Innovation Management Chapter 8 PDF

Innovation Management Chapter 8 Open Innovation and Collaboration Arsalan Safari Associate Professor Outlines Open Innovation Advantages of Open Innovation Strategies for Open Innovation & Collaboration Challenges of Open Innovation Technology Transfer Introduction External environment could contain...

Innovation Management Chapter 8 Open Innovation and Collaboration Arsalan Safari Associate Professor Outlines Open Innovation Advantages of Open Innovation Strategies for Open Innovation & Collaboration Challenges of Open Innovation Technology Transfer Introduction External environment could contain many sources of new ideas. It is difficult to own all the required capabilities and knowledge in one firm. → Therefore, we need to be open to the outside world, and collaborate with others who have better knowledge. This will enhance the firm innovation capacity. Open Innovation vs. Closed Innovation Open Innovation Closed innovation is using the firm’s internal knowledge to develop products. Open innovation (OI) integrate external knowledge (with internal) to develop products, which can lead to better outcomes. In practice, this can be done through collaboration with other organizations using different strategies to reach common goals. Drop-out Rates of Ideas in R&D Projects How many Ideas Firms can Generate? The previous plot illustrates that firms constantly need large amount of creative ideas to introduce new products (or develop existing ones). In practice, it is impossible (and very expensive) to keep developing a high rate of good ideas, especially with global competition. Therefore, firms must open their doors for external ideas to help to improve its innovation process. Details of benefits?! Advantages of Open Innovation 1- Access talent Lack of talented employees can hinder innovation capability. → OI acts as a bridge between internal teams and outside organizations to bring new ideas and solutions. 2- Access the right infrastructure Inadequate facilities for developing new products can hinder innovation. → Building a relationship with others could allow you to bring your product to market quickly and efficiently. Advantages of Open Innovation 3- Improving old products and services Sometimes, you don’t need to create new products, BUT you need some ideas to reshape existing products (or add features). → OI can give access to endless ideas. 4- Create new revenue streams It is not only about getting ideas from outside. OI allows to take ideas or projects generated internally but can not be developed. → They have the potential to create new revenue streams if they can be develop externally. Advantages of Open Innovation 5- Reduce costs and time to market In large firms, routines might slow the innovation process. OI with smaller firms (known for flexibility) can help to reduce costs and speed up the development process. (e.g., Toyota is developing the flying car with Joby Aviation) 6- Increase competitive advantage By accessing new ideas, the firm can enter new markets by introducing new products. Furthermore, the internal knowledge of employees can be increased by constant interaction with external environment. Strategies for Open Innovation & Collaboration 1- Strategic Alliance: An alliance is a collaboration between two firms to achieve mutual goals (product development, market access, knowledge sharing, etc.). 2- Joint Venture: A joint venture is a collaboration between two firms by creating a new legal entity (new firm) to achieve mutual goals. (create a real-time system to improve healthcare quality) Strategies for Open Innovation & Collaboration 3- Outsourcing: Innovation outsourcing is a strategy whereby a firm delegates the idea generation to other firms with high expertise or low cost. (e.g., Software development from India / AI) 4- Co-creation: Using users to generate ideas and feedback. Usually, users provide great ideas to develop products that reflect their needs. (e.g., IKEA ask customers to help in proposing new furniture concepts) Strategies for Open Innovation & Collaboration 5- Incubators and Company Accelerators: Incubators and accelerators have the capacity to support the external ideas and transform them into small firms, by providing tools and space for establishing new ventures. Incubators focus on early-phase startups that are in the stage of developing business ideas. Accelerators focus on speeding up the market growth of existing businesses that already have a functioning product. Strategies for Open Innovation & Collaboration 6- Challenges / Camps: OI challenges (camps) are competitions designed by organizations where everyone around the world (or from a specific location) is invited to present creative ideas. It can be for a prize, free entry, or a promise of employment. Running an Open Innovation “Challenge” 1. Define your innovation goals Set clear innovation goals that connect to your business 2. Select the participants Identify the domain of participants (internal/external), and Set out what you expect from them. 3. Set the critical success factors Clearly define the success factors, including the number of participants, the number of ideas generated, how many words to describe the idea…. Running an Open Innovation “Challenge” 4. Choose a platform Choose how you are going to run the challenge. It can be a live competition (local challenge), using online platform, or by using innovation management software like “Idea Drop”. 5. Write the challenge details - Title: should be attractive - Description: why the challenge is being conducted and what you will achieve - Supporting documents/images: to give clear instructions about how to participate in the challenge (and the timelines) Open Innovation Issues/Challenges OI can bring many challenges and issues to the firm if it is not managed properly: 1. Unclear goals It is important to know what firms are looking for before they start an OI process, and whether it is compatible with their situation. 2. Wrong type of participants Finding the right type of participants may be hard and costly. It is important to understand what we wish to achieve, so we can define the relevant participants. (develop kitchen tool → women who like cooking) Open Innovation Issues/Challenges 3. Building an effective process Managing OI activities requires an effective process with clear goals and communications weak. 4. Developing and implementing ideas OI can be successful if ideas are implemented in practice well, but with a large number of ideas, it can be hard to define the most promising ones. → Thus, it is important to have a method for ranking ideas based on their importance before developing them. Innovation Funnel Open Innovation Issues/Challenges 5. Intellectual property rights With large number of participants, it is hard to know the origin of all ideas, or if they are stolen. → Thus, it is important that all participants give written consent of the idea’s originality. 6. Terms and conditions The OI agreement with external participants should be carefully crafted to define the idea’s ownership. Otherwise it may result in challenging situations. Ideas can be shared among parties. Challenges of Open Innovation 7. Lack of participation Engaging in OI requires high motivation, especially from talented participants. → Thus, rewarding and recognizing good ideas are crucial. Open innovation can facilitate technology transfer by providing a framework for firms to acquire external technologies and knowledge and integrate them into their own innovation processes. Technology Transfer Technology Transfer is the application of technology to a new use or user. It is the process by which technology developed for one purpose is employed either in a different application or by a new user. The activity principally involves the increased utilisation of the existing science/technology base in new areas of application as opposed to its expansion by means of further research and development. (Langrish et al., 1982). Technology Transfer The tangibility of knowledge (recall): Technology Transfer (Economic Prospective) Models of Technology Transfer Licensing Science park model Intermediary agency model Directory model Knowledge Transfer Partnership model Ferret model Hiring skilled employees Technology transfer units Research clubs European Space Agency (ESA) Consultancy Models of Technology Transfer This four-stage conceptual framework (4A) is used to explore the processes involved in inward technology transfer. Summary Open innovation is very useful for obtaining many ideas from the surrounding environment, and it can significantly speed up the innovation process. There are many effective strategies for open innovation and collaboration (discussed earlier). However, it can lead to some challenges if the process is not managed effectively. Open innovation can facilitate technology transfer. However, the management of technology transfer is not entirely straightforward. A wide variety of models of technology transfer have been used over the years, particularly in the past 20 years (discussed earlier). Exercise