretical foundations/linking to theories of
management, organization and economics
Unit of analysis-moving beyond the dyadic narrative
Non-pecuniary motivations and incentives
Training for open innovation
Open innovation for functions beyond R&D e.g. HRM,
procurement
Managerial aspects of organizing for open innovation
Open Innovation Leader job description + profile
Emerging themes for future researchEmerging themes for future research
71. Do not forget!Do not forget!
Open Innovation is not only open and free access to own
technologies but is about the establishment and development of
a strategic Intellectual Property Rights Management
Open Innovation is not about outsources R&D but about
strategic R&D
Open Innovation does not deal only with the sphere of
technology but captures both technology and business model
innovation
Open Innovation is not about technical inventions but about
finding ways to commercialize innovations
Open innovation is not about value appropriation but about
establishing win-win sustainable partnerships
Open innovation is not about the creation of new ventures but
about the initiation of a core product and service
development process
Open innovation does not only aim at building partnerships but
innovation ecosystems
Open innovation does not entail budgetary cuts on research
costs but aims at improving R&D Return on Investment
72. Do not forget!Do not forget!
Open innovation is not cheap and does not aim at a short-
term financial benefit
Open innovation is not about reformulating, not inventing,
products
Open innovation does not offer a shortcut to success. It
can shorten the open innovation process trajectory but it
continues to require the right people, culture, challenges,
and processes
Open innovation does not encourage first entry into the
market but facilitates and presents more options for
commercialization
Open innovation is not about re-inventing in-house R&D
for short-term financial performance
73. 73
Things to keep in mind …Things to keep in mind …
Open innovation is a highly complex phenomenon
crystalizing many different interrelated disciplines
and elements
Open Innovation is not a monolithic practice
The full potential of Open Innovation can only be
leveraged by those companies that are willing to
innovate their business model
Open innovation puts forward a non-linear, dynamic
and interactive nature of the innovation process
Open innovation is meaningful in human
organizations where trust is perceived as a catalyst
and enabler
74. 74
Things to keep in mind …Things to keep in mind …
Open innovation is a contested concept that
inevitably involves endless disputes about its proper
uses on the part of its users (Coller et al., 2006).
The Open Innovation paradigm should not be
considered as a panacea
Open innovation requires discipline
Open innovation requires substantial organizational
transformation and strategic changes
Open innovation needs to be cultivated within an
organization embracing vision and willingness to
creatively collaborate, co-create value, elevate its
competitive advantage, differentiate, avoid the
commodity trap and become more human
75. 75
Thank you very much for your kind
attention
Dimitrios G. Salampasis
Dimitrios.Salampasis@list.lu
Dimitrios.Salampasis@lut.fi
dsalampasis
http://active-reflection.blogspot.com
https://www.researchgate.net/profile/Dimitrios_Salampasis