Talk by Joel West and Marcel Bogers, presented at the Industry Studies conference, June 2, 2011. See http://bit.ly/jdBxm6 for more info

1. Profiting from
External Innovation
Joel West Marcel Bogers
San Jose State U. U. of Southern Denmark,
Sønderborg
Keck Graduate Institute
Industry Studies Conference
June 2, 2011
Overview
• Our study of inbound open innovation
 Based on review of 280 OI publications
 Three-phrase process model
 Recommendations re gaps/opportunities
• Link back to crowdsourcing

2. Inbound Open Innovation
What is “Open Innovation”?
“Open innovation is the use of purposive
inflows and outflows of knowledge to
accelerate internal innovation, and
expand the markets for external use of
innovation, respectively.”
Source: Chesbrough (2006)
See also OpenInnovation.net/definition

3. Other definitional issues
• Conflating innovation
 with invention (OK for now)
 with knowledge or antecedents (not OK)
 with content (not OK)
• Success metrics
 Tend to be IP or product output
 Rarely: financial performance
Model for inbound OI
Innova&on
Focal
Firm
Source
1 2 3
Sales
/ Customers
R&D
Marke.ng
Innova&on
Source
Profiting from external innovations
1. Obtaining
Nonrecursive paths
2. Integrating Innova&on Innova&on
3. Commercializing Source Source
Suppliers Rivals Customers

4. 1. Obtaining
• Searching: sourcing, brokerage, limits
• Enabling: contests, toolkits, platforms
• Filtering: gatekeepers, scouts
• Acquiring: incentives, contracts
2. Integrating
• External vs. internal innovations
 Substitutes vs. complements?
 Absorptive capacity
 Culture: NIH
• Incentives to integration
• Implications for competencies
 For producing internal innovations
 For incorporating external innovations

5. 3. Commercializing
• Commercialization process
 Similar or different vs. internal innovations?
• Value creation
 Most common topic
 Standard NPD metrics
• Value capture
 Reduced cost or increased margin?
Nonrecursive paths
• Feedback loops
 R&D feedback
 Customer/market feedback
 E.g. “voice of the customer”
• Reciprocal engagement
 Co-creation
 Communities
 Value networks
 E.g. joint ventures, R&D alliances

6. Gaps/future research
• Alignment to business models
• More rigorous use of “innovation”
• Across the entire process
• Non-linear models
Open Innovation and
Crowdsourcing

7. What is “Crowdsourcing”?
“The act of a company or
institution taking a function
once performed by employees
and outsourcing it to an
undefined (and generally
large) network of people in the
form of an open call”
Source: Howe (2006)
Crowdsourcing archetypes
• Online content networks (iStockPhoto)
• Open innovation intermediaries (InnoCentive)
• Small human intelligence tasks (Amazon
Mechnical Turk)
• Peer production and open content (Wikipedia)
• Corporate without intermediaries (Dell
IdeaStorm)
• Open contest (TopCoder)
Source: Ren & Levina (AOM 2010) via oiblog.net

8. Crowdsourcing
Tech support
InnoCentive Threadless
X Prize
Linux
Licensed
IP Business
Extreme users
sports
Open User
innovation innovation
Thank you!