Profiting from External Innovation

Profiting from External Innovation Joel West Marcel Bogers San Jose State U. U. of Southern Denmark, Sønderborg Keck Graduate Institute Industry Studies Conference June 2, 2011Overview• Our study of inbound open innovation  Based on review of 280 OI publications  Three-phrase process model  Recommendations re gaps/opportunities• Link back to crowdsourcing

Inbound Open Innovation What is “Open Innovation”? “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.”Source: Chesbrough (2006)See also OpenInnovation.net/definition

Other definitional issues • Conflating innovation  with invention (OK for now)  with knowledge or antecedents (not OK)  with content (not OK) • Success metrics  Tend to be IP or product output  Rarely: financial performance Model for inbound OI Innova&on Focal Firm Source 1 2 3 Sales / Customers R&D Marke.ng Innova&on SourceProﬁting from external innovations1. Obtaining Nonrecursive paths2. Integrating Innova&on Innova&on3. Commercializing Source Source Suppliers Rivals Customers

1. Obtaining• Searching: sourcing, brokerage, limits• Enabling: contests, toolkits, platforms• Filtering: gatekeepers, scouts• Acquiring: incentives, contracts2. Integrating• External vs. internal innovations  Substitutes vs. complements?  Absorptive capacity  Culture: NIH• Incentives to integration• Implications for competencies  For producing internal innovations  For incorporating external innovations

3. Commercializing• Commercialization process  Similar or different vs. internal innovations?• Value creation  Most common topic  Standard NPD metrics• Value capture  Reduced cost or increased margin?Nonrecursive paths• Feedback loops  R&D feedback  Customer/market feedback  E.g. “voice of the customer”• Reciprocal engagement  Co-creation  Communities  Value networks  E.g. joint ventures, R&D alliances

Gaps/future research • Alignment to business models • More rigorous use of “innovation” • Across the entire process • Non-linear modelsOpen Innovation andCrowdsourcing

What is “Crowdsourcing”? “The act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call”Source: Howe (2006) Crowdsourcing archetypes • Online content networks (iStockPhoto) • Open innovation intermediaries (InnoCentive) • Small human intelligence tasks (Amazon Mechnical Turk) • Peer production and open content (Wikipedia) • Corporate without intermediaries (Dell IdeaStorm) • Open contest (TopCoder)Source: Ren & Levina (AOM 2010) via oiblog.net

Crowdsourcing Tech support InnoCentive Threadless X Prize Linux Licensed IP Business Extreme users sportsOpen Userinnovation innovation Thank you!

Profiting from External Innovation

by Joel West on Jun 03, 2011

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Profiting from External Innovation — Document Transcript