Nowadays, the Internet is littered (in a good way!) with applications designed to help you brush up on your know-how. Whichbook, for example, uses scales – i.e., “Larger than life - Down to earth”, “Optimistic - Bleak”, to generate your next inspiring Sunday read. Want to get better at producing music or just in need of some Monday Productivity Pointers? Lynda.com (now a LinkedIn Company in case you didn’t notice) can give you a hand with that. There is even a website that tosses a virtual coin for you, so you don’t have to. It’s called Random.org.
But what about some open innovation know-how? Is there a good place to brush up on that too? Of course there is. It’s right here on the HYPE Innovation Blog. I’ve caught up on some essential reading this weekend to be able to offer you a selection of the most inspiring thought pieces and research by world-renown scholar and management thinker, Prof. Henry Chesbrough.
A bit of background on Open Innovation
If you are new to open innovation, a quick Google search will get you acquainted with the main ideas and authors in the field. But be warned: the results might not all fit into one page (1). According to my test search just now, there are over 87.600.000 indexed places on the World Wide Web mentioning the term, with most pointing in one way or another to “Henry Chesbrough”, the scholar who coined it in his widely referenced book: Open Innovation: The New Imperative for Creating and Profiting from Technology. Chesbrough was also ranked the 24th most influential management thinker of 2015 making it even more important to familiarize yourself with his ideas and work.
So we’ve established that “open innovation” is popular. Now it’s time to brush up on some fundamentals. Last time we discussed open innovation (OI) and OI scholars here on the Blog, we tackled a few basic questions. The first was the origin and meaning of the term.
“Open innovation can be understood as the antithesis of the traditional vertical integration approach where internal R&D activities lead to internally developed products that are then distributed by the firm” (Source)
OI is essentially a philosophy that helps make sense of a company’s vast knowledge base - its architecture, utility and unique ways in which it can be leveraged so that what was unspecified and unmanageable in the closed innovation model can now be specified and managed. As a great OI seminar last year taught me, the shift from the closed innovation to the open innovation paradigm was influenced by several factors including: employee mobility, engineering schools having better business models than business schools (ironic, right?) when it came to industry-academic collaboration, enormous venture capital under management, and small and medium-sized organizations accounting for more of the total R&D spending.
“At its root, open innovation is based on a landscape of abundant knowledge, which must be used readily if it is to provide value for the company that created it” (Source)
What about implementation? To date, there are three main means of getting it done: outside-in – e.g., scouting, in-licensing, funding start-ups, inside-out – e.g., out-licensing, donating IP, corporate incubators, and coupled processes – e.g., strategic alliances, consortia, are all tried & tested options. The Managing Open Innovation in Large Firms Survey Report (2013) by Henry Chesbrough and Sabine Brunswicker actually ranks the popularity of these practices among large firms. What the investigation revealed is that customer or consumer co-creation, informal networking and university research grants are the leading inbound practices, while joint ventures are the most important outbound practices. Intriguingly, “new” practices, such as crowdsourcing or specialized open innovation intermediary services, play a rather minor role despite rising media coverage and plenty of research attention. The most important aspect, however, remains the effective combination of all available options and a healthy variety of partners.
To implement their open innovation practices, firms work with a variety of different innovation partners and sources, with customers and universities rated as the most important.
So, how prevalent is open innovation? That is difficult to tell. Businesses can be located on a continuum, from essentially closed to completely open. In the hyper-connected economy, there is little way of completely circumventing collaboration. Unless you are a fearless Arctic explorer; but chances are it might not end well.
“Both [the closed and open innovation] models are employed today and each has its place, depending on a company’s innovation goals” (Source)
Finally, what is the most important aspect to watch out for when doing idea triage in the context of OI? False positives, false negatives and other innovation ghosts, of course. Projects might not always turn into what you expected them to and it’s important to prepare for that.
(via The New Yorker Cartoons)
Elementary, intermediate and advanced reads
Prof. Chesbrough is no doubt a practical man. Browse the Garwood Centre for Corporate Innovation’s website and you will find a handy list of his articles grouped by readers’ interest or level of expertise. These categories are:
- Introductory - for those new to open innovation
- Recommended - articles to read after the basics are there
- Background - articles providing more depth on a topic
- Extensions - articles that take open innovation into new directions
- General innovation - articles that go beyond open innovation
- Academic - articles for academic readers
Here are some of my favorites in “Introductory + Recommended”, “Background” and “Extensions” to help you refresh what you already know. The links to the articles are embedded in the text, and also summarized under each heading. Happy browsing!
1. Introductory and recommended reads (Elementary)
Strict control of the new product development, self-reliance, and aggressive protection of IP all made successful innovation happen in the 20th century. In the era of open innovation, however, these guidelines are harmful, not helpful to organizations. To create value, organizations large and small, must combine ideas external with internal know-how and R&D. Furthermore, companies should master both the art of chess – i.e., plan several moves ahead, well-defined resources, new information arrives during the game, as well as the art of poker – i.e., adapt as new information arrives, resources emerge over time, new information arrives regularly, when managing their innovation process. As for why bad things happen to good technology, new ideas can only take an organization so far. The main culprit is often the business model. Open innovation should hence focus not only on the offer itself, but also on how that innovative offer makes its way onto the market.
- The Era Of Open Innovation via Sloan Management Review, 2003
- Managing Innovation: Chess And Poker via The Research and Technology Management Journal, 2004
- Why Bad Things Happen To Good Technology via The Wall Street Journal, 2007
2. Background reads (Intermediate)
Whether an outside-in, an inside-out or a coupled process, OI requires “old” organizations to learn new tricks. Tricks like changing the role of research staff from not just generating knowledge but facilitating and brokering it or ensuring access to external ideas as well as to profit from one’s own IP. And by the way, OI concepts are not only applicable to high-tech industries. In their search for growth, non-high tech players can and do profit equally from opening up their organizations. Increasingly, OI concepts are not employed primarily as a rationale for cost reduction or outsourcing of the R&D function. Instead, research external to the company functions as a complement.
The OI mindset makes it easier for small companies to join forces with large ones too. For example, a large organization might refer to a networked incubator in search of strategic partnerships with promising start-ups. Institutionalized networking is therefore an important tool in accelerating the partnering and innovation process as well as maintaining a healthy entrepreneurial drive in an industry.
- Networked Incubators: Hothouses Of The New Economy via the HBS Working Knowledge Series, 2000
- Old Dogs Can Learn New Tricks via MIT Technology Review, 2001
- Beyond High Tech: Early Adopters Of Open Innovation In Other Industries via R&D Management Journal, 2006
3. Extension reads (Advanced)
Balancing the value creation forces in resourceful individuals, innovation communities, and various collaborative initiatives with the actual value capture mechanisms meant to secure continued participation can only be done with the help of a special strategy: an open strategy focused on the sustainability of the innovation ecosystem. One great example is Chez Panisse, where OI initiatives such as the open kitchen concept encouraged ideas to bloom and co-evolve in terms of menu, food design, and customer interaction as early as the 1970s. Add intentional ignorance of fiscal discipline, experimentation with business models, “sabbatical” programs for head chefs and a launch-pad for future innovations is created - a true ecosystem, where R&D spillovers are not losses, but fuel for further development and connectedness with the food innovation world. Cases like these help shape the frontiers of open innovation, and help create new standards for crating and delivering new products, services and processes into the world. In the future, more studies focusing on unique institutional contexts will help nuance OI practice further.
- Chez Panisse: Building An Open Innovation Ecosystem via Harvard Business Review
- Open Innovation And Strategy via California Management Review
- New Frontiers in Open Innovation via Exnovate.org
Found this wisdom-dispenser-of-a-post interesting? Have a suggestion for a new one? You are always to get in touch with me via LinkedIn.
(1) If you have more than 0,57 seconds at your disposal, though, you might want to target that search and explore other leading (open) innovation scholars too: Robert Cooper, Eric von Hippel, Michael L. Tushman, John Bessant, Karim Lakhani, Charles O'Reilly, Wim Vanhaverbeke, Joel West are just a few names to keep in mind.
- 12 Good Practices in Open Innovation for the Year to Come
- Using Living Labs for Open Innovation - Part 1