Open innovation the new paradigm in knowledge creation
Open Innovation – The NewParadigm in KnowledgeCreationAhamed IqbalArchana KC
Agenda• Scope• Innovation – Redefining Boundaries• Knowledge Creation in Open Innovation• Looking at Open Innovation through SECI Lens• A Case in Point• Lessons Learnt• Conclusion
Scope• The presentation is limited to exploration of knowledgecreation aspects in open innovation through technologypartnerships, crowdsourcing and spin-offs.• The research is limited to knowledge creation and does notelaborate on the knowledge transfer process involved in OpenInnovation.• It is brief and does not look at the concepts of knowledgecreation, innovation and open innovation in detail.• Nonaka’s SECI model is conceptually adapted to suit theanalysis.
Open Innovation – Redefining Boundaries• Innovation is the key driving factor for companies to prosper, growand sustain a high profitability. There is a strong need to open up theinnovation process.• Boundaries of innovation process breaks up due to mobility ofknowledge workers and the development of new financial structureslike venture capitals.• OI is the new paradigm through which the firms use external ideasas well as internal ideas, paths to market, for the firms to advancetheir technology.• Concept uniqueness derived from external venturehandling, external technology in-sourcing, utilization of externaltechnology base, license and through spin-offs.Definition: Open Innovation(OI) is the use of purposive inflows and outflowsof knowledge to accelerate innovation and expand the markets for theexternal use of innovation, respectively. (Chesbrough, 2006)
Knowledge Creation in Open Innovation• Innovation process begins with knowledge, elaborates thatknowledge and produces knowledge as the final outcome.• In open innovation, organizational diversity positivelyinfluences collaborative knowledge creation.• Collaborative knowledge creation in open innovation terms isa source of creativity.• Thus, a framework for analysis of open innovation inknowledge creation terms becomes essential.• SECI Model is used for this analysis
Technology Partnerships Crowd Sourcing Spin OffsSocialization Potential partneridentification and relationalcapital formationExploitation of thewisdom of crowds byconnecting to the masswith the brand identityin form of competitionwhere requirements areclearly elucidated.Identification andinvestment inentrepreneurial venturesor Start UpsExternalization Interaction of knowledgeassets like shared resources,best practices and dynamicculture during the duediligence process and postpartnering.Results in formation ofunique culture,development nichetechnologies with themonetary capital andinfrastructural supportfrom the investors.Combination New Knowledge creationand capture as a result ofthe complex interaction ofinter organizational factorsNew knowledge creationas a result of problemssolved, applicationscreated, contentscreated, ideas galore.Internalization Resultant know how, bestpractices, cultural impactand increase in netorganizational knowledge.Exploitation of theresultant assets forinternal knowledgecycle.Acquisition of newcapabilities throughequity relationships withstart ups.SECI lens of Analysis for OIOI TypesSECIDimensions
OI in Siemens• Opening labs and sharing knowledge with outside worldresults in global synergies.• Cost-effective collaborative path of knowledge creation.• Key activities across automotive, healthcare and energydomains.• Integration of knowledge networks and internet.• OI in Siemens is a success due to its world wide operationsand in house expertise.The lab is our world The world is our lab
• Strives to use latest results of fundamental and applied research.• 1000 cooperative projects with universities, research institutes andindustrial partners.• Set up of “Centers of Knowledge Interchange” (CKIs) on the campuses witha mutual collaborative benefit - issues explored beyond academic research.OI in Siemens - Technology PartnershipsPartner/Vendor Domain/Industry Project Perceived BenefitDenmark TechnicalUniversity (DTU)Automotive (ElectricVehicles)Integration of electric carsinto power gridsInnovative technologyoutsourcing projectsEnergy Suppliers inGermany and researchinstitutes in NetherlandsClean tech (Energy ) Capture of carbon dioxide inpower plantsCollaborated benefits –employment of scientistsShanghai’s Tongji University Sustainable environment(Infrastructure)Development of a eco-citymodelJoint research, promotetalented individuals andknowledge on future chinafor SiemensKing Abdullah University ofScience and TechnologyMaterial Sciences( Healthcare)A course in environmentaltechnologyDevelopment of sustainablesolutions for greentechnologies. Infrastructuredevelopment
• A broadened research horizonfor Siemens to tap resourceswith internet as a platform.• Innovation Jam – moderateddiscussions to allow flow ofnew ideas.• Internal resource accumulationwith emergence of e-brokers.• Idea generation contests –new impulse plans to result inspin –offs.OI in Siemens - CrowdsourcingInternalExternalOsram Idea contestSustainabilityIdea contestTechnoWeb 2.0E-brokerK - SharingSource : Siemens CT Open Innovation
OI in Siemens - Spin OffsFounders•Professionalassistance –legal, organizational,financialSiemens•Revenues fromimplementation ofprograms even ifproducts are not relatedto core business.PartnersInvestors•Access toinnovativetechnologies and toSiemens globalnetwork• A step after universitycollaboration;• Siemens acts as a VC and atechnology – knowledgeprovider;• Knowledge acquisition model– for tech start ups, off thecore business model;• K Creation across verticals –financial/business expertise,management enterprise, IPmanagement, culturallearnings.Logo image source : www.siemens.com
Technology Partnerships Crowd Sourcing Spin OffsSocialization Siemens has universitypartnerships, techoutsourcing partners andcorporate venturesSiemens is involved in internalcrowdsourcing by creatingknowledge networks –Techno web and organizingcompany wide ideageneration competitions.Establishment of CKI inuniversitiesExternalization Partnerships offer morebenefits than technologybenefits. Employment tostudents, and researchfacilities to institutionsA triple beneficial spin offwith assured returns, highlevel innovation andsuperior value systems instartups.Combination Technoweb acts as aknowledge network –resulting in creation ofexplicit knowledge bytapping tacit sourcesE brokers are formed to solveissues with external problemsolvers and to arrive atinnovative optionsInternalization Siemens TechnologyAccelerator acts as ainternal think tank withaccumulated knowledgeInternal knowledge basegrows exponentially.Technoweb directs to experts,not answers.Siemens acts as a VC andderives direct monetaryreturns. Also indirectlythrough licensing, patentsetcSECI lens of Analysis for OI - SiemensOI TypesSECIDimensions
Observations /Lessons Learnt• OI is not a means for innovation ; it is a compliment.• Various knowledge creation activities in OI is schematicallyclassified under the framework.• OI provides wider opportunities for knowledge assetinteraction and hence knowledge creation.• Nonaka’s SECI model serves as the foundation for research inknowledge creation.• Siemens has a high success rate in collaborations withuniversities, technology institutes and research houses.• Siemens exploits new breakthrough technologies withOI, away from their core business areas.
References• Fischer, M. M. (2000). Innovation, Knowledge Creation and Systemsof Innovation. The Annals of Regional Science .• Gassmann, O., & Enkel, E. (n.d.). Towards a Theory of OpenInnovation:Three Core Process Archetypes.• Siemens AG. (2010). Pictures of the Future - The Magazine forResearch and Innovation. www.siemens.com.• Nonaka, I. (1994). A Dynamic Theory of Organizational KnowledgeCreation. Organization Science, 5(1)• Chesbrough, H.W. (2006). Open Innovation: The New Imperative forcreating and Profiting from Technology. Boston: Harvard BusinessPress• Popadiuk, S. & Choo, C. W. (2006). Innovation and KnowledgeCreation: How are these Concepts Related? International Journal ofInformation Management. 302-312.
References• Chateneier, E.D. et Al ( 2009). The Challenges of CollaborativeKnowledge Creation in Open Innovation Teams. Human ResourceDevelopment Review, 8(3).• Wadha, A. & Kotha, S. (2006). The Knowledge Creation ThroughExternal Venturing: Evidence from the TelecommunicationsEquipment Manufacturing Industry. Academy of ManagementJournal, 49(4), 819- 835.• Elmquist, M. , Fredberg, T. & Ollila, S. (2009). Exploring the Field ofOpen Innovation. European Journal of Innovation Management,12(3)• Chief Technology Office, Siemens AG. (2010). Retrieved March 2011,from http://www.siemens.com/entry/cc/en/:http://www.slideshare.net/heisss/crowd-sourcing-and-knowledge-networking