Q&A Open Innovation in Global Networks PDF

OPEN INNOVATION IN GLOBAL NETWORKS ESSAY QUESTIONS 1) What is innovation? Explain incremental, distinctive and disruptive innovation and give example for each. Innovation is the process and outcome of creating something new, which is also of value. Innovation involves the whole proces...

OPEN INNOVATION IN GLOBAL NETWORKS ESSAY QUESTIONS 1) What is innovation? Explain incremental, distinctive and disruptive innovation and give example for each. Innovation is the process and outcome of creating something new, which is also of value. Innovation involves the whole process from opportunity identification, ideation or invention to development, prototyping, production marketing and sales, while entrepreneurship only needs to involve commercialization (Schumpeter). Today it is said to involve the capacity to quickly adapt by adopting new innovations (products, processes, strategies, organization, etc) Incremental innovation: The new product incorporates a few new elements than the previous one, without changing the basic functionalities of the product. Example: light bulbs; razors Distinctive innovation: Although possessing some traits similar to the previous product, the new product incorporates a few attributes which correspond to previously non-existing functions. Example: smartphones Disruptive innovation: This type of innovation is characterized by a complete breakdown of the previous existing products. It may arise in response to the satisfaction of a certain need, or by creating a new need which previously did not exist. Example: Internet; chip 2) What is open innovation? Who coined the term and when? Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology. Henry Chesbrough, a professor and executive director at the Center for Open Innovation at UC Berkeley, in his book “Open Innovation: The new imperative for creating and profiting from technology”, 2003. 3) What are the main differences between open and closed innovation? Closed innovation: The smart people in our field work for us. To profit from R&D, we must discover, develop, produce and ship it ourselves. If we discover it ourselves, we will get it to market first.  If we are the first to commercialize an innovation, we will win. If we create the most and best ideas in the industry, we will win. We should control our IP so that our competitors do not profit from our ideas. Open innovation: Not all the smart people work for us so we must find and tap into the knowledge and expertise of bright individuals outside our company. External R&D can create significant value; internal R&D is needed to claim some portion of that value. We don’t have to originate the research in order to profit from it. Building a better business model is better than getting to market first. If we make the best use of internal and external ideas, we will win. We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our own business model. 4) Please explain inbound and outbound open innovation. Inbound OI is defined as “the use of purposive inflows of knowledge” and it includes activities such as acquiring existing knowledge (mergers and acquisitions, in-licensing, corporate venture capital) or collaborative creation of new knowledge (collaborative agreements, joint ventures, strategic alliances). Outbound OI is defined as “the use of purposive outflows of knowledge” and it includes activities such as bringing ideas to market, selling or licensing intellectual property, and multiplying technology. The combination of inbound and outbound OI is known as “coupled process”. 5) Describe the differences in managing IP between the closed innovation paradigm and the open innovation paradigm. The Closed Innovation paradigm assumes that you must “make” your ideas and monetize them through your own products. In practice, a company manages IP to create and maintain control over its ideas and to exclude others from using them. The Open Innovation paradigm assumes that there is a bountiful supply of potentially useful ideas outside the firm and that the firm should be an active buyer and seller of IP. In practice, a company manages IP not only to leverage its own business, but also to profit from others’ use of the company’s ideas. 6) What is a business model and what are the two main functions? Every company has a business model, whether they articulate it or not. At its heart, a business model performs two important functions: value creation and value capture. First, it defines a series of activities, from procuring raw materials to satisfying the final consumer, which will yield a new product or service in such a way that there is net value created throughout the various activities. This is crucial, because if there is no net creation of value, the other companies involved in the set of activities won’t participate. Second, a business model captures value from a portion of those activities for the firm developing and operating it. This is equally critical, for a company that cannot earn a profit from some portion of its activities cannot sustain those activities over time. 7) Explain product, process, marketing and organizational innovation. Product innovation: A good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, software in the product, user friendliness or other functional characteristics. Process innovation: A new or significantly improved production or delivery method. Thisincludes significant changes in techniques, equipment and/or software. Marketing innovation: A new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. Organisational innovation: A new organisational method in business practices, workplace organisation or external relations. 8) What are the challenges in outbound open innovation? Challenges related to the external exploitation of technology (appropriability issues and high transaction costs, identification of potential customers, caluation of technology), challenges related to loss of knowledge, loss of control or high complexity, and challenges related to internal barriers (difficulties in finding the right partner, insufficient time and financial resources or inbalance between OI and daily business). FILL IN THE BLANK QUESTIONS 1) Two main modes of open innovation are: ________________ and ______________ (inbound, outbound). 2) ____________________ is the firm’s ability to explore and acquire external knowledge. (Absorptive capacity) 3) Firm’s capability to internally explore knowledge, i.e. generate new knowledge inside the firm is known as ______________________. (Inventive capacity) 4) A tendency for people and organizations to avoid things that they didn't create themselves is known as ________________ syndrome. (Not-invented-here) 5) A business model performs two important functions: _______________ and ________________. (value creation and value capture) 6) The Closed Innovation paradigm assumes that you must „make“ your ideas and monetize them through ______________. (your own products) 7) Intellectual property refers to the subset of ideas that are __________, are _________, have been reduced to practice in a _________ form and have been managed according to the law. (novel, useful, tangible) 8) _____________________ is a cycle of transformation of individual knowledge into organisational, which is explicit to tacit, whereby other individuals or groups learn through practice. (internalisation) 9) An innovation characterized by a significant change in one element but same overall architecture__________________. (a modular innovation) 10) ______________________ coined the term open innovation. In 2003 he wrote a book called “The New Imperative for Creating and Profiting from Technology”. (Henry Chesbrough) 11) The four pillars of the knowledge economy are: ______________________________ (economic/institutional, education, innovation, information) 12) _________________ is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology. (Open innovation) 13) ___________________ is the systematic management of innovation processes. It refers both to product, process, and organizational innovation. (Innovation management) 14) 4P of innovation space are: ____________________________________________ (paradigm, process, position, product/service) 15) ______________________ assumes that an organization must discover, develop, manufacture and deliver itself in order to profit from research and development. (Closed innovation) 16) The common definition of ____________ is when a division of a company or  organization becomes an independent business. (spin-out) 17) Firm’s capability to internally retain knowledge over time is known as _____________ capacity. (transformative) 18) ______________________ is a model that sequences possible business models from very basic (and not very valuable) models to far more advanced (and very valuable) models. (Business Model Framework) 19) _____________ involves the whole process from opportunity identification, ideation or invention to development, prototyping, production marketing and sales. (innovation) 20) Open Innovation combines internal and external ideas into architectures and systems whose requirements are defined by a ______________________. (business model) TRUE OR FALSE 1) The business model influences the management of intellectual property. TRUE 2) The value comes from the party that has a business model to create and capture value from the patent, not from the invention of the patentable technology itself. TRUE 3) Protecting ideas is costly and time consuming. TRUE 4) Open innovation assumes that an organization must discover, develop, manufacture and deliver itself in order to profit from research and development. FALSE 5) How companies should manage IP: First they must connect management of their IP to the underlying technology life cycle of that IP and second, they shouldn’t change the management of IP surrounding the technology in the stages of the technology life cycle. FALSE 6) Patents do directly protect technologies. FALSE 7) Patents allow you to exclude others from practicing a technology that is covered by your patent. TRUE 8) At the initial phase, the management of IP greatly depend on whether technology fits well with business model. TRUE 9) The closed innovation paradigm assumes that you must make your ideas and monetize them through your own products. TRUE  10) Absorptive capacity is the firm’s ability to explore and acquire external knowledge. TRUE 11) Knowledge is data that have been organized, grouped or categorized into some pattern. FALSE 12) IP is the cost you pay to defend your knowledge and keep it from competitors. TRUE 13) Open Innovation combines internal and external ideas into architectures and systems whose requirements are defined by a business model. TRUE 14) A new or significantly improved production or delivery method which includes significant changes in techniques, equipment and/or software is known as marketing innovation. FALSE 15) Open innovation has two dimensions: inbound and outbound open innovation. TRUE MULTIPLE CHOICE QUESTIONS 1) Intellectual property refers to the subset of ideas that are: a) novel b) useful c) intangible d) a) & b) 2) Licensing technology is an important part of: a) marketing b) managing property c) finance d) human resources 3) What are NOT a Company’s forms of IP: a) trade secrets b) patents c) copyrights d) licenses 4) One thing that is well known and well accepted among those who study or work in technology is that technology changes ____________ a) from stage to stage b) rapidly c) slowly 5) In the hierarchical process model of knowledge management for innovation the nurture phase is NOT characterized by which routine: a) evaluate b) capture c) support d) re-innovate 6) In managing knowledge what are the main tasks to look at: a) sharing and distributing knowledge across the organization b) exploiting and embedding knowledge in processes, products and services c) identifying and codifying existing knowledge d) all of the above 7) A new or significantly improved production or delivery method which includes significant changes in techniques, equipment and/or software: a) marketing innovation b) product innovation c) process innovation d) organizational innovation 8) Organizations can acquire knowledge by: a) experience b) acquisition c) experimentation d) all of the above 9) A good or service that is new or significantly improved: a) product innovation b) process innovation c) marketing innovation d) organisational innovation 10) Type of innovation is characterized by a complete breakdown of the previous existing products. It may arise in response to the satisfaction of a certain need, or by creating a new need which previously did not exist: a) incremental b) distinctive c) disruptive d) all of the above 11) What is NOT the pillar of the knowledge economy:  a) economic and institutional regime b) information infrastructure c) education d) invention 12) The investment of corporate funds directly in external start-up companies is known as: a) corporate venture capital b) merger c) acquisition d) in-licensing 13) Challenges in outbound OI imply: a) appropriability issues and high transaction costs b) identification of potential customers c) difficulties in finding the right partner d) all of the above 14) The firm’s ability to explore and acquire external knowledge: a) absorptive capacity b) inventive capacity c) transformative capacity d) none of the above 15) Firm’s capability to internally explore knowledge, i.e. generate new knowledge inside the firm: a) absorptive capacity b) inventive capacity c) transformative capacity d) none of the above 16) A model that sequences possible business models from very basic (and not very valuable) models to far more advanced (and very valuable) models: a) open innovation model b) closed innovation model c) business model framework d) none of the above 17) The use of purposive inflows: a) inbound open innovation b) outbound open innovation c) coupled process d) none of the above 18) Which is the least effective way to acquire knowledge:  a) Experience b) Experimentation c) Acquisition d) None of the above 19) Inbound open innovation implies: a) the acquisition and transfer of external technologies b) in-licensing c) out-licensing d) a) and b) 20) Outbound open innovation implies: a) the transfer of technology, ideas and knowledge to external firms b) the acquisition and transfer of external technologies, ideas and knowledge into the firm c) in-licensing d) all of the above