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  1. 1. TAMPERE UNIVERSITY OF TECHNOLOGYTampere School of Business and TechnologyMANUEL VELAZQUEZ VEGACOMMUNITIES FOR INNOVATIONS: Integrating Communities to CreateValue.Seminar Report
  2. 2. iiABSTRACTInnovations and the means for their enhancement demand participation withinparties outside companies’ boundaries. The following paper presents howcommunities can be integrated into the process of an innovation to mainstreambenefits and risks among different parties. The present paper clarifies the meaningof and related practices between “innovation” and “communities”. There are manyexamples in the literature that sustain that these two practices are stronglyinterrelated and that the interactions among communities impact the realization ofinnovations.Yet this review just shows a different perspective of a knowledge exchangedilemma that companies face when looking for value creation means out of theirboundaries. The dilemma between innovation and communities is based on thepractices of explicit knowledge sharing, and the risk of compromising exploitabletacit knowledge resources within particular contexts. Today both practices areaddressed in a different way due to higher rates of integration of value networksand open collaboration. This current integration founded in open science principlesattempts to increase organized community efforts to impact positively theeconomy. Nevertheless, the development of these practices are at an early stageawaiting to benefit the gross-industry sectors as many implicated parties are stilllearning how to manage open innovation and build up a sustainable networkwithout compromising core knowledge assets.In this sense, the reviewed literature presents communities as the backbone of newinnovations, stressing the need of external collaboration, knowledge exchange-integration pro-retrieval, as well as discretional knowledge management practices.A community calls for integration, knowledge sharing education, and trustconstruction practices. Companies can obtain great benefits by processing andintegrating communities’ contributions into their knowledge infrastructure to getaccess to actionable insight. Well managed communities can become the placeswhere companies can repeatedly ask the hard question about where to invest theirassets or how to improve their current operations in accordance to the needs oftheir final customers. Communities can help to keep up a flux of ideas, facilitatethe creation of collaborative teams, provide the basis for further development andresearch, and support commercialization and marketing activities.
  3. 3. iiiPREFACEInnovation through communities encloses many of the issues that companies arefacing today to sustain their competitive aiming given the constantly changingexternal environment. Through communities companies can find customers tolisten and ask what they want, but they can also conduct research and obtaininformation about all the different phases of a product development process.The inspiration for researching Communities and Open Innovation came from mysupervisor with who I had several fruitful discussions about the concepts and broadideas presented in this paper. Thus my special gratitude goes to Dr. Jouni Lyly-Yrjänäinen for all those interesting debates we had.Tampere, 10.10.2010Manuel Velazquez Vega
  4. 4. ivTABLE OF CONTENTSABSTRACT ______________________________________________________ iiPREFACE _______________________________________________________ iii1 INTRODUCTION ____________________________________________ 1 1.1 Background __________________________________________________ 1 1.2 Objective _____________________________________________________ 12 INNOVATION _______________________________________________ 3 2.1 What Is Innovation? ___________________________________________ 3 2.2 Acquiring Innovation __________________________________________ 4 2.3 Enhancing Innovation __________________________________________ 53 USER COMMUNITIES _______________________________________ 7 3.1 Why Communities? ____________________________________________ 7 3.2 Types of Communities __________________________________________ 7 3.3 Improving Quality and Attractiveness_____________________________ 94 INNOVATION & COMMUNITIES ____________________________ 11 4.1 Open Innovation _____________________________________________ 11 4.2 Communities for Open Innovation_______________________________ 12 4.3 Networking for Open Innovation ________________________________ 135 CONCLUSION & RECOMMENDATIONS ______________________ 14REFERENCES __________________________________________________ 16
  5. 5. 11 INTRODUCTION1.1 BACKGROUNDTraditionally companies lead their Research and Development (R&D) efforts ingreat extent internally. Examples of this are the stage gate process, the productdevelopment tunnel (Figure 1), and the chain link model (Schonberger et al. 1994,p. 59-61). An open mode of collaboration has attracted attention especially in theInformation Technology (IT) sector for the development of software. This practicehas shown how the simple exchange of information within different parties canenable the buildup of a final product out of the information flow itself (Chesbrough2003, p.187-195). A first Production quick Build a Test and business and full investigation Validation case Development launch S S S S S Market G G G G G 1 2 3 4 5 1 3 5 2 4 Approve Initial Interim project Review of Screen Approval Product development Release result Figure 1. Stage Gate Process and Product Development Tunnel.In addition to software development, this collaboration approach is also becoming acommon practice within other industries. An open community project is describedby Watson et al. (2005, p. 125-142) with the Oxford English Dictionary. Theproject took about 70 years to complete and was compiled primarily fromdefinitions submitted by thousands of volunteers fluent in English language.Interestingly, Winchester (1998) reported that an insane American prisoner becamethe most prolific contributor to the original compilation of the dictionary. Thisexample illustrates two things. Firstly, everyone is able to contribute regardless oftheir personal circumstances in an open innovation scheme. Secondly, collaborativeefforts can create great value.1.2 OBJECTIVEDue to the integration of information and communication technology (ICT)networks, the ability of combine people’s ideas has nowadays no limits. Still itseems pretty challenging to lead projects for the commercialization of useful ideas,enforce collaboration of people in groups within these networks, integrate their Velazquez M.
  6. 6. 2workflows, and create trust between external and internal units from differententities. The objective of this paper is to present how communities could help in the realization of an innovation.Chapter 2 presents the findings about innovation; definition, acquisition, andenhancement. Chapter 3 introduces communities; usability, the different types,and how they can be improved. Chapter 4 gives a short introduction to openinnovation, presents how communities can be narrowed and integrated foropen innovation, and sketches community networking influenced by openinnovation practices. In chapter 5 conclusions are drawn and the current picture ofopen innovation management is given. Velazquez M.
  7. 7. 32 INNOVATION2.1 WHAT IS INNOVATION?The concepts of invention and innovation are mistakenly often usedinterchangeably. Since invention implies coming up with something new while it isthe bringing an invention to life what makes an invention to an innovation(Gattorna 1977, p. 2; Davila 2006). Rubenstein (1989) defines innovation as theprocess whereby new or improved products, processes, materials, and services aredeveloped and transferred to places where they are appropriate. These twodefinitions together imply a process of finding, developing, and realizing a certaininvention in accordance to someone else’s needs for explicit trading purposes.Thus, innovation is a successfully commercialized invention.Innovations can take place in two forms. One way is the radical innovation, alsocalled disruptive innovation, in which an insight is able to substitute existentproducts, processes, practices, and even concepts. The other way is the incrementalinnovation, or continuous innovation, in which an innovation is gradually enhancedwith small improvements (White et al. 2007). Figure 2 illustrates both cases,incremental innovation on the left and the disruptive case of innovation on theright. Both cases lean on a time frame and imply a successful commercializationphase to be able to advance in their performance. Technology Limit 2 Performance Limit Maturity 2 Maturity PerformancePerformance Technology Limit 1 Incremental Maturity 1 Launching Innovation 2 Disruptive Innovation Launching Launching 1 Time Time TIME FRAME Figure 2. Technology Life Cycle (Foster 1986).Radical innovations are more commonly related with field-experts, researchers andentrepreneurs whereas gradual innovations are rather linked with traders, wellestablished companies, and end-users (Maidique 1980, p. 59-76; Dodgson et al.2008). However, field-experts can be highly conceptualized to innovate radicallyout of their fields of expertise and trouble shooters not necessarily need to beexperts in a specific field to overcome difficulties and find ways to get the thingsdone. Therefore, an expert’s or end-user’s conditions are not exclusive forinnovation in any case (Root-Bernstein 1989, p. 43-55), but rather complements. Velazquez M.
  8. 8. 4Consequently, an unspecialized perspective can provide as much value as aspecialized one. Nevertheless a pre understanding with respect to the subject underdiscussion is required for a shared mindset setup (Newell 2002; Alvesson 2004).2.2 ACQUIRING INNOVATIONDrucker (1985) affirms that diverse needs on demand for better results in certainperiods of time may boost or even give rise to innovation and, especially if theseneeds are worthy business opportunities, people will try to realize them. The sevendriving sources of innovation defined by Drucker (1985) are: 1. Unexpected: What is, and what is not working in the actual business? Why is this? How to change/reinforce it? 2. Incongruity: Is what we consider valuable also valuable for our stakeholders? Can we give them what they want, and remain profitable? 3. Process Needs: What is needed to reach a better performance? Can we realize it with what we have? If not, how can we obtain what we need? 4. Structural Changes: What is on demand? Integration or specialization? 5. Demographics: What will be the major changes of our target group? What will these changes demand? 6. Changes in perception, mood, and meaning: What is appreciated today? Can we respond in time? 7. New Knowledge/The idea: What is new? How to apply it to our current operations? What are the risks, and the ROI?According to Hippel (1988), from the company perspective there are basically twomain ways to realize an innovation. The first one is the traditional way that comesfrom the internal efforts, more commonly from the R&D departments of acompany. The second way of innovations takes into account external people suchas customers, suppliers or independent entrepreneurs. Throughout this paper, theinternal people of a particular company will be represented with black dots andexternal people with white dots as shown in Figure 3. External Internal Figure 3. People for Innovation – Company Perspective.Not surprisingly, bigger needs require greater collaborative efforts to innovate and,given the competitive landscape and the constantly increasing market demands,internal and external people tend to have closer collaborations when working oninnovations together. This kind of collaboration requires knowledge integration Velazquez M.
  9. 9. 5throughout networks and domains (Mitchell 2005, p. 518-522). This integrationattempts to make guided collaborative efforts to innovate with parties that aredifferent in nature including for example government and universities (White et al.2007, p. 116-118; Dixon 2009). However, this integration does not narrowparticipation in a business network. Someone participating in a business networkcan be (1) an independent party, (2) an expert in certain field, (3) an activecustomer and provider of many products, and also (4) a member of other networks.Heterogeneity in a network might help to acknowledge more easily the drivers ofcertain markets and react faster to them because the knowledge scope includesdifferent perspectives of a shared issue (Drucker 1985, p. 27-122; EuropeanCommission 2004, p. 23; White et al. 2007, p. 21-29).2.3 ENHANCING INNOVATIONThe process towards innovation is very dynamic and knowledge intensive.Managers with understanding of knowledge management practices and awarenessof the intangible nature of knowledge assets have better competences to innovatecollaboratively (Newell et al. 2002, p. 105/152-155; Alvesson 2004, p. 180). Someof the best practices include:  Obtaining knowledge on people related with the company activities  Increasing availability, sharing and mediating company’s knowledge  Identifying best practices and new ideas to add value to current operations  Avoiding redundanciesThe reviewed literature provides among others an internal-oriented style thatsuggests a hierarchical management to innovate where managers have special skillsand perform determined tasks in order to achieve an innovation (Roberts 1969, p.259; Kanter 1982, p. 87-93; Drucker 1985, p. 27-122; Rogers 1995, p. 519). Insuch cases organizations focus their efforts on the selection, development, andcongruence of the top management as the success depends on their decisions onhow to use available internal resources (Twiss 1980). Innovation flourishes wheninternal teams have overlapping areas of knowledge, members can contact eachother independent of their functions and ranks, managers are in open endedpositions, and rewards systems look to the future (Kanter 1982, p. 87-93). Even so,an innovation requires external awareness; including the awareness of the channelthat needs to be used to increase the chances of external support, acceptance, andadoption (Rogers 1995, p. 519).Clearly companies have shifted their innovation practices towards a more external-oriented style where a moderate and discretional innovation management is needed.In the external case, the tasks and outflows cannot be managed but rather cultivated Velazquez M.
  10. 10. 6and refined according to the interactions of a group supporting the realization of anew idea (Edosomwan 1989, p. 20-30; Newell et al. 2002, p. 141-164; Alvesson2004, p.182/184-186). This style takes into account the issue that innovation can beencouraged or discouraged by the actions of external people that cannot beformally managed (Christensen 1997, p. 207-210). Internal people in charge of theprocess of certain innovation should be as close as possible to end users in order tocreate value based on real needs (Ruggles 1998, p. 80-88; Chesbrough 2003, p.76/184). Consequently, innovations call for team work among internal and externalpeople in order to create a greater value. The mentioned drivers, practices, peopleand parties can be easily grouped and differentiated in a community repository(Figure 4). Figure 4. Grouping Internal and External People – Entities.In this sense, companies could actively nurture their innovations by including localor worldwide perspectives from different external communities (Lesser et al. 2001,p. 831-841). In this direction, communities seem to provide a guided pattern ofcommunication enabling the understanding and integration of organizedcontributions into a knowledge domain for supporting an innovation (Pemberton etal. 2007, p. 13/74-85). Velazquez M.
  11. 11. 73 USER COMMUNITIES3.1 WHY COMMUNITIES?In most cases communities are seen as means for improvement (Appendix 1).Community is a source of collective knowledge with the contribution of itsparticipants, also called collective intelligence (Wang et al. 2006, p. 524-526).Community knowledge building is the knowledge derived from members’interactions in a community (Lambropoulos 2006, p. 414-416). In order to facilitatethese interactions, networking is needed to support the efforts of any community(Khine 2003, p. 22/335-397). To help network management, communities requireto be enclosed under oriented guidelines for distributive actions (Figure 5). Figure 5. Community Enclosed under a Specific Function.Oriented communities can help in the design, stability, implementation,documentation and scalability of a product (Dixon 2009). In this sense,communities shape the generation of knowledge flows with respect to specificgoals and issues, while having the freedom to achieve these goals and solve theseissues in the best possible way. This knowledge flow intends to streamline benefitsfrom previous understanding and different perspectives; as well as realize underwhat perspective certain understanding is valid to either augment success’ chancesor lower risks of spilling out resources in a product development.3.2 TYPES OF COMMUNITIESBefore dot-com, user communities had a very limited scope through magazines,post letters, and social gatherings (Turban 2007, p. 393-397). Such communitieswere built around the shared interest of improving products and acquiring insightinto how the best performance is obtained (Jin et al. 2007). Communities were seenas informal, almost volunteer structures for solving problems within the web byexchanging experiences (McDermott 2004, p. 2). The creation of a community canbe conceived in a spontaneous manner, but lately companies have realized theimportance of creating their own strategic communities (Rochlin 1997, p. 15-34/45-46; McDermott 2001; McDermott 2004, p.10; Tzu 2004, p. 7). Spontaneouscommunities do not include direct participation of the companies’ staff;nevertheless spontaneous communities can still be closely monitored around Velazquez M.
  12. 12. 8specific companies’ purposes. Both cases (Figure 6) can provide insight intocompanies in order to channel their efforts towards an innovation in a smarter way. Strategic Spontaneous Community Community Figure 6. Creation of Communities.Chesbrough (2003, p. 12-13/32-33/ 183) identifies three core activities to innovatewithin a time frame: (1) time to research, (2) time to test, and (3) time to market.These activities can be contained in communities, change or even become cyclicalover time, as for instance, outflows from a testing community may disclose furtherresearch needs (Stoll 2007, p. 15/18/28/34; Owyang 2008a, p. 10). Under thesegeneral functions (Figure 7), communities can help an innovation in (1) researchingimprovements, economical solutions or new applications of/for a new or anexisting product, (2) testing a product under development that requires the previousunderstanding or access to other products or technologies, (3) marketingassessment, promotion, introduction and conceptualization of the product itself, and(4) a partial combination of the three previous points. RESEARCH TESTING MARKETING Figure 7. Community – General Functions & Cycles.First, research communities include gurus and users with the highest level ofexpertise in a certain field. Research communities tend to link efforts of academics,researchers or R&D units of entities deeply involved in a specific technology. Inthis kind of community people should be able to easily access pre-selectedresources and peers in order to complement and share their findings. The role of thecompany members is to deliver marketing and testing knowledge to thecommunity. One example is the collaboration between BP, the University ofCalifornia Berkeley, the University of Illinois and the Lawrence Berkeley NationalLab (2007) for the development of capabilities to put biofuels down the road.Second, testing communities include users with a high level of expertise. Thesepeople are either regular users or potential customers with a fair understanding ofthe issue under development. The role of the company is to identify improvementsand further developments to enhance performance, as well as to assure contact withthe product under development. For example, at the moment at Tampere Universityof Technology (TUT 2010) Nokia is realizing a project in which 250 mobiles were Velazquez M.
  13. 13. 9lent to engineering students for a two months trial period in order to identifyarchitectural defects and to find new applications.Third, marketing communities include users or potential customers with no deepunderstanding of the technology. Usually people in these communities are eithercurrent customers who want to know more about the general use of certain productor potential customers making explorations before the final purchasing decision.The role of the company is to find out what is considered valuable in the market toretain and expand its share. Polar (2010) has a practice where its customers can getusers’ tips and free of charge software updates for their products; while thecompany can better understand customers’ needs and use that pool to launch newproducts.Communities may be enclosed inside other communities or overlapped with eachother (Appendix 2). Other general characteristics like language, geographicalproximity or market target can influence the interactions within a community. Forfurther considerations are the degree of certain qualities each participant requires inaccordance to the community function, and the fact that communities can go fromup-down involvement, or from researching to marketing approaches among groupswith pre-established interests (Appendix 3).3.3 IMPROVING QUALITY AND ATTRACTIVENESSStraight managerial practices for communities that depend on bottom-upinvolvement are rather difficult to be applied as their success depends onindividuals’ commitment (Newell et al. 2002, p.120; Alvesson 2004, p.175). Assuch, communities are not manageable but rather cultivable, meaning thatcommunities require a moderator instead of a manager (Rein et al. 2007, p. 50-61).Still down-up communities, in the same manner as up-down communities, requiredirection and administration to link their outflows with the company’s assets inorder to obtain an efficient development (Hippel 2002). In both cases, communityadministration only supports, integrates, and communicates everybody’s opinions(Tzu 2004, p.13-19). McDermott (2004, p. 10) and Renninger (2002, p. 253-261)coincide that communities evolve to provide leverage by influencing organizationaldecisions with their opinion. McDermott (2004, p.13) says that spontaneouscommunities go from a practice of mere group discussions and idea exchange to adirect and formal communication with the R&D units of a company. In the case ofstrategic communities, the success can be seen when questions are answered bypeople outside the company (Jin et al. 2007, Chapter 4.7; Renninger 2002, p. 151-152). Here the role of the company should be upgraded to identify the peopleresponding to the community’s concerns. Velazquez M.
  14. 14. 10The constant growth of communities in some areas has shown the need ofdesigning tools to manage them as current staff levels cannot meet users’ demands(Panel on Neutron Research 2007, p. 5-6). This growth has created positions like“data managers” who incorporate feedback from users into data packages andprovide authoritative data sets to tackle more directly the development, re-analysis,and research of a community (National Research Council 1995, p. 80; Committeeon Climate Data Records 2004, p. 63-80). Other technical issues encompass therunning of communities, like the use of Extensible Markup Language (CCIDGDC2003, p. 16), the use of virtual private networks, or artificial intelligence for dataidentification and processing (Vedral 1998, p. 28). Table 1 includes somecharacteristics of successful communities.Table 1. Characteristics of Successful Communities (Molm et al. 2000, p. 1396-1426; McDermott 2002, 2004, p.11-12; Hess 2005, p.146/285/335; Sawhney 2000,p. 24-54). Hess McDermott Molm Sawhney Clear function x Active participation of moderator(s) x Critical mass of engaged members x x Accomplishment and Learning x x High expectations x Real time x Trust x x x x Reciprocity x x Altruism x Passion and Motivation x xThe lack of trust is a latent problem as potential participants might be unwilling tocollaborate truthfully with the perception that not everyone will contribute in thesame manner (Kramer 1999, p. 569-598; Andrews et al. 2000, p. 797-810; Empson2001, p. 839-862; Dirks et al. 2001; Cabrera 2002, p. 687-710). Trust can beincreased if participants in a community can perceive reciprocity from otherparticipants (Molm et al. 2000, p. 1396 - 1426). Schulz (2001, p. 661-681) providesevidence of the relation between sharing knowledge and reciprocity, indicating thatsharing knowledge stimulates a reciprocal flow of knowledge. At this point,successful communities could be seen as the core of new innovations whendiscussing open development (Onetti et al. 2005, p. 224-227) or, in other words,user communities are “an innovative way to innovate”. Velazquez M.
  15. 15. 114 INNOVATION & COMMUNITIES4.1 OPEN INNOVATIONToday companies have realized the value of functioning as semipermeablemembranes able to embrace external contributions and combine them with theirinternal assets and competences to develop business opportunities (Chesbrough2008). This practice aims at avoiding technological and market uncertainties(Chesbrough 2003, p. 11-13/130-133; 2008). Figure 8 illustrates the openinnovation scheme where R&D and commercialization of an idea can be carriedout in collaboration with external entities while the company internalizes,incorporates, and shares outflows based on environmental needs and internalcompetences. Other Firm’s Markets New Licence, spin Markets Out, divest Internal technology Current base Company 1 Market Internal/external venture handling External technology base External technology sourcing Figure 8. Open Innovation (Chesbrough 2008; SCA).Consistently with the definition of innovation, open innovation endorsescollaboration towards specific goals and mission oriented activities to demonstrateproject commercialization (Chesbrough 2008; Curtis et al. 2006, p. 368) either forcurrent or new markets. Additionally, open innovation takes into account thecapabilities of external potential network partners to realize an innovation. Thedevelopment of an innovation under participation of external parties with freeknowledge exchange requires risk management practices (Dixon 2009). It isimportant to realize the implications of disclosing information, as it is difficult toenforce custody over it (Braman 1989, p. 233-234; Newell et al. 2002, p 100-113).It is also important to consider the fact that information needs to be processed andvalidated (Alvesson 2004, p.122-124). Communities can be created under certainconditions where some information flows are not disclosed until all interactionshave occurred (Chesbrough 2008). Communities can be founded under certainrestrictions, hold/share rights, description of responsibilities, and documentsoutlining the sharing of benefits and risks. Agreements that include the particularinterests of each participant can help to create trusty environments for knowledgesharing (National Research Council Staff 1999, p. 80-110, Chesbrough 2008;Seppänen et al. 2007, p. 578-589; Jong 2008). Velazquez M.
  16. 16. 124.2 COMMUNITIES FOR OPEN INNOVATIONSDespite the risks, increased visibility inside the company could also improvecollaboration. Figure 9 switches the company structure into another communitywhere the funnel no longer represents the company but a sort of magnetic fieldincluding the outflows from internal-external interactions, and the decisionssupported by internal members of the company. Figure 9. Company as a Community.Figure 10 integrates the new company structure with external communities. Thefigure also presents the cyclical logic of the knowledge flows and how resourcescan be allocated in accordance to each function within a time frame. Figure 10. Communities for Innovations.In today’s world, companies are focusing their efforts on identifying the mostrelevant communities for achieving innovations. Some tasks of the company are (1)to stimulate collaboration, (2) to grasp the outcome produced from communities’interactions, (3) to follow further developments, and (4) to supportcommercialization. From the open innovation perspective, communities can beconsidered as cells of external knowledge resources, laboratories for Velazquez M.
  17. 17. 13experimentation, or a gate for straight contact with the different market places. The“function”, the “monitoring methods”, and, in the case of a strategic community,the “desired participants’ profiles” are elements that need to be delineated by thecompany members.4.3 NETWORKING FOR OPEN INNOVATIONWhen innovating openly, the company’s role is to pull and integrate marketoriented collaboration, enhance competitiveness, procure with solution providers,and create value to its customers throughout the development of networking(Timmers 2003, p. 121-140; Kuivalainen 2009, p. 2-4; Burris 2008, p. 2-8). Themanagement of network relationships has an important role in open developmentbusinesses for integrating outflows and accomplishing the job on time (Dahlanderet al. 2005, p. 481-493). The main aim of networking is having access to externalkey parties to keep sustainability even though, as at the user level, network partnerssometimes have contradictory intentions and expectations (Seppänen et al. 2007, p.578-589; Chesbrough 2008; Dixon 2009; Welch 2009). Network communities forinnovations also include the participation of intermediaries, indirect partners, andpotential customers. Figure 11 is a snapshot of a network community with itsinteractions for resources distribution. Figure 11. Community Network for Innovations.People in a community network can punctually replicate to value creationopportunities, either by taking actions or bringing up insight in collaboration. Hereit is important to highlight the most relevant aspects from the company’s viewpoint, the less relevant research, or the most appropriate idea to be commercializedunder current market needs and company’s competences. On the other hand, if anidea is not suitable for a company, the openness of the innovation processfacilitates another network partner to develop it using a different approach. Velazquez M.
  18. 18. 145 CONCLUSION & RECOMMENDATIONSIn the past, companies have usually led their innovations internally in order toprotect their competitive advantage. Today companies have closer collaborationwith other parties sometimes including even competitors. The objective of thispaper was to present how communities can help in the realization of an innovation.A great evolution towards a participative innovation process has taken place in thelast decade, mainly because of the integration of information and communicationtechnologies. Nevertheless, physical proximity with partners is still important tocarry out successful development processes.The open sharing of findings with trusty parties could enhance and increase theprobabilities of achieving innovations. Networking is an essential part of openinnovation where companies require proactive search of potential partners andsolution providers for the creation of innovations. Innovation requires a closemonitoring of communities to anticipate changes in demand or technology. Figure12 summarizes the different stages of an innovation based on its market coverage. Integration with Commoditization other Technologies Part of other innovation Combination Component Acceptance 3 A B Adequate Business Model Commercial Success Market Invention 1 A B C D 2 A B C D Coverage Product Substitute Launch Disruptive Other Users Innovation More Apllications Other Markets Improved Process TIME FRAME (Number): Invention (number). Research, testing and marketing. A: Successful product commercialization in the targeted market. The invention becomes an innovation. B: Market diversification and changes according to users’ needs. Phase of incremental innovation. C: The innovation helps in the realization of other innovations. Integral part of other innovations. D: Commoditization of the technology until a substitute arises. Figure 12. Innovation Development.Knowledge assets are an important concern that companies should evaluate interms of their innovation processes, both internally and externally, in order toperform low risk practices. Risk can be diminished with middleman communities.A middleman community can orchestrate research, testing or marketing Velazquez M.
  19. 19. 15communities in order to achieve a balance between the different parties involved ina development. Furthermore a middleman community can also create valuelinkages between network partners for successful innovations. Successfulinnovations help to create other innovations with the transmission ofknowledge within the network. The case of a disruptive innovation is still an issuehard to foreseen. Nevertheless a network including the right partners might be ableto survive and evolve over the disruption. Figure 13 is a snapshot that shows thedynamics of innovations where new ideas either create discontinuity or expand thescope of an innovation. Integrative 4 Innovation Integrative 3 Innovation Disruptive 1 Disruptive 5 Innovation Innovation 2 Integrative Innovation TIME FRAME Figure 13. Innovations’ Dynamics.Finding partners for greater overall value and trust building practices to exchangeknowledge freely are important elements for innovations. The internationalizationof trade and the regulatory environment are issues that can also affect thedevelopment of an innovation and call for reducing external boundaries. Furtherresearch is needed for the specific case of developing technological innovations inglobal markets. Velazquez M.
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  25. 25. 21Appendix 1: Definitions of CommunitiesVirtual Social aggregations that emerge from the Net when enough RheinglodCommunity people carry on those public discussions long enough, with (1993, p.5) sufficient human feeling, to form webs of personal relationships in cyberspace.Virtual Group of people with common interests and practices that Ridings et al.Community communicate regularly and for some duration in an organized (2002, p. 273) way over the Internet through a common location or mechanism.Online Interactive group of people joined together by a common OwyangCommunity interest, where the most important feature is the interaction (2008a, p. 2) among members.Online Voluntary collaboration among members across time and Lucas (2008,Community space independent of geographical barriers, with different p. 48-60) rules from physical communities. They often exist around a single idea or topic.Knowledge Groups or organizations whose primary purpose is the Kramer (1999,Community development and promulgation of collective knowledge. p. 50)Knowledge A group of people providing information related to the same Huff (2002, p.Community subject, and the information is interpreted in a different way 144-145) in accordance to the previous experiences of people receiving the informationLearning A learning community is a cohesive community that McConnellCommunities embodies a culture of learning. Members are involved in a (2006, p. 19) collective effort of understanding. It attends issues of climate, needs, resources, planning, action, and evaluation.Communities A group of people who come together around common Vat (2005, p.of Practice interests and expertise. They create, share, and apply 827-830) knowledge within and across boundaries of teams, business units, and even entire organizations - providing a concrete path toward creating a true knowledge organization.Communities A group of people in an organization who are (somehow) held Distererof Practice together by common interest in their work topic, purpose, and (2005, p. activities. 1391-1396.)Communities A group of individuals that may be co-located or distributed, Coakes &of Practice are motivated by a common set of interests, and are willing to Clarke (2006, develop and share tacit and explicit knowledge. p. 30-33)Customer Organized system of customer contact, that allows regular OLeary &Communities interactions with customers, both in person and electronically. Sheehan These interactions are for information sharing, feedback, and (2008, p.2) exchange of ideas.Community A community of practice where members mainly focus on the Paquetteof Creation sharing and generation of new knowledge for the purpose of (2006, p. 68- creating new ideas, practices, and artifacts (or products). They 73) can be legitimized through involvement in a company- sponsored product development effort, or they may be informal through various practitioners, with similar experience and knowledge meeting where new innovations arise from this interaction Velazquez M.
  26. 26. Marketing Online Community ICT Virtual Community Venture Community of Community 22 Capital Creation of Practice Community Appendix 2: Communities over communities. Knowledge Community Face to Face Learning Community Customer Community User Community Research TestingVelazquez M.
  27. 27. 23Appendix 3: Some User Communities considerations in accordance with theirfunction. ONLINE EXAMPLES RESEARCH, Up-down Build up,,, F U N C Down-up Build up T I TESTING O N MARKETING, amazon.comDown – Up Build up Size The amount of people in the community; at the top tends to be “1 to 1” organizational level, while at the bottom the interaction tends to be “n to N”. Product How easy it is to obtain physical contact with the actual product; at the top are located highly technological tangible products, in the middle non durable goods, services and processed information, and at the bottom commodities. Platform The importance of having a user friendly interface; analytical tools, easy language, features, etc. Social The openness of the community. The bottom tends to be public and spontaneous; the top is strategic and private. Homogeneous At the bottom participants are expected to have very similar profiles, while at the top the group tends to be multidisciplinary. Geography The level of geographic concentration of the participants. At the top participants may come from many different countries, while at the bottom specific areas are targeted. Analysis The investment needed to process information.Up – Down Build up Expertise The level of previous experience the participants have in relation with the subject. Incentives The investment (effort/time) that participants are willing to engage in the collaboration. Effectiveness The return in knowledge over the amount of participants. Time The time that a participant is willing to invest in communication. Control The degree of managerial control that can be exerted in the community. At the top well determined schedules, profiling, selection, and goals; at the bottom the community is uncontrolled and can be just cultivated as everyone is free to play. Trust More levels of trust and reliability can be built around a well-managed community rather that a public community. Insight The level of involvement, understanding, and shared information per participant. Velazquez M.