From technology market placesto problem placesFrank T. PillerChair, RWTH Technology & Innovation Management Group, AachenCo-Director, M.I.T. Smart Customization Group, Cambridge, MA tim.rwth-aachen.de | open-innovation.com 3 The problem of "local search"
4Every innovation process requires two kinds of information,influencing the efficiency and effectiveness of the process. Solution Need Information Information market Ideation launch Doing things Doing the right right things Realization concept ("R&D", development product develop.) 5Overcoming the two problems of (just) "local search" for solution informationand "stickiness" of need information are crucial for innovation success. Solution Need Information Information sticky information market Ideation launch Doing things Doing the right right things Realization concept ("R&D", development product develop.) local search bias
6Local search reduces problem solving effectiveness(Lakhani 2007)Local Search Problem EvidenceProblem-solvers have different local Experiment (psychology lab): individualknowledge stocks (Hayek 1945; von problem solvers have difficulty adaptingHippel 1994) to new problems (Luchins 1942; Duncker 1945)Problem solvers use their own local Team-based problem solving negativelyknowledge stocks and solution effected by prior experience and newalgorithms even when not appropriate: problems being different from old (Allen & Marquis 1964)Bounded rationality (Simon 1957) Firm & Industry level findings of negative effects: - Routines in problem solving – Photolithography (Henderson & Clark 1990) (Nelson & Winter 1982) – Semiconductor Manufacturing (Stuart & - Competency Traps Podolny 1995) (Levitt & March 1988) – Medical Imaging (Martin & Mitchell 1998) – Biotechnology and Semiconductors (Sorensen & Stuart 2000) 7 Open Innovation: A set of new methods to manage these two core problems ==> 20
8A good illustrationof open innovation: The Netflix Case 11
12 Objective: get root mean square error (RMSE) <= 0.8563 (Netflixs own algorithm Cinematch has RMSE of 0.9525, this equals to one point of error of recommendation on their 5-point scale of "hate-love" movie evaluation) 20A good picture of open innovation: Collaboration and input from diversesources ... and fair play in the end Nice summary from the winners perspective: http://www.research.att.com/~volinsky/netflix/bpc.html
21From "The lab is our world" to "the world is our lab" 22 Open Innovation The formal discipline and practice ofleveraging the discoveries of unobvious others as input for the innovation process through formal and informal relationships*. *Note: It are the informal relationships that constitute the "innovativeness" of open innovation!
47 From market places (for technologies) toproblem places for solutions 47 48 From "global" to "small worlds": Providing an arena for local open innovation 48
49 And there is so much capacity for this 49 51200 billion hours of television watched each year (US only!) 200.000.000.000This equals about 2000 times the total(!) human hours invested in creating the English Wikipedia 51
52The BIG question for innovation management today: How to capture the "cognitivesurplus" existing for innovation in the world (but not in your companys R&D lab)? 52 53 Our theme for today We problems!
54Open for interaction:Prof. Dr. Frank T. PillerTIM-Group at RWTH Aachen UniversityTel.: +49 (0)firstname.lastname@example.org: @masscustom 54