RINASCIMENTO Emerging Industries: a New Engine for Growth

1. POLITECNICO DI MILANO
Department of Management, Economics and Industrial Engineering
Emerging industries, Open Innovation and Innovation policies
Paolo Landoni
paolo.landoni@polimi.it

2. Agenda
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Emerging Industries
•Open Innovation
•Innovation Policies for emerging industries based on Open Innovation
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3. Agenda
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Emerging Industries
•Open Innovation
•Innovation Policies for emerging industries based on Open Innovation
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4. What is an emerging industry?
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The intersection of a unit of analysis and a temporal interval (Forbes and Kirsch, 2011)
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The unit of analysis is the industry or the industrial sector, that is a group of firms using similar technologies and/or producing products that are close substitutes for one another
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The temporal interval refers to the fact that emerging industries are industries in the earliest stage of development
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5. When does an emerging industry start ?
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Many authors identify the beginning of emerging industries with the concrete manifestation of the new products or services.
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But some influential authors (e.g., Christensen, 1993) identify the beginning with technological developments inside pre- existing industries.
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For instance Garud et al. (2002) studied SunMicrosystems' efforts to sponsor its Java technology as a common standard even before the clear emergence of product-markets based on that technology
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6. When does an emerging industry end?
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Low and Abrahamson (1997) mark the end of the emergent stage at the beginning of an industry's growth stage
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But others extend the emergent stage past the growth stage to some later point, alternately characterized as “maturity”, “legitimation”, or “stability” (e.g., Aldrich and Ruef, 2006; Klepper and Graddy, 1990) 6

7. How long does an emerging industry last?
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Klepper and Graddy (1990) shown that an industry can take as few as two years and more than 50 years to achieve stability, which they define as the point at which the number of firms in the industry peaked
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However, not all industries last long enough to experience all stages of development: some never grow to maturity or legitimacy
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Of these inchoate industries, some lie dormant for decades 7

8. Which firms create emerging industries?
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Some industries arise primarily through the entry of new, independent (de novo) firms, such as the “dotcom” firms that took root in new Internet-related industries in the mid-1990s
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But other industries arise through de alio entrants, that is through firms that already had a presence in another market
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For example, the disk array industry that emerged in the late 1980s and early 1990s was comprised primarily of large firms, such as IBM and Compaq
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9. Why do emerging industries emerge?
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Firms experience a conflict in the choice of technology
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On one hand, a firm has an incentive to adopt the same technologies and knowledge and product offer as existing firms to reduce its operating costs. This leads to groups of firms, i.e. industries, that exploit the benefits of accumulated knowledge
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On the other hand, firms can attract large demand if they can adopt previously unexplored technologies and ideas so that their new goods and services fit consumers' unsatisfied wants and needs
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Once some pioneering firms adopt the new technology or ideas, more firms use the same approach or technology to leverage the knowledge accumulated by the pioneers, which gives rise to a new industry
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10. Agenda
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Emerging Industries
•Open Innovation
•Innovation Policies for emerging industries based on Open Innovation
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11. What is Open innovation?
“Combining internal and external ideas as well as internal and external paths to market to advance the development of new technologies” 11
Chesbrough, H. (2003)

12. Closed innovation vs Open Innovation 12
Markets Research Development boundaries
Closed Innovation
Chesbrough, H. (2003)
Markets Research Development boundaries
Open Innovation

13. Who is involved in Open Innovation? 1/2
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Firms can involve suppliers, clients, engineering and design companies, research centres and universities and firms in other industries.
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In the past these relationships have been mainly one-to-one (e.g. technology transfer) or in small groups (consortia)
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Recently, leveraging on Information and Communication Technologies, firms have involved also crowds of users and inventors in open source projects and in crowdsourcing initiatives (e.g., Innocentive or Ninesigma platforms) 13

14. Who is involved in Open Innovation? 2/2
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Furthermore, firms have always learnt from competitors and potential competitors
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For instance Xerox developed the graphical user interface (GUI) but didn’t use it.
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Apple Computer exploited it in its Macintosh operating system creating the personal computer industry 14

15. Agenda
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Emerging Industries
•Open Innovation
•Innovation Policies for emerging industries based on Open Innovation
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16. The aim
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Given the importance of innovation for social and economic development policy makers are interested in innovation policies
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In particular, policy makers would be happy to identify in advance emerging industries and to invest on them in their countries or regions to gain a competitive advantage
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17. The problems
… it is not easy to identify the most promising emerging industries in advance and there are many different ones that can be interesting to invest in
… some emerging industries will not mature at all, some of them will remain emerging industries for decades
… it is not easy to identify the pioneer firms (they can be both new firms and existing ones)
… it is difficult to understand the difference and the priority between emerging industries and emerging technologies
… and which are the most promising technologies? 17

18. A proposal
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Innovation policies to support well recognized emerging industries remain important
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However efforts to identify and promote new emerging industries can be misplaced
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Given the increasing importance of the new Open Innovation approach, policies that leverage this approach could be useful to promote the birth and development of new industries
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many new industries have been based on the successful combination of existing knowledge from different sources
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and new technologies increasingly need the pooling of resources and capabilities of different actors to develop 18

19. How? 1/3
Promote mobility and radical open innovation projects of both existing and new firms (pioneers)
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Labour mobility is a crucial mechanism through which skills and experiences are transferred between firms, industries, regions and nations (e.g., Baruffaldi and Landoni, 2012; Neffke and Henning, 2013) 19

20. How? 2/3
Support research centres and universities and their collaboration with pioneers
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To promote this collaborative projects, and the ones previously described, policy support to innovation platform and crowdsourcing platform could be useful. 20

21. How? 3/3
Help the re-integration of struggling pioneers in other firms and research centres.
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There is evidence that de novo entry is more common than de alio entry in emerging industries and also that de novo firms are, on average, less successful than de alio entrants
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Pioneers invest time and resources for results that, as previously noted, can then became common knowledge for entire industries
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Help from policy makers to re-integrate struggling pioneers in other firms and universities could lower the risk for the pioneers and could strengthen the receiving firms and research centres 21

22. To conclude
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There are many information and technologies available and being developed, what is needed are entrepreneurs able to understand their potential and to have visions of future products and services that incorporates them
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This is what happened when Steve Jobs of Apple met the researchers of the Xerox research lab and learnt about the Graphical User Interface (GUI) 22

23. © 2012 MIP – Riproduzione riservata
Management of Design and Innovation
www.madeinlab.it
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To discover new continents you must sail uncharted oceans
Paolo.Landoni@polimi.it