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OPEN INNOVATION
NOT FAD BUT A PHENOMENON
THE ROLE OF OPEN INNOVATION IN TODAY’S GLOBAL AND
DIGITAL ECONOMY
Prof. Sabine Brunswicker
Purdue University, USA and Fraunhofer Society, Germany
INNOVATION IS OFTEN THOUGHT TO BE ABOUT SPECIAL PEOPLE
THE INNOVATION GAME HAS
CHANGED¹
Source: 1) Chesbrough (2003)
SINCE 2003…
FIRMS ENGAGE IN SO CALLED “OPEN INNOVATION PRACTICES”
Google Search Open Innovation :
10/2011 > 8 Mio Hits
05/2013 > 700 Mio Hits
Open Model
existing market
new market
other firm’s
market
idea sourcing
running/successful innovation projectsdiscarded innovation projects
Closed Model
market
+
+
+
new product/
service
internal
innovation
resources
internal
innovation
resources
external
innovation
resources
technology
sourcing
co-development
partnerships
spin-out
Source: Brunswicker (2011); see also Chesbrough (2003, 2006)
LET‘S RECAP – WHAT‘S OPEN INNOVATION
OPEN INNOVATION DESCRIBES A COGNITIVE FRAMEWORK FOR A FIRM’S STRATEGY TO PROFIT
FROM INNOVATION
INNOVATION “CROWDSOURCING” HAS BECOME POPULAR…
Firms outsource the task to solve an innovation problem to the
public “crowd” - rather than to a designated group of actors - via an
open call
CROWDSOURGING IS BUILD UPON THE IDEA
THAT „DIVERSITY“ IS THE GENERATIVE MECHANISM FOR INNOVATION
source: Chris Anderson (2004), Lakhani (2006), Laursen & Salter (2006)
Popularity of resources
In-house resources
Access to a small number of
experts and disciplines
„Long tail“ of resources outside the
firm‘s boundaries
Access to large number of different
competencies and various
disciplines
Range of potential problem solving resources
THE GOLDCORP STORY….
Crowdsourcing challenge:
GoldCorp put 000’s of pages of complex geological data
online to help discover new veins of gold
at its Red Lake mine, Ontario, Canada.
US ~$500,000 in prize money
Over 1,400 corporations, consultants and
universities from 50 countries entered the
contest.
More than 8 million ounces of gold found.
Company’s value rocketed
from $100M to $9B
Participation and outcome
Over 1,400 corporations, consultants and universities from
50 countries entered the contest.
More than 8 million ounces of gold found.
Company’s value rocketed from $100M to $9B
OPEN SOURCE IS DIFFERENT FROM OPEN INNOVATION….
Value Capture
Company
Ecosystem
In-House Community-driven
Value Creation
e.g. Microsoft
OS
e.g. MySpace
e.g. pirated music
complementors
e.g. Linux Kernel
…….with the right business model it can be a
successful open innovation practice
OPEN INNOVATION IS ABOUT „PROFITING“ FROM INNOVATION
Open Source Versus Open Innovation
…….Open Innovation requires a business model to ensure both
value creation AND value capture
CASE STUDIES SUGGEST THAT THERE IS PERFORMANCE IMPACT
Idea-fairs,
e.g. tinkerers
or suppliers
Technology
acquisition
Research
institutes
Strategic
suppliers
Customer
integration
Further
partners
Universities
Internal/externa
l ventures
Internet
platform
Licensing
Outside-In
Inside-Out
Co-Development/Networks
Source: Huston & Sakkab (2006), Enkel, Gassmann (2009)
“ In Connect &
Develop we set
the goal to
acquire 50% of
our innovations
externally “
(VP of
Innovation)
Improvement of the
R&D productivity by
60%
Within two years P&G
has marketed more
than 100 new products
OUR RESEARCH SUGGESTS THAT OPENESS IMPROVES PERFORMANCE
Success rate of innovation projects
(share of successful innovation projects; median)
Comparison of firms from different age classes
Income from new products/services that are younger
than 3 years (median)
Comparison of firms from different age classes
11 to 25 years
Older than 25 years
6 t 10 years
2 to 5 years
Datasource: IMP3rove, Oktober 2010; N=1469; see also Brunswicker (2011): Beyond open innovation in large organisations
47.0%
23.0%
29.0%
19.0%
19.0%
10.0%
15.0%
9.0%
50.0%
20.0%
50.0%
25.0%
60.0%
50.0%
50.0%
5.0%
11 to 25 years
Older than 25 years
6 to 10 years
2 to 5 years
Wide and diverse open innovation sourcing*
Closed/selective approach towards innovation sourcing**
10 YEARS LATER
A FAD OR A
PHENOMENON ?
Executive study
UC Berkeley and
Fraunhofer
 Study among the largest firms in
Europe and US
 Firm criteria: >1000 employees
and >250 million USD in sales
 Key informants: CEO, COO, or
CTO at headquarter
 Data collection
October– December 2012
 125 datasets
Adoption of open
innovation
Abandonment
Open innovation
experience
Management
support
Intensity
78% practice open innovation today
No firm has abandoned open
innovation
Median of 5 years
71 % have increased management
support
82 % have increased open innovation
activity
IN OUR NEW EXECUTIVE SURVEY WE FOUND THAT OPEN INNOVATION IS ON THE RISE
THERE IS A BUNCH OF OPEN INNOVATION PRACTICES
Challenge
 Powering the Grid
 Powering your Home
Source: www.ge.com, Chesbrough (2012) California Management Review
Co-investment
strategy
 VCs: Emerald
Capital, Foundation
Capital
LARGE FIRMS LIKE GE EXPERIMENT WITH IDEA COMPETITIONS
High participation
 4000 ideas
 75013 entrepreneurs
participating
Innovation
partnerships
 23 partnerships
 USD 200 million
investment GE
OTHERS USE OPEN INNOVATION INTERMEDIARY SERVICES
Open Innovation
Marketplaces
Searcher
Solver Community
(Technology experts,
individuals, entrepreneurs,
etc.)Request for proposal Proposes solution and
ideas
Market for Ideas and Technologies
Problem: Strong durable gear
materials that do not require
lubrication
• 26 solutions submitted
• 16 new solutions
• 8 solutions with potential
for development
INNOVATION CO-CREATION WITH USERS IS POPULAR…
More than 27 000 visitors
More than 350 design contributions
884 members
3980 hours spent
LET‘S TRY TO CLASSIFY THEM….
Direction
Inbound
Outbound
Pecuniary Non-pecuniary
Financial flows
Acquiring Sourcing
Selling
Free
revealing
THERE ARE A RANGE OF INBOUND PRACTICES
IP In-licensing
Informal networking
Publically funded
R&D projects
Contracting external
R&D services
Open Innovation
Intermediaries
Inbound
University grants
Supplier
innovation awards
Own crowdsourcing
initative
Customer and
consumer co-creation
Idea and start-up
competition
CO-CREATION WITH USERS MATTERS THE MOST
2.34
2.64
2.66
3.37
3.71
3.73
3.87
4.19
4.38
4.43
1 2 3 4 5 6 7
3.80
4.09
3.76
4.01
4.47
4.04
4.11
4.28
4.12
4.68
1 2 3 4 5 6 7
Customer and consumer co-creation
Informal networking
University research grants
Publically funded R&D consortia
Contracting of external R&D service
Idea and start-up competitions
IP in-licensing
Supplier innovation awards
Crowdsourcing (unknown problem solvers)
Specialized services OI intermediaries
Not important Highly
important
Significant
decrease
Significant
increase
No change
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91
Importance in 2011
(mean values)
Change of importance 2008-2011
(mean values)
Inbound practices
Corporate business
Incubation and
business venturing
Donations to
commons or
non-profits
IP out-licensing
and patent selling
AND THERE ALSO DIFFERENT KINDS OF OUTBOUND PRACTICES
Participation in
standardization
Participation in
standardization
Selling of
market-ready ideas
Joint venture activities
with
external partners
Inbound
TRADITIONAL PRACTICES ARE THE MOST POPULAR ONES
2.26
2.43
2.84
3.45
3.75
3.85
4.21
1 2 3 4 5 6 7
3.91
3.74
4.20
4.63
3.97
4.39
4.62
1 2 3 4 5 6 7
Joint venture activities
Selling of market-ready products
Participation in public standardization
Corporate business incubation & venturing
IP out-licensing & patent selling
Donations to commons or nonprofits
Spin-offs
Not
important
Highly
important
Significant
decrease
Significant
increase
No change
Importance in 2011
(mean values)
Change of importance 2008-2011
(mean values)
Outbound practices
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91
CUSTOMERS ARE THE MOST CRITICAL EXTERNAL PARTNER
2.13
2.47
2.54
3.67
3.82
3.82
4.22
4.30
4.51
4.88
5.17
5.54
1 2 3 4 5 6 7
Unrestricted communities
Restricted communities
Competitors
External consultants
Contracted R&D service providers
Entrepreneurs and start-ups
Public research organisations
Indirect customer or final consumer
Suppliers
Universities
Customers
Internal employees
Importance of open innovation partners
(mean values; 1= not important to 7=highly important)
Average = 3.9*
not important highly important
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 82
IT IS NOT ABOUT THE INDIVIDUAL PRACTICE AND SOURCE
1 2 3
Supply-chain oriented Technology oriented Ecosystem-wide
 Supplier programs
 Supplier awards etc.
 Direct customer co-
creation
 University grants
 Developercommunities
 ContractedR&D services
 Third-party developers
and service providers
 Trusted partner network
 Complementarynetwork
partners
3 categories of Open Innovation orientation
IT IS NOT ABOUT THE INDIVIDUAL PRACTICE AND SOURCE
….BUT OPEN INNOVATION IS HARD
SOME PEOPLE THINK OPEN INNOVATION REDUCES RESOURCES AND EFFORTS
Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91
THERE IS AN INTERNAL COMPONENT OF OPEN INNOVATION
THEY JOURNEY FROM CLOSED TO OPEN REQUIRES NEW CAPABILITIES, ROLES, AND VALUES
3.69
4.55
4.53
4.53
4.89
5.26
3.61
4.28
4.49
4.6
4.97
5.6
1 2 3 4 5 6 7
Avoidance of external or already existing knowledge
Effectiveness of intellectual property protection
Identifying new innovation sources
Protecting internal critical know-how
Management of external relationship with innovation sources
Managing the organizational change internally
Challenges of engaging in open innovation
(mean values, 1=not important to 7= highly important)
when firm's started
today
Not important Highly important
WHY ARE FIRMS NOT SATISFIED WITH CROWDSOURCING AND CHALLENGES?
Task description
Start:
Submission of Ideas
Many are designed for COMPETITION …
And not for COLLABORATION and CO-
CREATION
THERE IS A SOCIAL DIMENSIONS OF CO-CREATION
1
4
2
3
Fun
Fullfillment
Fame
Furtune
New SCN
platform
Gamified TechEd
2011
12 months
rolling points
THE EVOLUTION OF SAP‘S SCN SUGGESTSTHAT GAMIFICATION MATTERS
2003 2005 2007 2009 2011 2013
Ask the Expert
Points
introduced
Top Contributors
Annual Contest
SAP Mentoring
Program
Launch of
Gamification
Module
10 years SCN
Some outcome measures
 Activity up by 1,113%
 Community feedback up by 250%
 Points up by 147 %
OUTLOOK: OPEN INNOVATION IS EVOLVING
FINAL SLIDE WITH “WEB” AND NEW MODELS OF INNOVATION
The GRAVITY IS SHIFTING
EVEN MORE…
..people-centric & decentralized
innovation ecosystems
COMPLEMENTORY PARTNERS ARE CRUCIAL IN TODAY‘S BUSINESS ECOSYSTEM
^^
Internet
ISP
T
T T
Phone
WiFi
Enduser
system
Handset
Distribution
GUI
Shop
OS APIs
Audio-
Dateiformat
A A A
Millions of
songs
Thousands of
Apps
Assembly
C
C
C C
Hundreds of
components
Hardware
interface
BIOS
Betriebs-
system
iTunes
Design
Closed IP
External supplier
Complementor
Open Source
Closed Standard
Open Standard
Legend
A LIFECYCL-ORIENTED PERSPECTIVE IS BECOMING MORE AND MORE IMPORTANT
BOUNDARIES ARE BLURRING
DATA
Con-
tinued
Value
Creation
Lifecycle-oriented
Innovation
Ecosystems
Standardize
and open
data
Co-create
app
Application lifecycle
Co-
create
service
Users
Application
developers
Application
platform
Service
providers
Service
integrator
Open data
provider
Launch
app &
service
Operate &
con-
tinuously
improve
FIRMS ESTABLISH DIVERSIFIED INNOVATION ECOSYSTEM
Trusted Network
New
partners
Pearlfinder
Supplier
Government
ResearcherDevelopment
partner
Pearlfinder
• Company owned digital community
• Challenge-driven innovation
• Multi-staged process and individual
Terms + Conditions
• Link with other open innovation
practices
Partner and partner selection
• Suppliers, universities, development
partners, customers
• No start-ups
• Selection based on„manageral fit“
and stabiltiy, IPR-Policy, „Academic
Excellence“ and concrete idea
• Selection process based on new
methods such as incubation lab
ChallengeUni
Customers
…AND PROFESSIONALIZE THE MANAGEMENT OF NETWORK RELATIONSHIPS
Internal
net-
works
Expert
communities
Expert
support
New
research
partners
Market
places
Web 2.0
Communities
New
suppliers
New
development
partners
Tier 1
Loose innovation contacts
New opportunities
„Leverage“
(invest)
Tier 2/3
Trusted networks
Shifttowardsopenness
Phase 1 Phase 2 Phase 3 Phase 4
Source: CAS 2010; Ehrenmann & Brunswicker (2012)
Closed System
Firm-centric
innovation networks
New infrastructures
New decentralized
innovation ecosystems
Interne
Technologie-
Basis
Aktueller
Markt
Aktueller
Markt
Gescheiterte Ideen/
abgebrochene Projekte
Erfolgreiche Ideen/ erfolgreiche
Projekte
Interne
Technologie-
Basis
Aktueller
Markt
Aktueller
Markt
Gescheiterte Ideen/
abgebrochene Projekte
Erfolgreiche Ideen/ erfolgreiche
Projekte
Gescheiterte Ideen/
abgebrochene Projekte
Erfolgreiche Ideen/ erfolgreiche
Projekte
THE SHIFT IS CONTINUING; IT REQUIRES MORE EXPERIMENTATION
New facilitation skills and leadership capabilities
New socio-technical infrastructures
Experimentation (rather than control)
Lifecycle-oriented innovation
ecosystems
„If you’re not failing every
now and again, it’s a sign you’re
not doing anything very
innovative.“
Woody Allen
Contact: Prof. Sabine Brunswicker, sbrunswi@purdue.edu
BACK-UP
AGENDA
 Let‘s recap: 2003 – The emergence of Open Innovation as a new model of industrial innovation
 10 years later - The Adoption of Open Innovation Practices in Large firms
 Organizing and managing for open innovation – dynamics and socio-technical infrastructures
 The emerging landscape of Open Innovation: Towards an Innovation Ecosystem Perspective

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Open Innovation: Not a Fad but a Phenomenon

  • 1. OPEN INNOVATION NOT FAD BUT A PHENOMENON THE ROLE OF OPEN INNOVATION IN TODAY’S GLOBAL AND DIGITAL ECONOMY Prof. Sabine Brunswicker Purdue University, USA and Fraunhofer Society, Germany
  • 2. INNOVATION IS OFTEN THOUGHT TO BE ABOUT SPECIAL PEOPLE
  • 3. THE INNOVATION GAME HAS CHANGED¹ Source: 1) Chesbrough (2003)
  • 4. SINCE 2003… FIRMS ENGAGE IN SO CALLED “OPEN INNOVATION PRACTICES” Google Search Open Innovation : 10/2011 > 8 Mio Hits 05/2013 > 700 Mio Hits
  • 5. Open Model existing market new market other firm’s market idea sourcing running/successful innovation projectsdiscarded innovation projects Closed Model market + + + new product/ service internal innovation resources internal innovation resources external innovation resources technology sourcing co-development partnerships spin-out Source: Brunswicker (2011); see also Chesbrough (2003, 2006) LET‘S RECAP – WHAT‘S OPEN INNOVATION OPEN INNOVATION DESCRIBES A COGNITIVE FRAMEWORK FOR A FIRM’S STRATEGY TO PROFIT FROM INNOVATION
  • 6. INNOVATION “CROWDSOURCING” HAS BECOME POPULAR… Firms outsource the task to solve an innovation problem to the public “crowd” - rather than to a designated group of actors - via an open call
  • 7. CROWDSOURGING IS BUILD UPON THE IDEA THAT „DIVERSITY“ IS THE GENERATIVE MECHANISM FOR INNOVATION source: Chris Anderson (2004), Lakhani (2006), Laursen & Salter (2006) Popularity of resources In-house resources Access to a small number of experts and disciplines „Long tail“ of resources outside the firm‘s boundaries Access to large number of different competencies and various disciplines Range of potential problem solving resources
  • 8. THE GOLDCORP STORY…. Crowdsourcing challenge: GoldCorp put 000’s of pages of complex geological data online to help discover new veins of gold at its Red Lake mine, Ontario, Canada. US ~$500,000 in prize money Over 1,400 corporations, consultants and universities from 50 countries entered the contest. More than 8 million ounces of gold found. Company’s value rocketed from $100M to $9B Participation and outcome Over 1,400 corporations, consultants and universities from 50 countries entered the contest. More than 8 million ounces of gold found. Company’s value rocketed from $100M to $9B
  • 9. OPEN SOURCE IS DIFFERENT FROM OPEN INNOVATION…. Value Capture Company Ecosystem In-House Community-driven Value Creation e.g. Microsoft OS e.g. MySpace e.g. pirated music complementors e.g. Linux Kernel …….with the right business model it can be a successful open innovation practice
  • 10. OPEN INNOVATION IS ABOUT „PROFITING“ FROM INNOVATION Open Source Versus Open Innovation …….Open Innovation requires a business model to ensure both value creation AND value capture
  • 11. CASE STUDIES SUGGEST THAT THERE IS PERFORMANCE IMPACT Idea-fairs, e.g. tinkerers or suppliers Technology acquisition Research institutes Strategic suppliers Customer integration Further partners Universities Internal/externa l ventures Internet platform Licensing Outside-In Inside-Out Co-Development/Networks Source: Huston & Sakkab (2006), Enkel, Gassmann (2009) “ In Connect & Develop we set the goal to acquire 50% of our innovations externally “ (VP of Innovation) Improvement of the R&D productivity by 60% Within two years P&G has marketed more than 100 new products
  • 12. OUR RESEARCH SUGGESTS THAT OPENESS IMPROVES PERFORMANCE Success rate of innovation projects (share of successful innovation projects; median) Comparison of firms from different age classes Income from new products/services that are younger than 3 years (median) Comparison of firms from different age classes 11 to 25 years Older than 25 years 6 t 10 years 2 to 5 years Datasource: IMP3rove, Oktober 2010; N=1469; see also Brunswicker (2011): Beyond open innovation in large organisations 47.0% 23.0% 29.0% 19.0% 19.0% 10.0% 15.0% 9.0% 50.0% 20.0% 50.0% 25.0% 60.0% 50.0% 50.0% 5.0% 11 to 25 years Older than 25 years 6 to 10 years 2 to 5 years Wide and diverse open innovation sourcing* Closed/selective approach towards innovation sourcing**
  • 13. 10 YEARS LATER A FAD OR A PHENOMENON ?
  • 14. Executive study UC Berkeley and Fraunhofer  Study among the largest firms in Europe and US  Firm criteria: >1000 employees and >250 million USD in sales  Key informants: CEO, COO, or CTO at headquarter  Data collection October– December 2012  125 datasets Adoption of open innovation Abandonment Open innovation experience Management support Intensity 78% practice open innovation today No firm has abandoned open innovation Median of 5 years 71 % have increased management support 82 % have increased open innovation activity IN OUR NEW EXECUTIVE SURVEY WE FOUND THAT OPEN INNOVATION IS ON THE RISE
  • 15. THERE IS A BUNCH OF OPEN INNOVATION PRACTICES
  • 16. Challenge  Powering the Grid  Powering your Home Source: www.ge.com, Chesbrough (2012) California Management Review Co-investment strategy  VCs: Emerald Capital, Foundation Capital LARGE FIRMS LIKE GE EXPERIMENT WITH IDEA COMPETITIONS High participation  4000 ideas  75013 entrepreneurs participating Innovation partnerships  23 partnerships  USD 200 million investment GE
  • 17. OTHERS USE OPEN INNOVATION INTERMEDIARY SERVICES Open Innovation Marketplaces Searcher Solver Community (Technology experts, individuals, entrepreneurs, etc.)Request for proposal Proposes solution and ideas Market for Ideas and Technologies Problem: Strong durable gear materials that do not require lubrication • 26 solutions submitted • 16 new solutions • 8 solutions with potential for development
  • 18. INNOVATION CO-CREATION WITH USERS IS POPULAR… More than 27 000 visitors More than 350 design contributions 884 members 3980 hours spent
  • 19. LET‘S TRY TO CLASSIFY THEM…. Direction Inbound Outbound Pecuniary Non-pecuniary Financial flows Acquiring Sourcing Selling Free revealing
  • 20. THERE ARE A RANGE OF INBOUND PRACTICES IP In-licensing Informal networking Publically funded R&D projects Contracting external R&D services Open Innovation Intermediaries Inbound University grants Supplier innovation awards Own crowdsourcing initative Customer and consumer co-creation Idea and start-up competition
  • 21. CO-CREATION WITH USERS MATTERS THE MOST 2.34 2.64 2.66 3.37 3.71 3.73 3.87 4.19 4.38 4.43 1 2 3 4 5 6 7 3.80 4.09 3.76 4.01 4.47 4.04 4.11 4.28 4.12 4.68 1 2 3 4 5 6 7 Customer and consumer co-creation Informal networking University research grants Publically funded R&D consortia Contracting of external R&D service Idea and start-up competitions IP in-licensing Supplier innovation awards Crowdsourcing (unknown problem solvers) Specialized services OI intermediaries Not important Highly important Significant decrease Significant increase No change Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91 Importance in 2011 (mean values) Change of importance 2008-2011 (mean values) Inbound practices
  • 22. Corporate business Incubation and business venturing Donations to commons or non-profits IP out-licensing and patent selling AND THERE ALSO DIFFERENT KINDS OF OUTBOUND PRACTICES Participation in standardization Participation in standardization Selling of market-ready ideas Joint venture activities with external partners Inbound
  • 23. TRADITIONAL PRACTICES ARE THE MOST POPULAR ONES 2.26 2.43 2.84 3.45 3.75 3.85 4.21 1 2 3 4 5 6 7 3.91 3.74 4.20 4.63 3.97 4.39 4.62 1 2 3 4 5 6 7 Joint venture activities Selling of market-ready products Participation in public standardization Corporate business incubation & venturing IP out-licensing & patent selling Donations to commons or nonprofits Spin-offs Not important Highly important Significant decrease Significant increase No change Importance in 2011 (mean values) Change of importance 2008-2011 (mean values) Outbound practices Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91
  • 24. CUSTOMERS ARE THE MOST CRITICAL EXTERNAL PARTNER 2.13 2.47 2.54 3.67 3.82 3.82 4.22 4.30 4.51 4.88 5.17 5.54 1 2 3 4 5 6 7 Unrestricted communities Restricted communities Competitors External consultants Contracted R&D service providers Entrepreneurs and start-ups Public research organisations Indirect customer or final consumer Suppliers Universities Customers Internal employees Importance of open innovation partners (mean values; 1= not important to 7=highly important) Average = 3.9* not important highly important Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 82
  • 25. IT IS NOT ABOUT THE INDIVIDUAL PRACTICE AND SOURCE 1 2 3 Supply-chain oriented Technology oriented Ecosystem-wide  Supplier programs  Supplier awards etc.  Direct customer co- creation  University grants  Developercommunities  ContractedR&D services  Third-party developers and service providers  Trusted partner network  Complementarynetwork partners 3 categories of Open Innovation orientation
  • 26. IT IS NOT ABOUT THE INDIVIDUAL PRACTICE AND SOURCE
  • 27. ….BUT OPEN INNOVATION IS HARD SOME PEOPLE THINK OPEN INNOVATION REDUCES RESOURCES AND EFFORTS
  • 28. Source: Open Innovation Executive Survey Fraunhofer & UC Berkeley; n = 91 THERE IS AN INTERNAL COMPONENT OF OPEN INNOVATION THEY JOURNEY FROM CLOSED TO OPEN REQUIRES NEW CAPABILITIES, ROLES, AND VALUES 3.69 4.55 4.53 4.53 4.89 5.26 3.61 4.28 4.49 4.6 4.97 5.6 1 2 3 4 5 6 7 Avoidance of external or already existing knowledge Effectiveness of intellectual property protection Identifying new innovation sources Protecting internal critical know-how Management of external relationship with innovation sources Managing the organizational change internally Challenges of engaging in open innovation (mean values, 1=not important to 7= highly important) when firm's started today Not important Highly important
  • 29. WHY ARE FIRMS NOT SATISFIED WITH CROWDSOURCING AND CHALLENGES? Task description Start: Submission of Ideas Many are designed for COMPETITION … And not for COLLABORATION and CO- CREATION
  • 30. THERE IS A SOCIAL DIMENSIONS OF CO-CREATION 1 4 2 3 Fun Fullfillment Fame Furtune
  • 31. New SCN platform Gamified TechEd 2011 12 months rolling points THE EVOLUTION OF SAP‘S SCN SUGGESTSTHAT GAMIFICATION MATTERS 2003 2005 2007 2009 2011 2013 Ask the Expert Points introduced Top Contributors Annual Contest SAP Mentoring Program Launch of Gamification Module 10 years SCN Some outcome measures  Activity up by 1,113%  Community feedback up by 250%  Points up by 147 %
  • 32. OUTLOOK: OPEN INNOVATION IS EVOLVING FINAL SLIDE WITH “WEB” AND NEW MODELS OF INNOVATION The GRAVITY IS SHIFTING EVEN MORE… ..people-centric & decentralized innovation ecosystems
  • 33. COMPLEMENTORY PARTNERS ARE CRUCIAL IN TODAY‘S BUSINESS ECOSYSTEM ^^ Internet ISP T T T Phone WiFi Enduser system Handset Distribution GUI Shop OS APIs Audio- Dateiformat A A A Millions of songs Thousands of Apps Assembly C C C C Hundreds of components Hardware interface BIOS Betriebs- system iTunes Design Closed IP External supplier Complementor Open Source Closed Standard Open Standard Legend
  • 34. A LIFECYCL-ORIENTED PERSPECTIVE IS BECOMING MORE AND MORE IMPORTANT BOUNDARIES ARE BLURRING DATA Con- tinued Value Creation Lifecycle-oriented Innovation Ecosystems Standardize and open data Co-create app Application lifecycle Co- create service Users Application developers Application platform Service providers Service integrator Open data provider Launch app & service Operate & con- tinuously improve
  • 35. FIRMS ESTABLISH DIVERSIFIED INNOVATION ECOSYSTEM Trusted Network New partners Pearlfinder Supplier Government ResearcherDevelopment partner Pearlfinder • Company owned digital community • Challenge-driven innovation • Multi-staged process and individual Terms + Conditions • Link with other open innovation practices Partner and partner selection • Suppliers, universities, development partners, customers • No start-ups • Selection based on„manageral fit“ and stabiltiy, IPR-Policy, „Academic Excellence“ and concrete idea • Selection process based on new methods such as incubation lab ChallengeUni Customers
  • 36. …AND PROFESSIONALIZE THE MANAGEMENT OF NETWORK RELATIONSHIPS Internal net- works Expert communities Expert support New research partners Market places Web 2.0 Communities New suppliers New development partners Tier 1 Loose innovation contacts New opportunities „Leverage“ (invest) Tier 2/3 Trusted networks
  • 37. Shifttowardsopenness Phase 1 Phase 2 Phase 3 Phase 4 Source: CAS 2010; Ehrenmann & Brunswicker (2012) Closed System Firm-centric innovation networks New infrastructures New decentralized innovation ecosystems Interne Technologie- Basis Aktueller Markt Aktueller Markt Gescheiterte Ideen/ abgebrochene Projekte Erfolgreiche Ideen/ erfolgreiche Projekte Interne Technologie- Basis Aktueller Markt Aktueller Markt Gescheiterte Ideen/ abgebrochene Projekte Erfolgreiche Ideen/ erfolgreiche Projekte Gescheiterte Ideen/ abgebrochene Projekte Erfolgreiche Ideen/ erfolgreiche Projekte THE SHIFT IS CONTINUING; IT REQUIRES MORE EXPERIMENTATION
  • 38. New facilitation skills and leadership capabilities New socio-technical infrastructures Experimentation (rather than control) Lifecycle-oriented innovation ecosystems
  • 39. „If you’re not failing every now and again, it’s a sign you’re not doing anything very innovative.“ Woody Allen Contact: Prof. Sabine Brunswicker, sbrunswi@purdue.edu
  • 41. AGENDA  Let‘s recap: 2003 – The emergence of Open Innovation as a new model of industrial innovation  10 years later - The Adoption of Open Innovation Practices in Large firms  Organizing and managing for open innovation – dynamics and socio-technical infrastructures  The emerging landscape of Open Innovation: Towards an Innovation Ecosystem Perspective